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A Republic if You Can Keep It

June 28th, 2012 - 10:48 am

The Supreme Court has upheld the healthcare individual mandate as a tax. “Chief Justice John Roberts wrote the opinion, joined by the court’s four liberal justices, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan.”

The chief justice wrote that the penalty’s “practical characteristics pass muster as a tax under our narrowest interpretations of the taxing power.” He said a person who does not wish to carry health insurance is left with a “lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.”

Mitt Romney reacted by saying “What the Court did today was say that Obamacare does not violate the Constitution. What they did not do was say that Obamacare is good law or that it’s good policy.”  The Supreme Court also said something else in upholding the expansion of central government power. It affirmed what Leo Linbeck III observed: the “centrocracy” rules.  The Supreme Court has held that the Constitution is not going to stop if from getting ever larger. As the chart below shows a bigger and bigger share of national wealth has been appropriated by Washington and spent at the center.

Being Ruled From Further and Further Afield

Whether as in guise of a tax or a mandate, the decision suggests there is no legal way to keep the process from continuing indefinitely, provided the right forms are observed.  The expansion has been under way a long time. From the Civil War and certainly after the New Deal. After all, President Obama did not create Obamacare from a standing start. He was amplifying on a longstanding trend.

In the process it is also spending the country into oblivion. Leo describes the moment he realized how great was the tide of red ink in his article:

My personal political journey began about five years ago when I was sitting at a business luncheon in Houston, listening to a presentation by the president of the Federal Reserve Bank of Dallas, Richard Fisher. He showed a series of slides with typical Fed fare: deficits, interest rates, home prices, mortgage markets.

This was before the financial crisis, and the economy still seemed strong. But Fisher was not so optimistic, and his talk was a little unnerving. At the end, he said words to the effect, “All of this probably sounds scary, but the next slide that I’m going to show you is the one that keeps me up at night. If you are concerned about your country, it should keep you up at night too.”

On the screen appeared one number: $84 trillion. “That is the unfunded liability of Medicare,” Fisher said.

I quickly ran the math and realized this was almost $300,000 for every man, woman, and child in the United States, including my wife, my five kids, and me. I was stunned.

After the luncheon, I made my way through the crowd to find Fisher. I expressed my bewilderment and said the number couldn’t possibly be true. “It’s true, “ he replied. “It’s one of the first questions I asked my research staff when I joined the Fed, and it has been checked and double-checked.”

“How did this happen?” I asked.

He looked at me and said one word: “Congress.”

With that word, Fisher awoke me from my dogmatic slumber.

But to awake to a realize you’re broke and then rushing out to because nothing prevents you from spending more –  as the Supreme Court observed — is not to end it. It is only to make one aware of the nightmare and extend its horrors to the daylight hours

Mitt Romney’s assurance that his election will undo Obamacare is less than convincing. Since both the Republicans and Democrats have an interest in government continuous government expansion, in the event of his election, while Romney may try to roll aspects of the medical care expansion back all he can hope for in the face of the special interest pleadings that created Obamacare in the first place is only to retard its progress somewhat. The image of Sisyphus rolling a rock up a cliff-face comes to mind.

Yes We Can

But who plays the role of Sisyphus in this scenario? Is it those who are trying to “roll back” the unremitting expansion of state power into something of the shape of the Old Republic being forced ever back? Or as is it the reverse: is it the State that is Sisyphus?

Government is always trying to muster one more mandate, one more regulation, one more tax that will perfect their expansionary program forever.  At least one writer has called the European debt crisis Sisyphean. After all, Obamacare is hardly the last stop in the program. There’s Climate Change and Big Gulf soft drinks still to conquer.  A few more bailouts and the rock  will attain the summit and roll down the other side into a gentle valley, there to remain forever.

We have seen Europe suffer the same fate as Sisyphus too long. They push the rock up the hill, only to find that it rolled back down the next day. Europe can do what they usually do, declare victory, delay implementation of ESM, avoid serious negotiations on the Greek bailout, and fail to implement any of the Spanish bailout. That is what they have done so often, and if they do it again here, we will see the rock rolling downhill, and this time it might not be able to stop it and push it back up.

On the other hand, with the rock so close to the top, Sisyphus or Merkel might ask what can be done? Can the rock be pushed over to the other side? Can it be smashed once and for all? This may be the opportunity to end their misery. Now is the time to unleash the “coordinated” bailouts. Launch new financing programs. Renegotiate the existing bailouts. Implement the FROB deal and create similar programs elsewhere. Cut rates. Create realistic growth and infrastructure plans.

And then Europe will find its footing forever. “With the rock so close to the top …” There’s the rub. If it is not, then the likely outcome will more resemble Indiana Jones fleeing from a boulder or the crew of the Prometheus trying to escape a crashed million ton alien spaceship rolling on the ground after them. The rock will chase Sisyphus as it is doing now in Greece, Spain and Italy.

Run For It Boys, It's Krugman's Space Aliens

The question who really plays the role of Sisyphus will be empirically answered by how things actually turn out, in Europe at least. While those who believe that “one more push” may create a stable welfare state forever, the probability is that their efforts are doomed by arithmetic. If the word “deficit” means anything it means unsustainable.  And unsustainable is at least as forceful as “unconstitutional”.

The EU must be crushed by forces that it has itself stored up. The same fate is now apparently in store for the Federal Government. If it cannot stop itself from expanding without apparent limit then it will spend itself to death. The inertia built into the program of government expansion is tremendous. And the fact that there is no obstacle to its continued inflation is no proof it can continue indefinitely.  After all, France and Greece have responded to the crisis by voting in left-wing parties; let us see what they will spend. And now, in the United States, the Supreme Court has decided that it cannot legitimately stand in the way of yet another expansion.

Maybe an empty wallet will.

The dispute over the question of limited government has moved past the purely legal sphere to the political one. What will drive the political outcome are economic conditions. At the close of the Constitutional Convention of 1787, Dr. James McHenry, one of Maryland’s delegates to the Convention, asked Benjamin Franklin what he thought they had wrought:

Q: “Well, Doctor, what have we got—a Republic or a Monarchy?”

A: “A Republic, if you can keep it.”

In the same vein, one may say that the Court has decided: Obamacare, if you can afford it. Any hope that the Constitutional flight control software can of itself keep the trim has faded. The voters have got to actively pilot the great ship of state if they want something other than the direct course into the sea of debt. That’s about all we know for now. Whether they can succeed is still a question that is up in the air.


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