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Works and Days

The Democratic Disasters to Come

October 20th, 2013 - 7:26 pm

The defunding wars are over. The accusations are fading. We are back to reality. Of course, America’s long-term prospects, at least in comparison with other countries’ futures — whether in terms of demography, military power, food-production, constitutional stability, energy sources, or higher education — are bright.

But short term, we are walking over landmines that threaten to blow up the normal way of doing business, and pose far more harm for Democrats than for Republicans.

Zero Interest

The real story about the debt is that by the end of Obama’s eight years, he will have matched the borrowing of all previous presidents combined.  Yet incredibly, the present huge sum of $17 trillion in debt is serviced at the same cost that we paid over 15 years ago. Such free use of money without raging inflation is almost historically unprecedented — and it won’t last.

Indeed, we are paying today about the same amount in aggregate annual interest payments, in non-inflation-adjusted dollars no less, as in 1997 — even though the 2012 figure of $17 trillion in debt is about three times larger than it was a decade-and-a-half ago. That anomaly is possible only because today’s interest rate of about 2.2% is only a third of what it was back then.

If interest ever returned to 1997 levels, at say 6.6%, we’d be paying over a trillion dollars a year in debt service. In crude terms, the winners of this Ponzi scheme are the very wealthy connected to Wall Street, which is flooded with foreign and domestic capital. It need not do much of anything more than outperform a pathetic 1% return on savings accounts.

The poor benefit from the vast increase in federal spending and exemption from federal income taxes. In contrast, the middle class still pays high interest on its student loans, credit card, and, to a lesser extent, car debt, receives almost no interest on its meager savings accounts, and is not so ready, after 2008, to dabble in real estate and the stock market.

In some sense, holders of U.S. Treasury debt and passbook savers are giving up hundreds of billions of dollars in interest returns (cf. the difference, say, between 1% and a more normal 5%) to subsidize the redistributive policies of the federal government.

The lack of interest, or de facto negative interest, keeps the near-retired working and hampers job prospects of the young; discourages thrift, savings and investment; and plays an underappreciated role in the slow economic recovery. The Democrats must deal with the contradiction of needing zero interest rates to service their recent extra $6 trillion in debt, and higher interest to encourage savings, investment, and job growth.


While the glitches and sign-up problems of Obamacare may soon ameliorate, the program’s damage and unpopularity won’t go away soon.

All the president’s promises will stay broken: health-care premiums will go up, not down. Young people, who can least afford a new burden, will have to be taxed to pay for others and so resist. The deficit will not be helped. Obamacare more likely will make it go up. Premiums will climb. Existing plans will be altered. Doctors will be less, not more accessible. Businesses will not enjoy a new competitiveness. Exemptions for administration pets will continue. Again, the wealthy will find ways to navigate around Obamacare, and the middle class will pick up the tab in higher costs and worse care.

In short, over 300 million people are going to find their health care analogous to a DMV visit. The logic of Obamacare was always redistributionist; those who had health care were obligated to give up some of it so that others might share the same benefits, regardless of the circumstances, fair or unfair, under which such differences first arose. Washington has decided that, with more money and employees, it can decide who has too fine a health care policy and who too little insurance, and then make the necessary redistributive adjustments.

The shutdown may have temporarily sidetracked the Republicans, yet Obamacare threatens much worse for the Democrats. By 2014 the former will be ancient history, while the latter will be an ongoing mess.

The Debt

All the old liberal pretexts for the debt are now questionable. Foreign wars are over in Iraq and about over in Afghanistan. Sequestration already made radical cuts in spending. New taxes on the top brackets were passed. The economy is supposedly recovering, bringing in new revenue.

Why, then, are we still borrowing $700 billion annually?

Obama will probably not get GDP growth up to 4-5%. He won’t be able to raise taxes again, above the new 39% rate, on “fat cats.” There are no more wars to blame for the borrowing. Instead, he faces always higher entitlement costs, Obamacare, and possible hikes in interest rates. This paradox has no answer other than spectacular economic growth, the repeal of Obamacare, an extension of the private-energy revolution onto federal lands, and vast cuts in entitlements. I don’t see any of that happening in the next three years, and so the deficits will continue to hover between $600 billion and $1 trillion per year. “Bush did it” will not excuse a president who in eight years borrowed more than did all previous presidents put together.

“Comprehensive” Immigration Reform

Ramming through amnesty will be an Obamacare-like disaster. With even cursory scrutiny, the public will learn that the effort is far more than giving “dreamers” who played by the rules a fair shot. Instead, “legal” immigration-reform proposals will still inordinately favor family and ethnic considerations and proximity to the border, not racially blind educational and skill-set criteria. The public still does not trust government claims about border security. The pathway to citizenship provisions will still extend green cards to those with criminal records, including DUIs, and past residence on public assistance.

In short, the bill is not about giving the Korean engineer a chance to become a legal skilled employee, or allowing the Romanian doctor to practice without fear of deportation.

It is not about giving the Mexican national, who is a National Merit Scholar, a chance to attend MIT without worry of deportation. At least not entirely.

Instead the bill is politically and ethnically chauvinistic. Indeed, comprehensive immigration reform is the most illiberal legislation in a generation: it favors Latin American nationals over others entirely on the basis that they have already broken federal immigration laws, are residing here illegally, and share the same ethnic background as their leaders in the Democratic Party.

It hurts the lower classes, many of them minorities, who compete with cheap labor of foreign nationals. It burdens state budgets that must allot hundreds of billions in entitlement costs to allow rough parity to the vast majority who arrive from Mexico and Latin American illegally, without a high school diploma and without English.

It will ensure Democratic majorities in the American Southwest for a generation and turn Nevada, Arizona, New Mexico, and perhaps Texas into something akin to the politics of California. The bill is ethnocentric, championed by corporate elites and ethnic chauvinists, and central to Democratic Party strategy.

Anyone who worries about a melting-pot, ethnically blind tradition of immigration and assimilation, the wages of entry-level workers, fairness to middle-class taxpayers, the truly needy who depend on a solvent government, or the need for skilled and educated legal immigrants should be worried by the legislation.

So What?

In contrast to all of the above, there are all sorts of conservative opportunities that focus on the welfare of the middle class. Take the 2012 stalled farm bill. It is a gift to agribusinesses (at a time of record high commodity prices, no less) not small farmers, to the degree there are any left of the latter, and should be opposed as corporate welfare. More gas and oil drilling on federal lands is also a naturally winning issue. Fracking and horizontal drilling will help lower energy and fuel costs for the public and offers the quickest way to provide more good jobs. Luring energy-intensive industries back to the U.S. should also be a conservative cause.

In contrast, zero interest, Obamacare, more borrowing, amnesty, and using government to hinder federal energy leases and Keystone are not popular issues, and do not appeal to the working classes.  Will Republicans finally grasp that?

(Thumbnail image on PJM homepage created using multiple elements.)


What books does Victor Davis Hanson recommend for 2013? Click here to see his picks at the Freedom Academy Book Club.

Comments are closed.

Top Rated Comments   
What is your point Victor? We all know almost everything you said in this article, and moreover the punditry have been repeating it for some years now. All of it. So what? Big deal! Until the stoopid American electorate begins to take its politics seriously by voting the bums out, by really truly getting rid of the self-serving cadavers that crawl over Congress and the Senate like flies over s***t, then nothing is gonna change. Sorry to be so brutal Victor, but you are talking about the wrong boring topic. If the stoopid American electorate thought there was something wrong with the state of America today, then the stoopids would do something about it. But they don't and they won't. Next time around the same old same old will be elected back into office for the millionth time. Then the same old same old will continue on and on and on and on and ... and you will still be whining about "illegal immigration" five years from now .... in Spanish.
1 year ago
1 year ago Link To Comment
"In contrast, zero interest, Obamacare, more borrowing, amnesty, and using government to hinder federal energy leases and Keystone are not popular issues, and do not appeal to the working classes."

In today's dumbed-down, know-nothing and care-less celebrity-worshiping brain-dead "popular" culture, you could hit them in the head with cement blocks having those issues printed in bold letters on the side and they probably wouldn't notice. And thanks to the garbage known as "journalism", if they do notice, they'll blame the GOP for it. We now effetively have a one-party national government. The Democrooks will spend the rest of the country's remaining life running against the troubles THEY caused. Idiocracy is here.
1 year ago
1 year ago Link To Comment
Ted Cruz and co. smoked the democrat's corrupt republican fellow travelers out of the DC woodwork with his valiant stand against the literal disaster known as Obamacare; even the corrupt propaganda arm of the Obama White Mosque could not keep the truth from getting out once American citizens saw the disaster unfold before their very eyes......along with the very real financial statements from insurance carriers advising exponential cost increases...or complete cancellation of existing insurance policies. Senator Cruz was attacked by corrupt politicians on both sides of the aisle because he upset their gravy train - the fix is in and both parties are screwing America for their own selfish gain. We must ALL unite behind Cruz & Co., unless we wish to see America die before our very eyes...the 'fundamental transformation' has to be defeated, not negotiated, not compromised with....DEFEATED....or America will cease to exist as a free nation.

Remember BENGHAZI!
1 year ago
1 year ago Link To Comment
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All Comments   (89)
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The political solutions are closed. The language of the left against the right is the language of war propaganda against an enemy of the state. It is designed to demonize an enemy to make it palatable to the public for the combatants employing that kind of language to savage the enemy, any and every way possible. There are no avenues for civil debate left. Talk has become the hyper-inflation debased currency of public life. It's basically worthless except as a war making tool. Y'all go on ahead and keep yourself convinced you can make a difference with your vote after last elections' singularly irregular election or the Republican majorities that have been in place from time to time since '94 with hardly a mile and hour slowdown in government expansion and usurpations. Believe in the fairy dust of the Supreme Court after Roberts ruled as he did on Obamacare. Believe ideas matter to the other side when they employ the rhetoric of total war against us.
I got other plans
1 year ago
1 year ago Link To Comment
I agree and disagree. I disagree on the deficit comments. Not to say that the deficit hasn't increased under Obama but it was 30 years of Reagonomics that has created the economic problems we now face. You can't push a man out of a plane and blame his death on the ground. Unfortunately for Obama the 30 years decided to implode 4 months before he became president (although it helped him to get elected). As long as you have such a wide gap in income distribution you will always have the need for massive entitlements.

As for illegal immigration you are correct but only partially. Clearly the Dems are the driving force for no other reason than votes. But the Republicans (other than some Tea Partiers) have caved as well. The business interests like the Chamber of Commerce, the hospitality industry, construction, food processing and of course agriculture, almost exclusively Republican, are selling out the middle and lower class for cheap labor and wage deflation.
1 year ago
1 year ago Link To Comment
Your allegation that consequences of 30 years of Reagonomics was unfairly thrust upon Obama is not supported by the facts.
The federal balance sheet catastrophe can be traced directly back to LBJ, his deficits and his Great Society programs, which garnered their impetus from FDR's New Deal. The TBTF banking problems, on the other hand, can be traced back to Nixon's removal of the USD from the Gold standard, Clinton's overturning of the Glass Steagall act and the TARP & QE initiatives begun by GWB and shifted into overdrive by Obama.
In short: Reagonomics had ZERO to do with it.
1 year ago
1 year ago Link To Comment
Do you honestly think that income inequality is something that you can just legislate away? Has it ever occurred to your liberalism-anesthetized mind that people have different abilities and work ethics? Do you think maybe THAT could have something to do with it? Do you honestly think that taking from people who work and giving to people who don't work is fair? Newsflash: people who work hard in school, work hard at their careers, and stay out of trouble end up earning more money than people who habitually make other choices. Someone who eschews hard work for the easy route, who never applies himself in school, who waits around for someone to hand it to him rather than getting up off his kiester and earning it is, in fact, choosing to have a lower income.

Grow up, liberal, and recognize that human nature ensures that some will do better than others.
1 year ago
1 year ago Link To Comment

You would learn something by reading Since my experience of those calling themselves "proud liberals" suggests that you won't, I'll summarize it for you:

Economic forces affect the rich and poor alike, just with different magnitudes. In good times, the poor get richer, and the rich get richer *faster*. Result: income inequality goes *up*. In bad times, the poor get poorer, and the rich get poorer *faster*. (Though they have a longer way to go before they're uncomfortable, while the poor have almost no safety margin). Result: income inequality goes *down*.

There are brief periods where the poor get richer and the rich poorer, or the poor get richer and the rich poorer, but they are usually the result of some weird event and never last for long. E.g. the dot-com crash, which wiped out stocks but took a little longer to kill off jobs -- so for a while, the rich were getting poorer while the poor were staying even. But within a few months, the poor started losing jobs as companies cut back.

So since in good times, income inequality goes up -- and in bad times, income inequality goes down -- you should be cheering when income inequality goes up, because it means the poor are getting richer. But by focusing on the wrong indicator, you're missing important signals about the economy.
1 year ago
1 year ago Link To Comment
Democrats appeal to emotion, Republicans to reason. In an under-educated society such as America has become, who wins the day? Repubs need to change the party name to something like "Caring America Party" and use sob stories as a vehicle to convey their message, such as statements from those who could not sign up (sob) for their poor kids who need health care.
1 year ago
1 year ago Link To Comment
When will the Republicans realize they're sitting on goldmine of issues with popular appeal? I suspect this will occur when Republicans also realize the following:

1. The news media are biased against Republicans, will never like Republicans, will never report the news fairly or honestly, and are worth at least 8 points to the Democrats in every election.

2. The American electorate are governed by sentiment, not facts or reason, of which they are largely ignorant and willfully so. This renders them susceptible to manipulation by masterful political campaigners like the ones who delivered Obama the presidency twice.

3. The sentiment-governed electorate is steeped in a culture hostile to the Republican brand, the color and age of Republican skin, and many Republican moral, economic and political principles. Worse, American culture is in fact comprised of mass-market consumer entertainment products designed to provide consumers a temporary respite from ennui with no regard or accountability for the long-term consequences of the products' design. Worse still, the products' designers are the Republicans' political enemies.

Hope that answers your question, VDH. Great column, as usual.
1 year ago
1 year ago Link To Comment
You don't understand. The GOP absolutely WANTS to be the permanent minority party. They see how cozy the Illinois and Chicago Repubs become under the Daley-architected political structure. Today's GOP will be happy to go along with the Dems on anything, provided their positions are secured.
The GOP needs to be voted out of every public office in the land. If you believe in any conservative issues at all, you need to support the Tea Party and push them to become an official, organized body.
1 year ago
1 year ago Link To Comment
Don't be naive. The Dems are already planning a concerted campaign to blame Republicans for the impending disaster. Unfortunately, most of the bovine voters are too damn stupid to analyze the situation.
1 year ago
1 year ago Link To Comment
Although I won't argue that the farm bill favors agribusiness, or that ir is designed to pave the way for higher levels of crony capitalism, pitting "small farms/farmers" against large industrial farms is to totally miss the evil being perpetrated and is a false choice.

Operating within the remaining scraps of capitalistic principle we can find, small farms have become BIG of necessity. No matter the business, "Economy of Scale" is a valid economic principle. Additionally, the remark about "record high prices" is dated. December 2013 corn futures trade at near $4.40 today. Last year at this time it was at least $2.00 higher.

Do serious people honestly believe we who take monumental risk to raise their food will plant the crop in 2014? The ridiculous inflation the farm sector has experienced since '08/'09 shows no sign of tempering, even though grain markets have been sliding constantly for over six months.

Because dreamy Americans several generations removed from the farming industry fondly "remember" their forebears making a nice living on a 120 acre farm, doesn't mean that sort of operation can survive in 2013. Visions of Utopian Agrarianism based on "The Waltons", or how the Amish continue to farm aren't a realistic model for today.

Good gawd, you don't feed 330 M people by de-innovating an industry, but I regularly see calls for that very practice from every direction.

Google "grain export subsidies/Cargill" and read as much as you can stomach, after which you may be qualified to pontificate on farm subsidies and WHO is pulling the strings that have led to several years of ALL OUT production.
1 year ago
1 year ago Link To Comment
Government farm supports are for the big grain crops (corn and wheat) and for milk. There's no government support for chickens, pigs, sheep, potatoes, tomatoes, lettuce, peppers, peas, cucumbers, carrots, raspberries, cherries, etc. Many such crops are grown on family-owned farms and orchards. Small 'truck' farms remain economical because the crops must be harvested by hand and freshness is important (hence local trucking to restaurants and farmers' markets).

Those farm businesses survive without government support, so I will feel no pity for the owners of 10,000 acre wheat farms if government subsidies disappear. As for the vagaries of weather or plagues or fires: there's a concept known as insurance.
1 year ago
1 year ago Link To Comment
Well said sir, I couldn't agree more. The days of needing farm subsidies are long gone and remain simply due to the power of the agrilobby and a romantic attachment Americans have with farming as a noble pursuit.

There is a significant difference between growing family farms and the likes of Cargill. One can obtain economies of scale without being a corporate behemoth; scale is relative to the point at which one begins measuring. Furthermore, there is nothing in the movement to eliminate subsidies that is anti-innovation. The opposite is true.

Finally, there are thousands of US farms in the 100-500 acre range that are alive and healthy today. They would find TxTumbleweed's suggestion of their business model being antiquated as offensive and patently uninformed. Particularly because a large number of those farms are in Texas and are the economic foundation for rural communities throughout the state.
1 year ago
1 year ago Link To Comment
Your circuitous approach to bash my opinion/information, rather than engage in debate, is cowardly.

Secondly, to assume or intimate that I advocate for continuing farm subsidies is disingenuous, although not surprising given your obvious preference for backdoor slander, probably due to lack of confidence to debate issues.

If you had competent reading comprehension ability, decent knowledge of the farm industry, or had lightly perused the information I suggested, you would grasp that large farms no longer receive significant government subsidies.

Show me the money! The paltry percentage of my annual outlay for crop inputs, that I currently receive from the U.S. taxpayer is little more than an aggravation, however since the government took over the crop insurance industry (yes, as in "nationalized"), I am unable to obtain crop insurance, or to participate in some necessary marketing programs, without complying with USDA's guidelines.

In fact, nowadays USDA programs are largely designed to do little more than glean ridiculous levels of financial information (similar to how ACA will eventually do to every American), and to constrain land owners and producers from making land use decisions based on their own capitalistic best interest.

For at least a decade, the government funds formerly paid to grain producers have been redirected into export enhancement subsidies (which only Cargill, ADM and ConAgra benefit from), grants to upgrade ethanol production facilities (largely owned by Cargill & ADM), and to crop insurance companies (ADM is, and probably Cargill will eventually branch into) who collect huge government subsidized premiums, while taking advantage of the ability to hide behind a morass of rules and "get out of jail free clauses", only a government inspired entity could negotiate.

Your second paragraph is so pitifully meandering and empty of substance I am at a loss as to how to approach the mis/dis-information therein.

Again, IF you had read the information I suggested you wouldn't be making such uninformed statements, therefore, I can only pity your lack of knowledge.

Cargill's lobbying efforts lead directly to the continuance in expansion of grain production. Congress is merely the facilitator of these multinational grain companies wants and needs, while the American farmer naively assumes their congressmen are representing them. Government subsidies are the means the aforementioned, near monopolistic entities have used to finance their move to vertically integrate, and expand their operations from mere U.S. grain exporters a few decades ago, into their current status as multinational, multi-faceted untouchables who control every facet of the protein side of the U.S. (probably the world) food chain - with one exception - U.S. farmland ownership.

As you so have so ably demonstrated, the problem is the disengagement and lack of knowledge Americans in general have of how WORLD business operations affect all levels of U.S. business, including their food production.

Furthermore, there is nothing in the movement to eliminate subsidies that is anti-innovation.

What "movement"?

Actually, that statement is incorrect. The lunatics who constantly rave against industrial scale, GMO, chemical tech innovation are the very 100 acre and smaller pseudo-farmers who believe the current methods of food production are dangerous. They wander the web, spewing their scaremongering, pseudo-scientific, half-truths and anti innovation screed ad nauseum.

Why no one has the temerity to challenge them as to which demographic of America they will choose to have starve with their little Utopian system is amusing to those of us who produce the bulk of the protein Americans consume, thereby making their pitifully insignificant effort possible.

It is obviously little more than a case of peeniss-envy!
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1 year ago
1 year ago Link To Comment
Love the up front optimism about the future of the country, long term.
I would include VDH among three conservatives who are driving this point...Kevin Williamson and Walter Russell Meade being the others.

The populace may be struggling but the firmament of this country is quite strong.
1 year ago
1 year ago Link To Comment
Short term? Anybody who's been to the Third World knows that having 50% current ethnic minorities - as we will in 50 years - as a base population is a recipe for raging failure. 90% of our immigrants come from the Third World and this has been true for years.

The real epidemic and plague the Dem Party and it's moronic adherents fear is the plague of white folks. Once that's tamped down to acceptable levels, everything will be just fine. By an amazing coincidence this all started around 1970 and we haven't been to the moon since then. Success is where you find it. The problem is, the Dem Party don't like where they find it, so they'll take failure instead.
1 year ago
1 year ago Link To Comment
This is what we should be doing about illegal immigration. It is not often we need to be schooled about how to run a country by the U.K., but this is such a time:
1 year ago
1 year ago Link To Comment
"a president who in eight years borrowed more than did all previous presidents put together."

Is this statement inflation adjusted?
1 year ago
1 year ago Link To Comment
What inflation?
1 year ago
1 year ago Link To Comment
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