At a jolly party in New York Friday, I met and chatted with an intelligent chap from one of those big, scary financial firms that the media likes to demonize. After a few sighting pleasantries to gauge each other’s level of political maturity, we got down to business and discussed the disaster that is the Obama administration’s record on the economy. I have rehearsed it here so many times that I hate to drag it out once again. But the truth is, this administration is so ostentatiously irresponsible that if one only waits a few months, things are already a lot worse than when one last looked. This summer, the federal debt was approaching the historic, utterly incomprehensible figure of $16 trillion. Now it’s eying $16.5 trillion. (Remember back in the early 1980s when Ronald Reagan faced — and helped face down — a federal debt of $1 trillion?)
A number like 16.5 trillion is incomprehensible not only because of its sheer size — Reagan, in an image of characteristic genius, pointed out that a $1 trillion stack of thousand-dollar bills would be 67 miles high — but also because of the potential, gestating misery that amount of debt contains. What that debt will do to the poor, to the retired, to the nation’s military prowess, to the very fabric of our society: those are incalculable things. And remember, the federal debt is only something like 11 or 12 percent of the country’s total unfunded liabilities. We are, as Mark Steyn likes to point out, the brokest country in history.
Well, my new friend and I spoke mournfully about these and related matters. We finally got around to the question of “fairness” and taxation. I mentioned Steve Moore’s great book, Who’s the Fairest of Them All? The Truth about Opportunity, Taxes, and Wealth in America, which I published at Encounter Books last fall. Is it fair, for example, that the top 1 percent of tax filers pay nearly 40 percent of the tax receipts, or that the top 5 percent pay some 60 percent of the income tax receipts? Is it fair that approximately 47% of tax filers pay NO FEDERAL INCOME TAX AT ALL? Is that fair?
I have hard thoughts about such matters, especially at this time of the year when I huddle with my accountant to figure out how much more money the government will be robbing from my family to pay for Obama’s vacations and kindred exercises in fiscal imprudence.
It was at this point that my friend ventured his modest proposal. How about, he suggested, we have the top 7 or 8 percent of filers pay all the federal income tax? In exchange, such filers would get a larger say in determining such things as entitlement payments, what sort of things the federal government should be paying for, etc. What do you think? The proposal would, of course, make official something that has been in place unofficially at least since so many tax filers were taken off the tax rolls during the Bush administration (that was the price the Democrats extracted in exchange for the Bush tax cuts). I mean the bifurcation of American society into two classes, the makers and the takers.
My friend and I chatted awhile about the advantages of his idea before drifting apart to mingle with other guests. There are, doubtless, things to be said in favor of such a proposal, especially the second part of the suggestion, having to do with granting the makers and the payers a larger share in determining how the money is spent.
There is, however, one big disadvantage. It is this: it would be yet another large blow against the Founders’ vision of the country, a vision that recognized the ineradicable reality of inequality while also making provision for universal participation in the commonweal.
When I say that inequality is “ineradicable,” I mean “ineradicable without destroying liberty.” Communist tyrannies have gone a long way towards snuffing out inequality — apart, of course, from the gigantic inequality that naturally grows up between the tiny nomenklatura (think: “Congress and the executive branch”) and the rest of the population. But there are few people, even in the age of the Imperial Obama, who would say in public that was a good thing.
James Madison was right when, in Federalist 10, he pointed out that inequality was rooted in the diversity of human nature (“sown in the nature of man,” as Madison put it). “The diversity in the faculties of men,” he wrote there,
from which the rights of property originate, is . . . an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.
Note the highlighted sentence. So much that has happened to the size and the extent of government since the New Deal has transformed the state into the predator rather than the protector of property rights.
What should we do? “It is in vain,” Madison sadly observed, “to say that enlightened statesmen will be able to adjust these clashing interests, and render them all subservient to the public good. Enlightened statesmen will not always be at the helm.” We all know about that.
The greatest danger, Madison saw, was when the ruling faction was also the majority faction. It was then that what John Adams called “the tyranny of the majority” became a potent danger not only to minority rights but also to the commonweal. “When a majority is included in a faction,” Madison explained, “the form of popular government . . . enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens. To secure the public good and private rights against the danger of such a faction, and at the same time to preserve the spirit and the form of popular government, is then the great object to which our inquiries are directed.”
What Madison called “pure democracy” inevitably falls prey to the “mischiefs of faction”: “Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths.”
The only workable cure for this form of popular tyranny is a republican form of government in which a small number of citizens are elected to represent the rest. In a large country, Madison thought, this scheme could effectively tame the danger of faction, especially the danger of majority faction.
Madison and his colleagues devised an ingenious system of checks and balances that worked to disperse power and prevent its consolidation in the hands of one party or faction. We have had generations of lawyers and politicians who have expended their ingenuity attempting to circumvent those safeguards the Founders were at such pains to put in place for the preservation of freedom. One result has been the gradual transformation of the Constitution from an instrument whose chief purpose was to protect the individual from the state into a blueprint for the nearly unlimited exercise of state power. Another result has been the formation of a state or regime party in which the interests of one faction successfully infiltrate the prerogatives of executive and judicial power. When that happens, as Edmund Burke observed in writing about a similar abuse in 18th-century England, it is “soon discovered, that the forms of a free, and the ends of an arbitrary Government, [are] things not altogether incompatible.” In other words, it is perfectly possible to have a society in which the forms and institutions erected to safeguard liberty continue to exist, but whose actual operation tend to trample on the rights of one part of the population in order to consolidate power in the hands of the regime party.
That, I believe, is more or less where we are today. And contemplating the way out brings me back to my party conversation that began with contemplation of America’s debt and issued in that modest proposal to bring the distinction between the makers and the takers in American society out into the open and give it official recognition.
I don’t think that will work — nor, frankly, would I want it to, since its effect would be to push us even further from the form of limited, constitutional form of government the Founders envisioned. But debt is also a powerful agent of change, as Greece is discovering to its chagrin. “What can’t go on forever, won’t,” the economist Herb Stein famously observed. Our profligate behavior cannot go on forever, cannot even go on much longer, ergo, it won’t. But when that stops, so will the lifeblood that is sustaining the unholy alliance between the state and the faction of takers. What exactly will happen when that stops is beyond anyone’s crystal ball to delineate. It will not, I strongly suspect, be pleasant. The question is, just how ugly will it get before it gets better.
Join the conversation as a VIP Member