March 28, 2010 As Predictable As the Sun Rising by Victor Davis Hanson Pajamas Media Giddy About Remaking America If we assume that Obama & Co. wish to radically remake the United States along the lines of a European socialist society, or perhaps to the left even of a Belgium or Denmark then the past 14 months were as predictable as the sun rising. Liberal Utopia. To transmogrify a center-right country into a liberal utopia, certain things follow: higher taxes on the better off to pay for redistribution and to bring fairness to society (e.g. called redistributive change, spread the wealth patriotic paying your fair share); increased government coercion to force the reluctant to conform (e.g., new IRS agents, more regulations and government intrusion; mandatory new fees); a growing constituency to administer and receive entitlements (e.g., I never really heard much about ACORN or SEIU until the Obama ascendency); a public relations campaign to demonize the skeptical as enemies of civil society, starting with selfish and greedy escalating to racists and finally reaching the dangerous level of terrorists who threaten officials (those who used to court Michael Moore, or snooze about books and movies suggesting scenarios of killing George Bush are suddenly worried about uncivil discourse); a new neutralist foreign policy to match defense cuts on the horizon and to adjust our stature abroad with our new more revolutionary profile at home (cf. the treatment of an Israel or Britain to the new efforts at winning over Iran and Syria; or our shrinking navy and air force); and a highly educated, urban technocracy not subject to its own new protocols and dependent on an ever growing bureau (e.g., Geithnerism, or the strange career of Van Jones); and a new euphemism in language (there is no terrorism any more; liberals disappeared and were replaced by progressives, we have no more enemies from the radical Islamic world, etc.). Taxes and Spending. As these nearly two trillion dollar annual deficits mount, as the combined local, state, federal, and payroll taxes approach 60-70% on the top brackets and yet do little to meet the shortfalls, we will have to either cut programs or tax the middle class or both or implode. We are floating huge amounts of debt at historically cheap interest. One can borrow $ 11 trillion at the price of what would be borrowing $20 trillion in the old days of interest, as rates hover around 2-4% rather than the old 6-10%. But this is a fools delusion; any spike in inflation will almost immediately turn this mortgaging into an unsustainable disaster, sort of like those old 1980s adjustable mortgages at 3% that drew buyers in to purchase enormous homes only to climb within a few years to 15% and insolvency, or like those introductory credit card offers that offer 6 months at 3% only to climb to 19% when you are maxed out.(As a rule, all interest rates climb as borrowing increases [ask a petulant Greece]). If we cut some spending, as in the Clinton years, it will eventually fall mostly on defense fewer planes, armor, divisions, personnel. etc. If we continue to increase taxes, we will see some sort of federal sales, VAT, or special user taxes on the tens of millions who are now tax exempt. The untaxed will be taxed and told they are not taxed (sort of like poor George Stephanopoulos in his interview with Obama, being bewildered by the presidents postmodern linguistic gymnastics, and thus reduced to looking up tax in the dictionary, only to be ridiculed by Obama that Stephanopoulos had to rely on a dictionary in the first place.) There are simply too many new entitlements and too few left now to pay for them. Note it is not as if we were extending novel universal healthcare to a 1920s self-reliant and much poorer populace, but rather to the most affluent, most leisured and most taken care of generation in the history of civilization. It is not as if those without health insurance plans either get turned away from the emergency room or are bereft of cell phones and flat-screened TVs. No, entitlements subsidize the good consumer life of both the poorer and the middle class. Go to the poorest section of a poor county in a bankrupt state (e.g., 2 miles from my residence), and the electronic and warehouse discount stores are crammed with the shopping poor poor maybe in comparison with the contemporary wealthy, but in a way rich compared to most in the world today or to Americans a generation ago. Cheap interest, the welfare state, 1 billion Indians and Chinese working night and day, high-tech, and instant communications and entertainment have made life not as it was. Todays Selma resident not far from this farm has access to things that an earl or duke could only dream of 50 years ago. The Gradual Slow-down. If Obamism is carried to its logical conclusions, we will start to see Californization or Hellenization. An increasingly furious public work force refuses to take cuts or furloughs, and so continues to demonize the supposedly greedy them, who in turn nod and leave or begin to marginalize themselves. (Our radio ads out here now blare with teachers unions demanding higher taxes on the most taxed wealthy and corporations in the nation.) In Americas case, the flight will be psychological rather than material (where else could one wish to go?), as professionals and the self-employed begin to slow down, drop out, or detach not dramatically so to stop the economy, but enough to keep unemployment high and growth disappointing. As income is curtailed (the herdsman is now skinning rather than trimming the sheep), the unions, as in Greece, as in California, will turn on each other, and on us the taxpayers who never quite give enough (I expect something like the 6th century Nika riots next in Greece). Government is not an abstraction, but a work force; its prime directive is for self survival and perpetuation. Public workers will find the rationalization to lash out, when the money dries up and the checks begin to bounce. Again, here in California, professors are on furloughs each month, prisoners are being released, teachers pink-slipped, and 3,500 leaving the state each week. Our schools are rated 47-49th in the nation, but we employ Americas highest paid teachers, and level the highest state, gas and income taxes in the United States and yet we have not a shred of introspection over how we managed to have the highest taxes, the highest paid teachers and the worst schools. To suggest that this is logical rather than aberrant earns one all sorts of calumny. cont.