The on-going negotiations over avoiding the tax hikes and spending cuts we call the “fiscal cliff” are the simply the latest act in a farce of self-serving political denial. For decades now both parties have overseen and nurtured the expansion of the entitlement state all the while ignoring the slow-motion economic implosion whose predictable end can be seen today in a bankrupt Greece currently surviving on EU handouts. But American voters and politicians are so marinated in expectations of endless federal and state largess that modest reductions in spending, such as those proposed earlier this year by Congressman Paul Ryan, are attacked as draconian “cuts” that will “shred” the safety net and throw millions into Dickensian penury.Yeah, those virtues have been circling the drain for some time. And the Obama-Socialists have been all too happy to apply the plunger to accelerate the flushing action.
And make no mistake. The “cliff” might not be reached in January, even without a deal. But it’s still waiting down the road. Baby Boomers, 75 million strong, are retiring at a rate of 200,000 a month, and they can expect to live on average until 84 if they make it to the retirement age of 65. The two big drivers of entitlement spending, Social Security and Medicare, weren’t designed to transfer money to retirees for so long, or pay for artificial knees and hips for Boomers who want to be active in their 70s and 80s. If left unreformed, spending just on Social Security and Medicare will eat up 14% of GDP in 40 years, necessitating even more federal borrowing than the 40 cents currently borrowed for every dollar the feds spend. That’s not a cliff, that’s an economic abyss.
Reining in entitlement spending, then, is the major problem that everybody needs to focus on. And a good place to start is Nicholas Eberstadt’s A Nation of Takers. Eberstadt’s grim documentation of the reckless expansion of what he calls the “vast and colossal empire of entitlement payments that it [the state] protects, manages, and finances,” and his analysis of the ill effects such transfers have had on the American character should be read by everyone serious about the fiscal threats to our way of life.
Redistributing wealth through programs like income maintenance, Medicaid, Medicare, Social Security, and unemployment insurance has become the federal government’s most important function. This development would have astonished the Founders, who codified national security and defense as the national government’s primary role. And this momentous shift has led to an accelerating number of Americans on some sort of dole. In the early 1980s, 30% of Americans received at least one government benefit. By 2011 just over 49% were. The costs of this increase have accelerated as well. In 1960, entitlement spending by government at all levels was $24 billion in today’s dollars. In 2011, the cost was almost $2.2 trillion. As Eberstadt glumly prophesizes, we are heading for “the day in which entitlement spending comes to exceed all other activities of all levels and branches of the U.S. government.”
The costs of such profligacy, however, are more than economic. These wealth transfers have had deleterious effects on traditional American character. Observers of the American character traditionally had remarked on what Eberstadt describes as a “fierce and principled independence” and “proud self-reliance.” This independence extended to financial self-reliance as well. Americans “viewed themselves as accountable for their own situation through their own achievements in an environment bursting with opportunity,” Eberstadt writes, and had “an affinity for personal enterprise and industry” and a “horror of dependency and contempt for anything that smacked of a mendicant mentality.” Accepting help or handouts was considered “an affront to their dignity and independence.” These are the strengths of character and virtue that have created the richest, freest, and most powerful nation in world history. But the federal government’s ever- increasing handouts––which these days are not considered signs of shame, but deserved legal and civil rights––are eroding these virtues.
IMAGE CREDIT: The People's Cube, "In Progressive America Virtue Has No Value."