Whether We Want To Believe It Or Not, We Are No Longer 'Exceptional'
I was reading this weekend, as I’m wont to do, and I noticed that there have been of late some very lucid points made regarding the status of the American welfare state.
Most of these comments were, to a point, somewhat simplistic – we Americans still have the ‘good guy/bad guy’ approach to most things – but as I began looking at the pure math of the problem, the points remain: We’re going to have to get used to paying a lot more in taxes and other forms of governmental revenue in order to sustain the actions of government which are good for the whole.
The other thing which leaped out at me is that while the Right is fond of their simplistic answers, the Left (or what passes for it) is also fond of their own.
Regardless, no one has a plan for either what to do with the displaced millions if the Welfare State is dissolved (the Right’s preferred solution), or what to do about paying for it (the Left’s preference).
The elephant in the room is the Empire – but we’ll save that one for a moment.
The far Right has created a phrase; ‘American Exceptionalism’. They tout this at every turn of phrase (they’ve even seen to it that this is part of the New Curriculum in Texas) – what it boils down to is this: The good ol’ U-S-of-A was inspired by ‘god’. This ‘god’ somehow ‘blessed’ the nation with abundant natural resources and a kick-ass location, away from most of its enemies. It was further ‘blessed’ by a unique people, ‘called’ from among the world’s most-creative and most-productive, and it was this creativity and productivity – along with the worship of this ‘god’ – which made us great.
It was this Exceptionalism that helped us create the biggest economic engine in history – along with a lot of help from this ‘god’ that keeps blessing us from afar.
But there are cracks in the plaster.
Yes, sir and ma’am (because we Americans are nothing if not polite), we’ve ceased worshiping ‘god’ the way we oughtta; the people who’ve Fallen Away are the ones who have caused the decline in ‘blessing’ (read: Massive amounts of disposable income and the ability to consume like nobody’s business).
At last count, nearly 60% of Americans believe this, in one form or another.
On the other hand, we have the Left, which believes that the current malaise was created by the Right, which has concentrated wealth in the hands of a few who are busy serving their own interests, and who, if they’d just Become Enlightened, would see that the Left is correct in its assumption that more, not fewer, programs for the poor are going to equal nirvana.
They believe that the engine which got us here can continue, if we only tax the rich and the super-rich, and do away with our far-flung Empire.
As with most polarized concepts, there’s a little right – and a whole lot wrong – with both positions.
Empire – It’s What’s For Breakfast (and Lunch; and Dinner….)
The Empire, as some on the Left are calling it, is costing us a fortune.
The wars in Iraq and Afghanistan have cost us well over a trillion dollars so far, and show little or now signs of slowing down. We’ve propped up regimes all over the world, the collective behavior of which would make any thinking-person’s skin crawl; we have bases literally all around the world (placed there, so we’ve been told, so we can respond to any crisis at a moment’s notice).
No one has addressed the obvious question: Do we really need all this?
The answer is no – and yes.
Everyone knows that we import a vast amount of our energy. What’s not immediately apparent is that we import a lot of other things, as well – everything from tires to cars to medical equipment to funny-sounding rare-earths which go in wind turbines, and – well; you get the idea. America imports far more than it produces. Those ‘abundant resources’ are not so abundant any longer – especially when we have over 350 million people, and they all want a lifestyle that’s better than their parents.
All of this trade needs to be protected. In a world where a handful of half-starving Somalis carrying well-used AK-47’s in a homemade speedboat can seize an entire freighter full of goodies bound for American Yuppiedom, it’s apparent that rather than spending too much on our military, we probably haven’t spent nearly enough – at least, on the sort of things which would adequately protect trade.
Politically, we’re no better off overseas. Remember that ‘god’ I told you about? Well, evidently, he’s told most Americans that we have to ‘support’ a nation called ‘Israel’, which was created after WWII in the Middle East, smack in the center of some land which was previously-occupied. The math there, too, is pretty daunting – they have a population of around seven and a half million – meanwhile, their neighbors in the Middle East number around half a billion – and they’re all pissed at Israel – and us – to one degree or another.
The only reason Israel has survived is because of us.
Now, if that’s a situation we want to see continue, we’re going to have to realize that it’s going to cost a hell of a lot more – perhaps even double – than what we’re spending right now on defense (around a trillion dollars a year).
Is the Empire a good deal? Well, that depends.
America’s military expenditures ‘buy’ (if you want to look at it that way) some pretty solid power - both ‘hard’ power (the kind you can throw across someone’s border), and ‘soft’ power (the kind you can use at the conference table). Both are pretty useful, are hard to value, and we’d likely miss them to one degree or another if they were suddenly unavailable.
The Nanny State – It’s What We’ve Got, Like It Or Not….
Next, we have to consider the other elephant in the room – entitlements.
Nearly half of all Americans live in a household now with some form of entitlement-payments coming in – whether that’s Social Security, welfare, unemployment, military pension, government pension, etc. 45% of all American households pay no income tax whatsoever (Federal or state). Such payments amounted to nearly two and a half trillion dollars – or three times the military budget – last year (2009).
We are now to the point where we can’t afford to do away with them. And yes; it’s that simple – if we do, the alternative is seeing massive numbers of elderly, infirm and unemployed simply starve.
As nearly half of the nation’s population is involved, we’re now to a point where participation equals complicity. The people who are participating won’t vote against their self-interest. Anyone who tells them, “We’re going to have to get used to fewer services” is going to find him or herself out of office in a hurry.
Who Pays?
The problem is that we’re borrowing 40% of our budget as a nation. We can no longer do this, for a bunch of reasons, but mainly because the countries loaning us the money aren’t going to put up with it much longer.
If you add up the trillion spent on maintaining the Empire; the two and a half trillion spent on entitlements, and the two-hundred fifty billion (plus or minus) spent on interest, and there’s not much room left to move in a budget which equals three and a half trillion – one and a half which is borrowed from other countries.
While it would be easy for one side to say, “Throw the bums in the streets!”, and the other side to say, “Bring the troops home!” – it’s not that simple.
The U.S. tax code taxes earned income at a different rate than unearned – which means that the people who have vast wealth and who live off the interest pay far lower taxes than those of us who are trying to win the lottery by way of the American Dream.
This, by the way, is not a coincidence. Income inequality has risen sharply over the past twenty years, to the point where the top 1% gained over 2/3rds of the income-growth. The Bush-era tax cuts saw nearly a third of those cuts go to the same 1%. Add to this the fact that most of the increase in government spending in that era was ‘filtered’ through business-interest owned by that same 1%, and you can see why actual income also increased to the top 1% along much the same lines.
The top 10% take home almost half of the earned income – and nearly all of the unearned income – in America. If you increase the first figure to comprise the top 20%, you have nearly all of the income and wealth in the country.
The top 20% pay nearly 83% of all Federal taxes. Eliminating the Bush era tax-cuts would only raise another $13 billion – a lot of money, but not nearly enough to offset the budget deficit and begin paying down bailout and stimulus alike.
If we want to know who’s going to pay – we’re increasingly going to have to look in the mirror, and begin by realizing that if we want a society which takes care of its own, maintains a worldwide empire and engages in religion-for-politics, we’re going to have to consider a 60% tax rate until the baby-boom generation is dead and gone; perhaps longer.
The alternative is to keep borrowing the difference from the Federal Reserve in the form of inflation and from other countries which sooner or later are going to call in their chits and refuse to loan us more money.
Class War, Reality, and The Future….
One thing we’re going to have to realize, once we’ve done the math – the facts are the facts; they’re remorseless, and they’re not going to change. The only thing which will change is the outcome.
We’ve set ourselves up for the Ultimate Conflict, the conclusion of which is not certain – a full-on class-war, between the ‘wants’ and the ‘haves’. The ‘haves’ are interested in maintaining the status-quo, because they’re making money and hanging on to it under a comparatively low tax structure; the ‘wants’ are not in a position to pay taxes. Neither are going to budge (in fact, if the support being given to the anti-tax crowd is any indication, the ‘haves’ are betting they can buy the election outright and keep right on.
The bottom-half of the upper 20% have one real option the Rest of Us don’t – they can truly bail out of the system and stay relatively intact, transferring their wealth to another country, or simply disappearing ‘off the grid’, converting their assets to land, equipment, hard metals and cash. The upper half are betting on their money keeping them in power.
They have the resources. The rest of the population (that bottom 80%) have the numbers.
Again, math raises its ugly head – and this time, it’ll be for all the marbles.
Regardless, we’ve had to accept this next bit of news with the sinking feeling that accompanies all truly life-changing negatives: We are no longer ‘exceptional.’
We’re just like the rest of the world.