When a young woman asked Benjamin Franklin what the Constitutional Convention had achieved, he replied: “A republic, Madame – if you can keep it.” Franklin recognized the American experiment in self-government could fail. But it was Thomas Jefferson who recognized what failure might look like.
The founders conceived of the American republic as an experiment in self-government. Imagine a triangle formed by three interlocking points. Only freedom can sustain religion. Only a religious people can be virtuous. And, as Franklin noted, “only a virtuous people are capable of freedom.” James Madison best addressed the issue of virtue: “Is there no virtue among us? If there be not, we are in a wretched situation… no form of government can render us secure. To suppose that any form of government will secure liberty or happiness – without virtue in the people – is a chimerical idea.”
The founders had many virtues in mind, including justice. Drawn from the Bible as well as ancient Greek culture, justice meant fairness. Fairness is not however what feels fair to me. It’s what’s fair for us, or the common good. In I Chronicles 21 we read how King David came to see fairness in this light – promoting justice for the common good.
In I Chronicles story, David makes a tragic decision. He decides to number his army, indicating a lack of trust in God. David asks forgiveness. He is given three options for punishment – three years of famine in the land, three months of being pursued by the enemy, or three days’ pestilence in the land. David chooses Door #3 – pestilence.
On Day One, 70,000 men die. David repents and asks that the Lord’s judgment be against him and his household. It’s not fair for the nation to be punished. David demonstrates his repentance by determining to build an altar to the Lord. Ornan offers him all the materials for free. As king, David is entitled to them. He declines the offer. Fairness is not what I feel entitled to. Justice is determining what is fair for the nation.
Is this how Americans understand justice? For example, the average American will draw out of Medicare and Medicaid roughly 200 percent of what they paid in. Is that fair? And what are we to make of a wide range of polls indicating Americans oppose any cuts to Medicare by a margin of 70 percent to 25 percent? Is that justice?
Or consider the fiscal cliff. The national debt is an alarming $15.96 trillion – more than 100 percent of GDP. This number however does not begin to tell the whole story. The federal government’s true liabilities, including Social Security, Medicare, and federal employees’ future retirement benefits, already exceed $86.8 trillion, or 550 percent of GDP.1 It’s similar to earning $100,000 a year and having a mortgage of $550,000 – with no money in the bank. With associated costs, the monthly payment is close to $3,000, or $36,000 annually. With a $100,000 income, that sounds affordable. But there’s more.
GDP is hardly growing while “federal health care spending looks like the slope of a jet taking off from LaGuardia,” writes David Brooks. When the accrued expenses of entitlement programs are counted, over $8 trillion in tax collections annually is required. Only $6.7 trillion is available. The government has to borrow the rest – $1.3 trillion this year. Double that amount next year. Quadruple it the next. Like a jet taking off, debt is soaring, soon to eclipse GDP. It’s similar to a homeowner earning $100,000, having no rise in income, opening a home equity line every year, borrowing more, and, in a few years making annual interest-only mortgage payments totaling $100,000.
Does this sound like a nation capable of self-government? If not, what are the solutions?
According to the Government Accountability Office, if we act on entitlements today, we will still have to cut federal spending by 32 percent and raise taxes by 46 percent over the next 75 years to meet current obligations. If we postpone action for another decade, then we have to cut all non-interest federal spending by 37 percent and raise all taxes by 54 percent. How can this happen when some Americans oppose cutting federal spending and the rest oppose raising taxes? Are we thinking of the common good?
There are of course two other options. Raising productivity is one. The other is the Fed can increase the supply of money – “quantitative easing” – and reduce its debt by reducing the value of the dollar. However, America is guided more by two other competing visions. On the one hand, we have what Charles Murray calls “collusive capitalism.” By dint of hard work, education, privilege, networks, luck or skill, the wealthy feel entitled to keep what they earn. Distrustful of Washington’s profligate spending, they oppose increased taxes. But they don’t seem to vociferously oppose the nation’s growing income disparity. Is that just? Is it fair?
On the other hand, there’s progressivism, the assumption that social and political scientists – the cultural elites – are best at finding ways to improve the well-being of citizens who can’t quite govern their own lives. Its central tenet is most wealth is earned unfairly, so justice demands redistribution through higher taxes. The outcome is over 50 percent of Americans receiving some sort of government assistance. They feel entitled to government payouts, resisting cuts in entitlement programs. Is that just? Is it fair?
Both visions create an entitlement culture. “Entitlements are an attack on the common good,” notes Harvard political scientist Harvey Mansfield. “They say that ‘I get mine no matter what the state of the country is when I get it.’”2 Forsaking the common good, most Americans aged 50 to 64 having nothing or next to nothing in retirement accounts, relying solely on Social Security and expecting the next generation to pick up their tab. More than one in four American workers are now using retirement savings accounts to pay current expenses – leaving future generations to pick up their tab.
Inside the rotunda of the Jefferson Memorial we read these words: “I tremble for my country when I reflect that God is just; that his justice cannot sleep forever.” Franklin felt the experiment could fail. Jefferson recognized what failure looks like. When virtues become vices, the just God awakens. It’s not the kind of awakening most Americans are prepared to witness.
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1 Chris Cox and Bill Archer, “Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt,” The Wall Street Journal, November 27, 2012, A17.
2 Sohrab Ahmari, “The Crisis of American Self-Government,” The Wall Street Journal, December 1, 2012, A13.
Wow! Well thoughtful in every way Mike.
A couple of thoughts:
– If we use the word “entitlement” we ought to be clear about what we mean. In a few months I will be “entitled” to a federal pension that some might lump into the same bin as welfare and Medicaid and frivolous disability claims. That future benefit has been part of my compensation for hard work and sacrifices – if I’m not entitled to it, perhaps everyone should turn their 401k etc in to be redistributed by the gov’t. This word has been politicized and thoughtful people should make every effort to avoid the trap.
– Mike presents 2 Courses of Action: Cut Spending or Raise taxes then briefly mentions raising productivity. The “rich” minority are working just as hard now as they were 50 years ago despite increases in efficiencies, but the poor are putting in fewer hours and making more claims toward unearned benefits from the gov’t than ever. Convince this chunk of our populace to engage in an industrious rather than parasitic life is the key to earning more than we spend. The “cut spending” or “tax more” are eaiser to quanitfy, but most likely of little benefit.
Great work Mike.
This is an intense wake up call.
Right on, Mike and Hank. These “predictable outcomes” are pretty bad, but soundly predicted – and yet – the unpredictable is still yet to happen. And the unpredictable almost always is bad luck, not good. So, I wouldn’t be hoping for a last minute lucky break. The point I believe Mike is making is the issue of virtue: fix that and we will fix the future. I’m all-in with you on that score. There’s no such thing as “getting lucky” with cultivating virtue for the good of the whole.
Mike, thanks for a clear presentation of the situation. However, what I don’t understand are those economists (Paul Krugman in particular) who see no problem with deficit spending by the Federal government nor in an increasing national debt. Wouldn’t economists, of all people, be in agreement on this? Why do some believe that deficits do not matter?
Added to these woes is the fact that our debt is owned by others, namely the Chinese. Without political will in the halls of Congress, the only meaningful scenario is continued debasing of the currency, which will create inflation. At a certain point, the Chinese will step in. The situation is much worse than Mike suggests, though his analysis is correct. See David Wiedemer’s “Aftershock” for an overview of the coming financial meltdown. The rising stock market only serves to mask the underlying corruption of our global financial system and with it our political independence. This is not a can that can be continually kicked down the road.
Thanks! Thoughtful, certainly timely, well-researched, and well-written. Makes one tilt the head
I agree that you’ve done a good job of defining the problem and it is well to be reminded that both the “rich” and the “poor” are sinful creatures—certainly tempted by greed and envy, among other things and that both will have to give until it hurts.
The problem in trying to work our way out of this mess is that the “rich”, to justify their objections to higher taxation, must convince a majority of the public that unmanageable public debt and excessive taxation will kill the goose that lays the golden egg. What the critical limit is can be difficult to predict but there are indicators that can be measured and there are plenty of signs of serious danger in evidence now. Large scale public education is a difficult and time consuming task.
All the “poor” have to do to make their case is to go to the streets and riot. We are seeing this all around the globe and it is for the most part generated by the cry of “entitlement”. The politicians inclination is to join the riot.
We Christians are the people of hope but it is very difficult to see any hope in this particular circumstance.
The “poor”
Another great essay, Mike. Thanks.
Deuteronomy 8:10-18 describes a socio-economic pattern of rising under God’s blessing and then falling when pride takes control.
The warning reads like this: “13 and when your herds and flocks grow large and your silver and gold increase and all you have is multiplied, 14 then your heart will become proud and you will forget the Lord your God, who brought you out of Egypt, out of the land of slavery. 17 You may say to yourself, “My power and the strength of my hands have produced this wealth for me.” 18 But remember the Lord your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today.”
As we look at the history of the U.S., it is possible to see this “rags-to-riches-to-rags” pattern unfolding. We seem to have moved from acknowledgement of God (imperfect as it was) to increased secularization, which is a form of pride. Restoration of virtue will require a return to God.
The downward spiral that Deuteronomy warns us about is not predetermined, thankfully, but we are at a critical juncture. What in your opinion can we do in tangible ways to help our nation reverse course?
Mike, thanks for a clear presentation of the situation. However, what I don’t understand are those economists (Paul Krugman in particular) who see no problem with deficit spending by the Federal government nor in an increasing national debt. Wouldn’t economists, of all people, be in agreement on this? Why do some believe that deficits do not matter?
I hate to be the contrarian but this is a rehash of what Fox News has been spouting for years. Much of the facts are too simplistic to be relied upon. For example, the medicare statement does not take into considerations of inflation or the future value of money.
The big problem is our concept of entitlements. Social security is a welfare program disguised as a “retirement” program. It takes money we pay in now to care for retired people who may or may not have contributed in the past. When we retire, others are supposed to pay for our benefits.
The past twenty years people have played the game and saved their pennies, but inflation has eaten up our wage gains and the vagrancies of the stock market have destroyed what savings we could set aside. Now interest rates are virutally nill, so no one can get ahead except to hope that the stock market does not crash in the future.
I see this as God’s judgement on our society and setting us up for the end times. Who wouldn’tr give up their freedom to a man who could solve our money woes and bring prosperity for all?