Steven Greenhut: Public roused and testy – Pacific Research Institute

Steven Greenhut: Public roused and testy

Americans have a deep-seated, inchoate idea that things have gone awry in our Republic, and they’re struggling to give voice to their frustrations. The Senate victory of Scott Brown – an unabashed Republican in the liberal Democratic bastion of Massachusetts – might not be the equivalent of the “second shot heard round the world,” as a caption to an Internet-circulating Revolutionary War drawing claimed, but it’s big news. Really big news, and a relief to those of us who know the destruction that government health care “reform” will wreak on our nation.

In a telling interview on National Public Radio, a Democrat from a Boston suburb, who described himself as a proud liberal, said he nevertheless voted for Brown because of the man’s fears of an American future soaked in debt. I’m naturally pessimistic about the fiscal future of our country and, especially, of California, but such revelations give me a glimmer of hope.

Then again, I already expect Republicans to draw the wrong lessons from the Brown victory. Andrew McCarthy wrote in the conservative National Review: “Scott Brown went out and made the case for enhanced interrogation, for denying terrorists the rights of criminal defendants, for detaining them without trial, and for trying them by military commission. It worked. It will work for other candidates willing to get out of their Beltway bubbles.”

In National Review’s world, the public mainly wants a return to the Bush administration’s national security policies – and the main failure of President George W. Bush and other Republicans was their unwillingness to sufficiently defend these anti-terror policies. Never mind that the Bush administration and the GOP were punished, in part, for those same policies with a stunning, well-deserved loss in the presidential and congressional elections.

Still, the public is testy, and that’s a good thing.

The Tea Party movement has been encouraging to the degree that it has not been co-opted by mainstream Republican politicians. I appreciate the protests, and especially the focus on opposing the bailouts and the growth in government, even if I am left wondering where these people were during the eight long years of government expansion and out-of-control debt under a Republican president.

I’m hoping to see a new, nonpartisan coalition bubbling up that will coalesce around the financial devastation being wrought on this country by Democratic and Republican politicians alike. It’s hard to overstate the financial problems we’re facing at the federal, state and local levels. The government has been spending like crazy, running up debt and unfunded retirement liabilities that eventually must be accounted for.

In a 2008 speech (before the Obama spend-a-thon), Federal Reserve Bank of Dallas CEO Richard Fisher took a look at what it would cost for Americans to directly address the unfunded liabilities from Social Security and Medicare: “With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four – over 25 times the average household’s income.”

Given that most American families don’t have a spare $1.3 million lying around to fork over to the federal government, Fisher points to the alternatives: a 68 percent increase in revenue (not rates, but revenue) or a permanent 97-percent cut in discretionary federal spending. “That discretionary spending,” he added, “includes defense and national security, education, the environment and many other areas, not just those controversial earmarks that make the evening news. All of them would have to be cut – almost eliminated, really – to tackle this problem through discretionary spending.”

Fisher wasn’t even accounting for the unfunded promises to pay for public employee pensions, estimated at above $2 trillion nationwide. And he wasn’t looking at structural problems in states such as California.

Obviously, California cannot get its fiscal house together, and shows few signs of moving in the right direction given political realities in Sacramento. Local governments are struggling, with the city of Vallejo’s 2008 bankruptcy being the “canary in the coal mine” for other localities trying to figure out how to get out from underneath crushing burdens of salaries and pensions for public employees. Vallejo is now looking at raising taxes, freezing bond payments and cutting spending.

My biggest fear is that the economy will recover too quickly – before more governments have been forced to get a handle on their financial messes. A booming economy will allow them to continue to kick the can down the road and avoid the tough choices that eventually must be made.

Writing in the San Diego Daily Transcript, San Diego Councilman Carl DeMaio points to another one of my fears – that officials will fix things just enough to get by. Noting that his city’s annual payment for retirement-related benefits consumes 69 percent of payroll, DeMaio decries city leaders who have declared victory, and he demands deeper reforms if the city hopes to ever get its fiscal house in order.

We’re a long way from a solution at any level of government. Still, the public is restless. More people understand that governments cannot continue to spend more money than they have and that massive debts and unfunded liabilities are basically tax increases on our grandchildren.

I’ll try to stay optimistic, at least for this week. If Massachusetts voters can hand “Ted Kennedy’s Senate seat” to a Republican, then maybe even California voters can elect politicians who get their government’s fiscal house in order.

Steven Greenhut is director of the Pacific Research Institute’s journalism center

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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