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Friday, April 15, 2011

Saving the Warfare-Welfare State

The difference is over means not ends.

Why does everyone think Washington is plagued by excessive partisanship? The contest over how to address the fiscal debacle says otherwise: Both divisions of the uniparty (Democrat and Republican) agree that the warfare-welfare state must be saved. It’s the means not the end that divides them.

Rep. Paul Ryan, who leads the Republican side, declares that his goal in seeking a balanced budget (someday) is to save the three pillars of the welfare state—Social Security, Medicare, and Medicaid—for “our children’s generation.” “I support these missions,” he says. He would “voucherize” Medicare [correction: give “premium support” through regulated insurance exchanges] and give states discretionary Medicaid block grants because, he says, the alternative is insolvency. He would maintain Social Security, while permitting people under 55 to put one-third of their Social Security taxes into government-guaranteed accounts. (They would still have to pay current retirees’ Social Security benefits.) His substitute for Obamacare would give a cash subsidy—he uses the Washington gobbledygook “refundable tax credit”—to “[ensure] universal access to affordable health insurance.”

So, although couched in the rhetoric of liberty and self-reliance, Ryan’s plan aims at saving the welfare state from itself, while giving insurance and investment companies more of a role, not to mention a cut of the taxpayers’ money.

Growth Path

Likewise, Ryan’s plan would leave military spending—misleadingly called “defense” spending—on its growth path, even though it has doubled in the last decade. With the government spending hundreds of billions of dollars in three overt and several covert wars, Ryan shows no inclination to question the global military policy that milks the taxpayers, wreaks destruction abroad, and creates a desire for revenge.

As former Reagan administration Pentagon official Lawrence Korb noted, “Apparently Ryan was taken in by Secretary of Defense Robert Gates’s claims that he has already proposed $178 billion in savings in defense spending. These were not real cuts. Gates plowed $100 billion of his ‘savings’ back into the budget for other programs while the remaining $78 billion merely reduced projected growth in the defense budget.”

Ryan’s package has other ingredients, such as cutting the top rate for the individual and corporate income tax to 25 percent, while broadening the tax base. He would also reportedly trim some corporate and agricultural welfare, but he leaves the principle in place.

Ryan thus reveals himself as not as one who has rethought the U.S. government’s current domestic and global missions and understands the need for a radical revision, but rather as one who seeks to fortify those missions by preventing insolvency and forced liquidation. The ruling establishment would have little reason to be concerned if Ryan prevailed.

Obama Response

In response, President Obama has now offered an outline — not much detail yet — of an alternative plan to cut the deficit, however, again the differences with Ryan are over means not ends. He too seeks to preserve the warfare-welfare state but would do so with fewer spending cuts than Ryan, higher taxes on the wealthy, an end to the business tax preferences he dislikes (while keeping those he approves of), and no operational changes to Social Security, Medicare, and Medicaid.

By the way, is it ignorance, dim-wittedness, or demagoguery that causes him to use the phrase “spending a trillion dollars on tax cuts”?  Does he really not understand that cutting taxes is the opposite of government spending?

On defense, Obama calls for the elimination of Pentagon waste (edgy!), however, every president does that and it never amounts to much. (The Department of Defense is routinely unable to account for billions of dollars.) Obama says the government will “have to conduct a fundamental review of America’s missions,” but how serious can he be? He’s just led NATO forces into Libya on an undefined, open-ended military adventure, while overt and covert wars continue to rage throughout the Middle East and Central Asia. He shows no willingness to rethink the unipartisan global-policeman policy that accounts for so much of the fiscal burden (over a trillion a year) and creates the need for bloated and costly “homeland security” that undermines our liberty. As Korb says, “The Obama administration already plans to spend 20 percent more on defense than was spent on defense during the Bush administration.”

Satisfying the Base

Thus we see Obama’s basic agreement with Ryan’s wing of the uniparty, though the latter would rely on the tax-funded “private” sector more than the former would. Of course each side highlights the differences to make them appear to be matters of kind rather than degree or method. This way each can keep its base rhetorically satisfied (or try). Obama’s team talks about the need for the rich to sacrifice to the middle class and poor, while Ryan’s team counters that the private sector is where the action should be. Democrats accuse Republicans of wanting to end Social Security, Medicare, and Medicaid (they don’t), while Republicans accuse Democrats of being Marxian socialists (they’re not).

But here’s the thing: Both seek to retain the fundamental status quo in which the State parcels out favors to reigning interests while providing succor to the vulnerable in a combined spirit of charity and fear. Fear of what? In the case of the elderly, fear of their political clout at the ballot box; in the case of those shut out the economic system because of lousy government schools, occupational licensing, and cartelization via the subsidy and regulatory regime, fear of a frustration that could turn into unrest.

Globally the Obama side emphasizes the supposed humanitarian rationale for military intervention while his internecine rivals emphasize the security rationale. But they agree on the premise — that it is the proper job of the U.S. government to police the world, at least where there is oil and other things coveted by the ruling elite.

Thus The Charade continues.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.