Thursday, December 4, 2014

What Middle-Class Programs, Chuck?

Back on November 25, Sen. Chuck Schumer (D-NY) broke from the pack and told the National Press Club that passing Obamacare was a mistake. Said he:
After passing the stimulus, Democrats should have continued to propose middle-class-oriented programs and built on the partial success of the stimulus[.]
Instead, of course, Democrats chased after their Great White Whale and passed Obamacare.

I remember thinking and writing back in 2009 that Democrats were making a strategic mistake in just executing on their 2008 platform. Sorry, chum, I thought. Before you weigh us down with new entitlements you'd probably better get the economy moving again.

But let us look at the bigger picture. Just what does Schumer mean by "middle-class oriented programs?" I mean, haven't the Democrats been passing "middle-class oriented programs" since at least the beginning of the New Deal? Isn't that what Social Security, Medicare, education, labor laws, minimum wage, unemployment compensation, training programs, disability, workers compensation is all about?  Why would there be a need for any "middle-class oriented programs" after 75 years of passing non-stop "middle-class oriented programs?"

Let's look at the reason we even needed to think about fixing the economy back in 2009. We'd just had the worst financial crash since the Crash of 1929. And why? Because of middle-class oriented programs centered on government-sponsored enterprises, Fannie Mae and Freddie Mac, that had flooded the mortgage market with sub-prime loans in accordance with government policy going back to the 1970s that had been pushed aggressively by Democrats. The idea was "affordable housing" -- for the middle class. That meant lowering credit standards and lowering down payments.

Could it be that it's the middle-class oriented programs that are the problem, not the solution?

I mean this. Suppose we decide that we've got to help the middle class climb out of the Great Recession.  What does that mean? Does it mean new regulations on business? Does it mean new subsidies for employment? A higher minimum wage?

Or do we admit that, after a great crash like that we can't just go on as before; we have to change the way government does business?

Could it just possibly be that the way forward is to dismantle all the economy-distorting programs that have been gussied up to help the middle class and try to let the price system and new businesses and good old-fashioned Yankee ingenuity solve the problem. How else does  the middle class get good jobs at good wages making and distributing and selling products and services that people want to buy. What a concept!

And we tell the truth to the American voters. There is no such thing as a lifetime job. That's not how capitalism works. Capitalism is revolution; capitalism is change; capitalism is new products putting old products out of business. Capitalism is new jobs putting old jobs out of business. If you want the prosperity that has lifted ordinary people from a life at $1 to $3 per day to $100+ per day then you have to accept the "creative destruction" of the modern economy.

Frankly, I don't know the way forward. The way you win elections is by waving some glittery thing in front of the voters, something to make them think that government cares about people like them. But all that does is pile more subsidies, more government spending, more distortions on to the economy on top of the existing subsidies, spending, and distortions.

Let's look at it another way, from the perspective of usgovernmentspending.com, using the overall government spending for FY 2014, federal, state, and local. We are talking $1.2 trillion in government pensions, $1.3 trillion in government health care, $1.1 trillion in government education, and $0.5 trillion in government welfare (excepting Medicaid). All of this spending is a handout; people are getting this stuff from the government without paying for it.

Do you think that the government handing out $3.9 trillion every year in various entitlements and welfare for the middle class and the poor might have something to do with the fact that the middle class is struggling in the aftermath of the Great Recession? Because the point is that before the middle class can earn money for themselves they first have to pay out the $3.9 trillion in transfer payments to seniors like me, to TANF recipients, to SNAP recipients, to Section 8 recipients, to the health care bureaucratic blob, to the education bureaucratic blob, to the welfare bureaucratic blob.

Now I understand Chuck Schumer. All he cares about is getting elected. If he can blame the Great Recession on greedy bankers, even though he is famously the "senator from Wall Street," hey, if it works, do it. If he can sucker the middle class with yet another "middle-class oriented program," hey, if it sells.

Chuck Schumer famously recruited good moderate Democratic candidates in the 2006 midterms that switched the Senate from Democrat to Republican. But then he stood by while the progressives executed their Big Obamacare Push that wasted 60 Democrats in the House in the 2010 midterms and has now swung the Senate back into the "R" column ib 2014. What was the point of recruiting those moderate candidates back in 2006, Chuck, if the Democratic Party is hard left progressive?

The whole point of elective politics is getting elected. Period. If we voters vote for shiny baubles, we deserve what we get. So long as voters vote for shiny things, the Chuck Schumers of the world are going to be dangling shiny things in front of us.

But sooner or later, as Margaret Thatcher said, the left runs out of other peoples' money. Because government spending is basically a waste. It is basically buying peoples' votes with other peoples' money and then giving it to them for nothing. That's not social, or economic, or fair, or just. It is just a waste. It just ends up wasting resources and wasting peoples' lives.

Here's what would really help the middle class. Privatize Social Security so that instead of paying payroll taxes people would be saving their own money for their own retirement. Privatize education so that mothers could band together to educate their children together. Privatize Medicare so that people saved their own money for their end-of-life care. Privatize welfare so that every middle class person was morally and economically contributing to the relief of the poor.

But what would be the point of that? How would a chap like Chuck Schumer ever get elected to political power if he didn't have any handouts to spread around on "middle-class oriented programs?"

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