Federal deficit-spending is impairing economic recovery and posing a grave threat to the future well-being, and even the safety, of Americans. We are looking at the real possibility of losing the dollar as reserve currency as well as the US position of financial and political leadership, and losing even the ability to fund a military capable of sustaining our country’s role as a world power.

If we do not want to condemn the next generations of Americans to a shrinking quality of life in a country which has declined into impotence, obscurity, and despair, we are going to have to make very significant and dramatic political changes.

Rembrandt van Rijn, Belshazzar’s Feast, 1635-8, oil on canvas, National Gallery, London

Essentially, we are seeing today, in both Europe and America, the arrival of the time in which the post-WWII Welfare State is proving financially unsustainable. The theory that the establishment elite could redistribute to the cannaile a sufficient quantity of the wealth produced by the productive sector of society to overcome the inherent disadvantages of sloth, intoxication, and criminality as a life-style, or at least to raise them to the level of the working classes, has proven to be futile, counterproductive, and a dream. The associated theory that labor cartels could successfully employ propaganda, intimidation, and governmental coercive force to deliver upper middle class life-styles permanently to modestly skilled workers has already failed conspicuously.

Communism collapsed a few decades ago, and the lesser gods of the religion of the Left are failing now. If you can’t have a Welfare State and you can’t have Trade Unionism either, it isn’t clear what there remains of an imaginable left-wing agenda.

Yuval Levin, at National Affairs, argues that we have reached a watershed point in domestic policy, arriving at the moment in which it is vitally essential to begin thinking about what the new social order is going to look like, now the Welfare State has been demonstrated to be unsustainable.

All over the developed world, nations are coming to terms with the fact that the social-democratic welfare state is turning out to be untenable. The reason is partly institutional: The administrative state is dismally inefficient and unresponsive, and therefore ill-suited to our age of endless choice and variety. The reason is also partly cultural and moral: The attempt to rescue the citizen from the burdens of responsibility has undermined the family, self-reliance, and self-government. But, in practice, it is above all fiscal: The welfare state has turned out to be unaffordable, dependent as it is upon dubious economics and the demographic model of a bygone era. Sustaining existing programs of social insurance, let alone continuing to build new ones on the social-democratic model, has become increasingly difficult in recent years, and projections for the coming decades paint an impossibly grim and baleful picture. There is simply no way that Europe, Japan, or America can actually go where the economists’ long-term charts now point — to debts that utterly overwhelm their productive capacities, governments that do almost nothing but support the elderly, and economies with no room for dynamism, for growth, or for youth. Some change must come, and so it will.

But fully grasping this reality will not be easy. Our attachment to the social-democratic vision means that we tend to equate its exhaustion with our own exhaustion, and so to fall into a most un-American melancholy. On the left, fear of decline is now answered only with false hope that the dream may yet be saved through clever tinkering at the edges. On the right, the coming collapse of the liberal welfare state brings calls for austerity — for less of the same — which only highlight the degree to which conservatives, too, are stuck in the social-democratic mindset.

The fact is that we do not face a choice between the liberal welfare state on one hand and austerity on the other. Those are two sides of the same coin: Austerity and decline are what will come if we do not reform the welfare state. The choice we face is between that combination and a different approach to balancing our society’s deepest aspirations. America still has a little time to find such an alternative. Our moment of reckoning is coming, but it is not yet here. We have perhaps a decade in which to avert it and to foster again the preconditions for growth and opportunity without forcing a great disruption in the lives of millions, if we start now.

But we do not yet know quite how. The answer will not come from the left, which is far too committed to the old vision to accept its fate and contemplate alternatives. It must therefore emerge from the right. Conservatives must produce not only arguments against the liberal welfare state but also a different vision, a different answer to the question of how we might balance our aspirations. It must be a vision that emphasizes the pursuit of economic growth, republican virtues, and social mobility over economic security, value-neutral welfare, and material equality; that redefines the safety net as a means of making the poor more independent rather than making the middle class less so; and that translates these ideals into institutional forms that suit our modern, dynamic society.

Hat tip to Future of Capitalism via Bird Dog.

Not hard to understand why the federal government is racking up unsustainable, record deficits, while the economy fails to recover, is it?

CNBC:

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.

Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.

And Henry Blodget has produced a graphic illustration to illustrate his contention.

[H]ere’s the one chart you need to see to understand why the US is screwed.

This is the “income statement” of the United States in 2010. “Revenue” is on the left. “Expenses” are on the right.

Note a few things…

First, “Revenue” is tiny relative to “Expenses.”

Second, most of the expense is entitlement programs, not defense, education, or any of the other line items that most budget crusaders normally howl about.

Third, as horrifying as these charts are, they don’t even show the trends of these two pies: The “expense” pie is growing like gangbusters, driven by the explosive growth of the entitlement programs that no one in government even has the balls to talk about. “Revenue” is barely growing at all.

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I’d put it another way.

I’d say that Liberalism and the post-New Deal American Welfare State is screwed.

The accident of the chickens finally coming home to roost from decades-old federal housing policies during the waning weeks of an increasingly unpopular Republican Administration delivered both elected branches of government into the hands of left-wing democrats eager to expand the empire of statism.

Those kinds of democrats do not understand economics and are not prudent and responsible managers. Their response to the economic crisis was to apply traditional liberal pump-priming excuses to enact a massive Stimulus package and to nationalize some automakers and bail out more banks, while driving full steam ahead on creating another new cyclopean entitlement system.

The result is a kind of show-and-tell demonstration, in front of God and everybody, making it perfectly clear to everyone whose intellect is not paralyzed by ideology that what conservatives had been saying all along is perfectly true. Social Security is a Ponzi scheme, and was always destined to fail one fine day when demographics failed to cooperate. That there are limits to the percentage of the national economy which can be taxed and redistributed without drastic costs in growth and prosperity. That there are limits to how much government you can have, how much government can do, how many departments and programs you can create, and how many bureaucrats you can hire.

The music has stopped. The era of the expansion of socialism, regulation, and federal authority is over. We have run out of money. National bankruptcy is within sight. The end of government’s capacity to pay for the entitlement system existing prior to Obamacare is at hand. Obamacare is a dream and a delusion which we could never afford. Our domestic experiment in social welfarism has failed.

The American people are gradually awakening from a troubled sleep. A political avalanche is building which is going to sweep Barack Obama, Harry Reid, and Nancy Pelosi, liberalism and the America left, and the whole New Deal/Great Society philosophy from the national political landscape onto the rubbish heap of history.

Neil Reynolds comments on the financial collapse of the European welfare state.

Democracies produced Nazi Germany and Fascist Italy, fulfilling the expectation of Socrates and Machiavelli that democracies end in tyranny. Now democracies are fulfilling the complementary expectation of Nobel laureate economist Milton Friedman that democracies end in bankruptcy. Put a democracy in charge of the Sahara, Mr. Friedman once said, and sand itself will become scarce. Democracies are indeed profligate trustees – or have been for the past 30 or 40 years. Mr. Friedman’s primary fret, though, was the tendency of democracy to centralize political and economic power in the same hands. Most critiques of democracy reflect this elemental distrust. “Democracy is two wolves and a lamb,” Benjamin Franklin reputedly said, “voting on what to have for lunch.”

A must read article.

CNS reports on just how inclusive the federal safety net has become.

According to the Government Accountability Office (GAO), the federal government helped pay the home air conditioning bills for more than 11,000 dead people, 1,100 federal employees, and 725 convicts in fiscal year 2009.

The payments were made by a $5 billion program known as the Low-Income Home Energy Assistance Program (LIHEAP). LIHEAP is designed to provide federal assistance, administered by the states, to help people pay the energy bills to heat their homes in the winter and cool them in the summer. The funds are disbursed by the Department of Health and Human Services and are distributed based on a formula that takes into account a state’s weather and the size of its low-income population.

The GAO examined the LIHEAP programs in seven states: Virginia, Maryland, Ohio, New York, Illinois, Michigan, and New Jersey. The agency found evidence of fraud in each state.

“Our analysis of LIHEAP data revealed that the program is at risk of fraud and providing improper benefits in all seven of our selected states,” reported the GAO. “About 260,000 applications–9 percent of households receiving benefits in the selected states–contained invalid identity information, such as Social Security numbers, names, or dates of birth.”

Most glaring among the problems the GAO found were the pervasive payment of LIHEAP benefits to dead people, some of whom, records show, had been dead for quite a long time.

George Will observes that the spectre of real world consequences is haunting Barack Obama and his democrat allies.

Concerning the job numbers from May, one can almost echo Henry James’s exclamation after examining letters pertaining to Lord Byron’s incest: “Nauseating perhaps, but how quite inexpressibly significant.” Except that the May numbers’ significance can be expressed: A theory is being nibbled to death by facts.

Private-sector job creation almost stopped in May.

The Progressive attempt to change America into a European-style Socialist Welfare State in the midst of an economic crisis has, it is increasingly becoming clear, prevented the recovery that should now be well underway, and deepened the misery.

Americans are experiencing hard times, wholesale bank and business failures, joblessness, and home foreclosures in a fashion not seen since the Great Depression.

All this coincides with state government bankruptcies and a European crisis caused by exactly the same policies. Governments everywhere are discovering the truth of Margaret Thatcher’s dictum that “the problem with Socialism is that, sooner or later, you run out of other people’s money.

Democrats are going to be annihilated in next November’s elections.

Jonah Goldberg argues that the hedonic consumerism nightmare of Aldous Huxley’s Brave New World (1932) has proven more accurately prophetic of the dystopian direction of Modernity than the brutal collectivism of George Orwell’s 1984 (1949).

[P]olitics is increasingly a vehicle for delivering prepackaged joy. America’s political system used to be about the pursuit of happiness. Now more and more of us want to stop chasing it and have it delivered. And though it has been the subject of high school English essay questions for generations, we have not gotten much closer to answering the question, what exactly was so bad about the Brave New World?

Simply this: it is fool’s gold. The idea that we can create a heaven on earth through pharmacology and neuroscience is as utopian as the Marxist hope that we could create a perfect world by rearranging the means of production. The history of totalitarianism is the history of the quest to transcend the human condition and create a society where our deepest meaning and destiny are realized simply by virtue of the fact that we live in it. It cannot be done, and even if, as often in the case of liberal fascism, the effort is very careful to be humane and decent, it will still result in a kind of benign tyranny where some people get to impose their ideas of goodness and happiness on those who may not share them.

“Homer was wrong in saying: ‘Would that strife might perish from among gods and men!’ He did not see that he was praying for the destruction of the universe; for, if his prayer were heard, all things would pass away.”
—Heraclitus of Ephesus

Russia knows how to deal with pirates: “They could not reach the coast and, apparently, have all died.”

Hat tip to John C. Meyer.

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Robert Samuelson: What we’re seeing in Greece is the death spiral of the welfare state.

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Jewish World Review: Elena Kagan let Charles Ogletree and Larry Tribe get away with plagiarism. Harvard Crimson story.

Mark Steyn argues that it can happen here, that the ideology of the left can alter the national character and turn a nation of self reliant individualists into whining clients of a socialist nanny state in terminal decline, and Barack Obama is here to prove it.

[W]hat are we to make of the British? They were on the right side of all the great conflicts of the last century; and they have been, in the scales of history, a force for good in the world. Even as their colonies advanced to independence, they retained the English language and English legal system, not to mention cricket and all kinds of other cultural ties. And even in imperial retreat, there is no rational basis for late-20th-century Britain’s conclusion that it had no future other than as an outlying province of a centralized Euro nanny state dominated by nations whose political, legal, and cultural traditions are entirely alien to its own. The embrace of such a fate is a psychological condition, not an economic one.

Is America set for decline? It’s been a grand run. The country’s been the leading economic power since it overtook Britain in the 1880s. That’s impressive. Nevertheless, over the course of that century and a quarter, Detroit went from the world’s industrial powerhouse to an urban wasteland, and the once-golden state of California atrophied into a land of government run by the government for the government. What happens when the policies that brought ruin to Detroit and sclerosis to California become the basis for the nation at large? Strictly on the numbers, the United States is in the express lane to Declinistan: unsustainable entitlements, the remorseless governmentalization of the economy and individual liberty, and a centralization of power that will cripple a nation of this size. Decline is the way to bet. But what will ensure it is if the American people accept decline as a price worth paying for European social democracy.

Is that so hard to imagine? Every time I retail the latest indignity imposed upon the “citizen” by some or other Continental apparatchik, I receive e-mails from the heartland pointing out, with much reference to the Second Amendment, that it couldn’t happen here because Americans aren’t Euro-weenies. But nor were Euro-weenies once upon a time. Hayek’s greatest insight in The Road to Serfdom is psychological: “There is one aspect of the change in moral values brought about by the advance of collectivism which at the present time provides special food for thought,” he wrote with an immigrant’s eye on the Britain of 1944. “It is that the virtues which are held less and less in esteem and which consequently become rarer are precisely those on which the British people justly prided themselves and in which they were generally agreed to excel. The virtues possessed by Anglo-Saxons in a higher degree than most other people, excepting only a few of the smaller nations, like the Swiss and the Dutch, were independence and self-reliance, individual initiative and local responsibility, the successful reliance on voluntary activity, noninterference with one’s neighbor and tolerance of the different and queer, respect for custom and tradition, and a healthy suspicion of power and authority.” Two-thirds of a century on, almost every item on the list has been abandoned, from “independence and self-reliance” (40 percent of people receive state handouts) to “a healthy suspicion of power and authority” — the reflex response now to almost any passing inconvenience is to demand the government “do something,” the cost to individual liberty be damned. American exceptionalism would have to be awfully exceptional to suffer a similar expansion of government and not witness, in enough of the populace, the same descent into dependency and fatalism. As Europe demonstrates, a determined state can change the character of a people in the space of a generation or two. Look at what the Great Society did to the black family and imagine it applied to the general population: That’s what happened in Britain. …

In the modern era, the two halves of “the West” form a mirror image. “The Old World” has thousand-year-old churches and medieval street plans and ancient hedgerows but has been distressingly susceptible to every insane political fad, from Communism to Fascism to European Union. “The New World” has a superficial novelty — you can have your macchiato tweeted directly to your iPod — but underneath the surface noise it has remained truer to old political ideas than “the Old World” ever has. Economic dynamism and political continuity seem far more central to America’s sense of itself than they are to most nations’. Which is why it’s easier to contemplate Spain or Germany as a backwater than America. In a fundamental sense, an America in eclipse would no longer be America.

But, as Charles Krauthammer said recently, “decline is a choice.” The Democrats are offering it to the American people, and a certain proportion of them seem minded to accept. Enough to make decline inevitable? To return to the young schoolboy on his uncle’s shoulders watching the Queen-Empress’s jubilee, in the words of Arnold Toynbee: “Civilizations die from suicide, not from murder.”

Hat tip to Karen L. Myers.

Let’s hope the Supreme Court strikes it down, or the new GOP Congress repeals the damned thing next Fall. As Mark Steyn observes, the Bismarkian welfare state dramatically changes the relationship of nations to government making citizens into clients and dependents, and there are other inevitable consequences.

[I]t’s hard to overestimate the magnitude of what the Democrats have accomplished. Whatever is in the bill is an intermediate stage: As the graph posted earlier shows, the governmentalization of health care will accelerate, private insurers will no longer be free to be “insurers” in any meaningful sense of that term (ie, evaluators of risk), and once that’s clear we’ll be on the fast track to Obama’s desired destination of single payer as a fait accomplis.

If Barack Obama does nothing else in his term in office, this will make him one of the most consequential presidents in history. It’s a huge transformative event in Americans’ view of themselves and of the role of government. You can say, oh, well, the polls show most people opposed to it, but, if that mattered, the Dems wouldn’t be doing what they’re doing. Their bet is that it can’t be undone, and that over time, as I’ve been saying for years now, governmentalized health care not only changes the relationship of the citizen to the state but the very character of the people. As I wrote in NR recently, there’s plenty of evidence to support that from Britain, Canada, and elsewhere.

More prosaically, it’s also unaffordable. That’s why one of the first things that middle-rank powers abandon once they go down this road is a global military capability. If you take the view that the U.S. is an imperialist aggressor, congratulations: You can cease worrying. But, if you think that America has been the ultimate guarantor of the post-war global order, it’s less cheery. Five years from now, just as in Canada and Europe two generations ago, we’ll be getting used to announcements of defense cuts to prop up the unsustainable costs of big government at home. And, as the superpower retrenches, America’s enemies will be quick to scent opportunity.

Longer wait times, fewer doctors, more bureaucracy, massive IRS expansion, explosive debt, the end of the Pax Americana, and global Armageddon.

Senior advocate of the European Court of Justice Paolo Mengozzi denounced British suspension of welfare benefits to wives of persons believed to be affiliated with al Qaeda or the Taliban in a 26-page written opinion which declared welfare support to be a human right. A final ruling is expected in a few months.

Terrorist spouses had previous appeals for restoration of income support, child benefit and housing assistance rejected in Britain and subsequently appealed to the European Court of Justice, whose decisions are binding on Britain’s Parliament and courts.

Daily Mail:

Ministers have halted benefit payouts made to the families of suspected terrorists to prevent the money falling into the hands of banned groups. …

Whitehall officials have refused to name the families involved in the test cases – but all three of the husbands are foreign nationals on the United Nations list of international terror suspects.

They have been linked by security officials to Al Qaeda, Osama bin Laden and the Taliban

The payouts to their wives include income support, child benefit and housing assistance worth ‘several hundred’ pounds a week.