The Rockaway Irregular
On the eve of Hurricane Irene I lingered briefly on the peninsula after my wife and mom had dutifully lit out for higher ground. I still had a few hatches to batten down and promised I’d follow as quickly as I could. I was finally heading for my car in now strangely quiet streets when I noticed a neighboring couple speaking in low tones on their stoop. I don’t get the chance to talk with them much because I’m always busy with something or other so I walked over before taking off.
My counterpart, call him Sam, said he and his wife were leaving, too, and had taken a break from packing up. He’s a retired firefighter and pretty game from what I know of him, but even he’d decided to evacuate rather than wait on Irene. After the obligatory small talk and some shared thoughts on our respective short term plans, we got round to politics – as such talks will.
Sam surprised me by announcing he was in Warren Buffett’s camp, the renowned billionaire investor who’s called for higher taxes on the rich (like himself). Sam told me he thought Buffett had it about right, that the rich need to pay more for the privilege of having what they have because they wouldn’t have it but for the rest of us. They had benefited from the government’s protection and the roads and bridges and other infrastructure the government makes possible.
Weren’t they already paying enough, I probed, since the data show that the top 1 percent of earners in the country pay close to 40 percent of all federal income taxes and the top 10 percent over 70 percent, in essence carrying everyone else. The bottom 50 percent, it turns out, actually pay only 3 percent, mainly because about 46 percent pay nothing at all.
No, Sam replied, they still don’t pay enough because we need more to get by with all the programs to keep going and all the stuff folks need. (Like the famous bank robber Willie Sutton once said, Sam figures you go where the money is.) What about the unfairness of that, I asked him. Did the government have the right to just take away increasingly large amounts of what others have earned just because it couldn’t spend within its means? The rich wouldn’t have it if it wasn’t for the government he reminded me. No protections, no wealth, so they owe the rest of us.
I was pressed for time and didn’t have a quick response. My wife, I was sure, was already fretting at our daughter’s home in central Queens, so I had to cut it short, but Sam’s words were still ringing in my ears as I headed across Jamaica Bay – not paying the recently increased bridge toll because the government had waived it to facilitate flight from our coastal homes. City, state and feds all doing their job, I thought. Wasn’t Sam right about the value of government then?
Of course, Sam doesn’t just want enough taxes to cover such core government responsibilities. He wants enough revenue to sustain an expanded government providing a wide raft of individual benefits and subsidies, from health care to loan guarantees, too. But government is increasingly unable to cover its costs for these things along with the return of capital and interest due on the vast amount of debt it’s taken on to keep the entitlement state running. These days, in fact, roughly 40 cents of every government dollar spent is borrowed. So where else do you go when you need still more?
Recent street demonstrations by the self-styled Occupy Wall Street crowd, protesting capitalism, greed and wealth in general, and demanding student loan debt forgiveness along with unspecified punishment of the nation’s top taxpayers, sheds some light on the case Sam made. Faced with persistent 9 percent unemployment, many of the demonstrators have unexpectedly found themselves without sufficient income to meet their student loan obligations and seek debt forgiveness. Like the angry Greeks in Athens and other European centers of commerce, our Occupy Wall Street crowd wants things flush again. Well, who’s going to cover that? Can’t the government just borrow more for the time being, and then squeeze additional revenue out of those nefarious high earners?
As Michael Moore told a cheering crowd some months back in the midst of the Congressional fight over raising the nation’s debt ceiling, we’re not really broke because there’s still plenty of money to be taken from the well off. But who’s going to forgive our debt when we can’t pay it back or squeeze anymore from the national tax base and when increasingly punitive taxation drives capital from our shores in search of more welcoming climes, the economy sputtering into reverse?
American voters made an historic mistake in 2008 when, ignoring evidence to the contrary, they sent Barack Obama to the White House on the supposition that he was a man who would bring us together. Instead he’s done nothing but set us against one another, pushing costly legislation through Congress without broad support and imposing an increasingly strict regulatory regime on the national economy that’s slowed business growth and virtually shut down the nation’s jobs machine.
His hefty new medical entitlement program, which trebled our national debt nearly overnight, and his massive “stimulus” spending (which failed to stimulate), have only added to the growing uncertainty. Nor can we confiscate enough from those who have more to pay off our creditors and keep our country afloat. Like the angry college grads blaming Wall Street and the rich for their bleak circumstances, our nation faces a debt burden of its own which it can’t hope to repay. Other nations are starting to notice.
The president’s increasingly partisan rhetoric, demonizing those trying to rein in the runaway spending, has brought us other demons, too — in the voices and faces of those seizing parks, bridges and streets in downtown Manhattan, scuffling with police while bitterly denouncing capitalists and bankers. This growing class resentment portends precisely the kind of civil strife that once seemed reserved for the streets of Europe.
My neighbor Sam’s a sincere guy with strong beliefs who sees our situation in terms of fairness to guys like him – and, frankly, me. But taking a leaf from Warren Buffett’s playbook, I have to demur from what seem to be the interests Sam and I share. History has shown that confiscatory policies don’t work, however appealing to those on the receiving end. Michael Moore says we need to take more from others but we’ve already seen how that went in the former communist states of Eastern Europe.
Now we’re seeing it in the rest of Europe, too. Places like Greece and Italy are already teetering on the brink of national default, because they couldn’t bring themselves to live within their means, while the once mighty European Union sits precariously atop a collapsing currency, trying to plug the spouting holes in its fiscal dike. We can do this to ourselves if we’re not careful, too – and tear ourselves apart in the streets as a kicker. There are some already lusting for the barricades. We’ve seen it before in the ’60s. Yet our president and his party continue to pour rhetorical oil on the smoldering flames of nascent class warfare their policies have ignited.
Contrary to my neighbor’s idea that conservatives just want to gut government, no one is arguing for anything remotely like that. This is about reining in expectations, putting our accounts in order, restoring the world’s confidence in America’s creditworthiness and economic capacity. It’s about renewing real jobs growth instead of faking it through unsustainable subsidies. I wanted to tell him that as I was speeding across the bay but it was more than a sound byte and Irene was rolling in. I knew that it probably wouldn’t have done much good anyway because once most of us have made up our minds, well we’ve made them up. And the listing European economic monolith still seems very far away.