Sense Of Entitlement

Conservatives are whining about "entitlement programs" now. You know, entitlement programs, like Medicare, Social Security, Head Start, food stamps, unemployment benefits -- anything that could actually help the citizens of the United States of America.

Keep an eye out for Democrats -- and not just those stinking Blue Dogs -- who may follow suit and adopt that hideous language as if people in dire straits are sticking their hands out and demanding help because they feel entitled to it and not because it's the right thing for government to do when its people are desperate.

But it's not true that conservatives oppose entitlement programs. Why, they're some of the biggest supporters, in fact.

You may not be aware of it, because when a conservative supports an entitlement program, they don't call it that. They call it a "bailout" or a "rescue plan" or "tax cuts." And it's meant explicitly for bankers and investors and CEOs and other campaign contributors.

Some people get it though. I found this blog, Stunatra's Place, earlier today.

You know, I am tired of hearing about this fucking stimulus/bail out/bullshit package. Look at these whiny motherfuckers. Let's see if I got this straight....you fucks are okay with bailing out the rich cocksuckers on Wall Street who robbed the people on Main Street but when it comes to helping those on Main Street you say "Fuck them?" What a bunch of bullshit.

If we're gonna alienate Main Street....why don't we just save us all a lot of money and not bother bailing anyone out. Tough shit for everyone. Auto industry, banks, crooks on Wall Street, struggling homeowners and anyone else who wants a hand out....fuck you.....you're all on your own. Good fucking luck!

Now, I won't go that far. I think that government does have a place -- an obligation even -- to help its citizens. And yes, that is a bit different from how it was set up in the 18th Century, when the entire U.S. population could have lived in Brooklyn. Times -- and the country -- have changed. Then, an economic downturn would have made barely a blip on the population since most of it was agrarian.

Not true anymore. Now, the population is too dependent on all kinds of artificial constructs -- many of them, if not most, set up by the government. An economic downturn -- especially a severe one like we're seeing now -- has the potential to be devastating to the people of the country.

But still, the conservatives would rather continue with their own entitlement programs for companies and rich bankers. Why, they're so horribly upset that taxpayer money might be used to help taxpayers that one of their rich buddies in the media, Rick Santelli, is calling for "tea parties," presumably some take off on the Boston Tea Party way back when. All the conservative sycophants are drooling over the possibility.

Billmon, however, says the rich guy version of a tea party doesn't look like anything like the old American variety of tea party. He thinks it probably look more like this, and I'm inclined to agree. It's clear they don't really know what the first one was about -- the favored tax status of the British East India Tea Company. Not the same thing as an attempt to help the people, and more akin to the Republican entitlement program of helping out corporations.

You heard them all going on and on about how the stimulus bill, for example, was just awful, was going to add to our already skyrocketing debt, shackle Americans for generations to come. John McCain, I think, called it "generational theft."

Only one problem, and for that I go back to Billmon. Government debt, it seems currently amounts to only about 50 percent of Gross Domestic Product, which is not that far from where it's been for the past 30 years. In fact, government debt as compared to GDP has risen only about 38 percent in those 30 years.

And, that's far below most other industrialized nations, like Japan (180 percent), Italy (170 percent), France (70 percent) and Germany (60 percent).

But other kinds of debt, not included when politicians say "national debt" but possibly more important in the grand scheme of things, have jumped far more.

And the biggest offender is the indebtedness of our finely tuned, well-oiled and strongly running financial institutions, now at about 350 percent of GDP -- more than six times what it was in 1975. And that's precisely where conservatism went wrong. Billmon...

The trend towards ever greater debt ratios has been particularly steep since then mid-1990s, which was roughly when the global creditor class decided that the "Great Moderation" (the globalization-induced taming of both inflation and recession) was here to stay, and began shoving loans in the face of any borrower who could fog up a mirror -- and some who couldn't.

There is an on-going economic debate -- too wonkish and tedious to explore here -- about whether this wall of money was a result of a coincident collapse in personal saving in the US, the UK and some of the other wealthy countries, or whether it actually caused middle-class and upper-middle class consumers to go an a spending spree the likes of which the hasn't been seen since the invention of the credit card.

Suffice it to say both sides of the trade thought they were getting a great deal at the time. And many of the same right-wing financial pundits now bitching about all this debt were perfectly happy to invent sunny stories that explained why it could go on forever.

But equally problematic is that private debt -- the kind that you and I hold -- has also risen, to just under 300 percent of GDP, one and half times what it was in 1975. That's also the fault of the conservatives, who convinced us over the years that we'd be just fine, no matter how much debt we took in. Billmon again.

Of course, conservative gospel tells us private debt is never a problem -- even when it's used to turn houses into ATM machines. But government borrowing (the only type of IOU dignified with the label 'national debt') is always a problem, even when it's used to build roads and bridges for all the cars bought with all that equity extracted from all those overpriced suburban mini-mansions. Then it's 'porkulus.'

It's been all that financial indebtedness that has us in the pickle we're in now. Nobody was very concerned about it, especially conservatives, because according to their smoke and mirrors fiscal understanding, everything worked out fine in the end.

Except it didn't. It created "toxic assets," all those crap loans that they gave to people who couldn't afford 'em, pushing private debt up. And now, all the chickens have come home to roost. The banks are stuck because the people they loaned money to can't pay. Then there's a bunch of financial mumbo jumbo about what makes things work or not work that come into play, and the result is that people who could pay their mortgages and car loans start to lose their jobs. Then they can't pay either, and everything slides further downhill.

Now, according to the conservatives, all we have to do is make sure the shareholders and executives of the bank receive their entitlement funds, and everything will be OK. But it won't. People will still be out of work. The bad loans will still be bad loans.

That's apparently not the concern of conservatives, who care only for their own bank and stock accounts. Except, again, it's not going to work. The same shortsightedness and half-assed efforts that doomed the Republicans before the last Great Depression are dooming them now. And us, if we don't act quickly and forcefully.

I go back to Billmon, who knows whereof he speaks, having covered financial matters for a long, long time.

The hard truth is that there is now only one, and only one entity on the planet that can keep the private credit excesses of the past decade, which most conservatives wildly applauded, from ending in a classic debt-deflation meltdown. And that is the US federal government.

Sometimes, deficit spending is the right thing to do. And the "entitlement" programs the conservatives hate so much are the very ones that need to be carefully preserved during this very difficult times, Republican governors refusing the bucks to bolster their conservative street cred be damned.

It's clear that Republicans have no answers but the ones that got us into this mess. Listen to them. What do they say that's different from what they've said for the past 8 years?

Oh, that's right. Because they've run us into the ground with their deficit spending, we must stop it now that we've sunk so low that the middle class is feeling the pinch. Oh, and cut taxes for our rich friends.

Don't buy it. Don't even think it. They're wrong, as they have always been. The Blue Dogs are wrong too. The liberals? At this point, they may not be right either, but they've sure got a better shot at it than Republicans who only want to keep doing what they have been doing.

It's gonna be a hard road ahead, my friends.

The years of anti-government and anti-deficit propaganda have definitely left their mark -- not least on the village idiots of the Beltway media, who may not rant and rave on camera, but who can't even comprehend, much less accept, the idea that there are times when expanding government debt is not only not a bad thing, but is a positive good thing, even an essential thing. The Keynesian idea of fighting a recession brought on by excessive debt with more debt is a hopelessly counter intuitive strategy. And intuition, for better or worse, is what democracy runs on most of the time -- that is, when it isn't being powered by base emotions like greed, fear and hatred.

Maybe there is no way out of this mess, either practically or politically. Limitless growth, Edward Abbey once wrote, is the ideology of a cancer cell, and the doctrine of endless debt-fueled expansion may have created an economy so riddled with it that any therapy powerful enough to kill the cancer will also kill the patient. In other words, globalized capitalism (or rather, this strange brew of corporate oligopoly and lemon socialism) may have finally dug itself a hole too deep for the traditional neo-Keynesian policy tools (fiscal and monetary policy) to lift it out of.

But, if that's true, then our children and our grandchildren may indeed spit on our graves, but it's going to be because we have bequeathed them much bigger nightmares than an increase in the federal debt.

And if that happens, remember where it came from. It didn't come from helping America's citizens. It didn't even come from unnecessary wars and bailouts. It came from unfettered financial irresponsibility brought on by greed and megalomania -- outside the government sector, but enabled by greedy and megalomaniacal elected officials who duped an entire country into thinking it could survive on somebody else's money.

They were wrong. And these modern day robber barons are wrong now to give a pass to their own entitlement programs while denying help to people who really need it.


Cross-posted at Stop the Press!

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