CAMPAIGN COUNTDOWN: IT STARTS WITH THE MONEY

Steyn Online ^ | oct. 25 2010 | mark steyn

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CAMPAIGN COUNTDOWN: IT STARTS WITH THE MONEY Print E-mail Steyn on America Monday, 25 October 2010

All this week at SteynOnline, we're looking at what I regard as the key issues in this year's big vote. I'd love to hear your thoughts, so drop us a line at Mark's Mailbox. We're starting today with the most basic issue of all: We're broke.

I’ve spent much of this election season overseas, a long way from internal polls for this or that House district, so I’m not too focused on the fortunes of particular Republican candidates or particular Democrat incumbents. But nor is a big chunk of the electorate: A Republican victory is not the end but merely the means. The Tea Party and other members of America’s beleaguered productive class decided that this time round it suited them to work within the diseased husk of the GOP. This is really the last chance for the unloved Republicans. If the party establishment is sufficiently dimwitted to see November 2nd as the restoration of the 2004-2006 GOP, they will be setting up the conditions (as Rush has already argued) for a serious third-force challenge in 2012. That would be less convulsive than a remoter though still possible scenario: If the Democrats manage to hold onto power by openly funding spoiler candidates, they would be discrediting the entire electoral process, and setting up pre-revolutionary conditions. In other words, it would be very easy for both parties to confirm the suspicion of a very disenchanted electorate – that the system no longer allows for serious course correction.

And, without serious course correction, America is doomed. It starts with the money. For dominant powers, it always does – from the Roman Empire to the British Empire. “Declinism” is in the air these days, but for us full-time apocalyptics we’re already well past that stage. In the space of one generation, a nation of savers became the world’s largest debtors, and a nation of makers and doers became a cheap service economy. Everything that can be outsourced has been – manufacturing to by no means friendly nations overseas; and much of what’s left in agriculture and construction to the armies of the “undocumented”. At the lower end, Americans are educated at a higher cost per capita than any nation except Luxembourg in order to do minimal-skill checkout-line jobs about to be rendered obsolete by technology. At the upper end, America’s elite goes to school till early middle age in order to be credentialed for pseudo-employment as $350 grand-a-year diversity consultants (Michelle Obama) or in one of the many other phony-baloney makework schemes deriving from government micro-regulation of virtually every aspect of endeavor.

So we’re not facing “decline”. We’re already in it. What comes next is the “fall” – sudden, devastating, off the cliff. That’s why this election is consequential – because the Obama-Pelosi-Reid spending spree made what was vague and distant explicit and immediate. A lot of the debate about America’s date with destiny has an airy-fairy beyond-the-blue-horizon mid-century quality, all to do with long-term trends and other remote indicators. In reality, we’ll be lucky to make it through the short-term in sufficient shape to get finished off by the long-term. According to CBO projections, by 2055 interest payments on the debt will exceed federal revenues. But I don’t think we’ll need to worry about a “Government of the United States” at that stage. By 1788, Louis XVI’s government in France was spending a mere 60 per cent of revenues on debt service, and we all know how that worked out for the House of Bourbon the following year.

In other words, forget about mid-century. Within a decade, the United States will be spending more of the federal budget on its interest payments than on its military. You read that right: more on debt service than on the armed services. According to the CBO’s long-term budget outlook, by 2020 the government will be paying between 15 and 20 per cent of its revenues in debt interest. Whereas defense spending will be down to between 14 and 16 per cent. And even those figures are premised on an optimistic assumption of resumed economic growth but continued low interest rates.

So hold that thought: within a decade, the United States will be spending more on interest payments on the federal debt than it does on the military – and that’s not because the Pentagon is such a great bargain. In 2009, the United States accounted for over 43 per cent of the world’s military expenditures. So, within a few years, America will be spending more on debt interest than China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey and Israel spend on their militaries combined. The superpower will have evolved from a nation of aircraft carriers to a nation of debt carriers.

What does that mean? In 2009, the US spent about $665 billion on its military, the Chinese about $99 billion. If Beijing continues to buy American debt at the rate it has in recent times, then within a few years US interest payments on that debt will be covering the entire cost of the Chinese military. This summer, the Pentagon issued an alarming report to Congress on Beijing’s massive military build-up, including new missiles, upgraded bombers, and an aircraft-carrier R&D program intended to challenge US dominance in the Pacific. What the report didn’t mention is who’s paying for it.

Answer: Mr and Mrs America.

By 2015, the People’s Liberation Army, which is the largest employer on the planet, bigger even than the US Department of Community-Organizer Grant Applications, will be entirely funded by US taxpayers. When the Commies take Taiwan, suburban families in Connecticut and small businesses in Idaho will have paid for it.

The existential questions for America loom not decades hence but right now. We face not genteel Euro-style decline cushioned by America, but something faster, wrenching and far more convulsive - with nobody to cushion it.

We know American government is living beyond America’s means. What’s more interesting is whether it’s living beyond the world’s. Historically, foreign official holdings of US Treasury securities have been less than five per cent of the rest of the planet’s GDP. By 2009, they were up to seven per cent. Obama-sized budgets depend on foreign holdings rising to about 20 per cent of the rest of the planet’s GDP.

There is no evidence that the world will be willing to do that. And, even if there was, the net effect would merely be to accelerate the remorseless transfer of wealth to our enemies. Chinese state-controlled enterprises are buying up everything from copper in Canada to zinc in Australia to bauxite in Jamaica. They’re doing what the first settlers did vis a vis the Indians: They sell us trinkets in return for our resources. That said, I disagree with the conclusion of this video. The danger from China is not its strength, but its underlying weaknesses: As I wrote in America Alone, it will get old before it gets rich, and, unless it’s planning on becoming the first gay superpower since Sparta, the millions of surplus young men whom the One-Child Policy has deprived of female companionship is a recipe for profound social convulsions. That’s actually worse news than if China was cruising to global hegemony – because it means their calculations on how the Sino-American relationship evolves are even less likely to align with ours.

As I said, the decline of great powers invariably starts with the money. When government spends on the scale Washington’s got used to, that’s not a spending issue, it’s a moral one. There’s nothing virtuous about “caring” “compassionate” “progressives” being caring and compassionate and progressive with money yet to be earned by generations yet to be born. That’s what “fiscal conservatives” often miss: This isn’t a green-eyeshade issue. Increasing dependency, disincentivizing self-reliance, absolving the citizenry from responsibility for their actions: The multitrillion-dollar debt catastrophe is not the problem but merely the symptom. It’s not just about balancing the books, but about something more basic and profound.

In a two-party system, you have to work with what’s available. In America, one party is openly committed to driving the nation off the cliff, and the other party is full of guys content to go along for the ride as long as we shift down to third gear. That’s no longer enough of a choice. If your candidate isn’t committed to fewer government agencies with fewer employees on lower rates of pay, he’s part of the problem. This is the last chance for the GOP to restore its credentials. If it blows it, all bets are off for 2012.

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For your viewing enjoyment

[Ronin]

By 2015, the People’s Liberation Army, which is the largest employer on the planet, bigger even than the US Department of Community-Organizer Grant Applications, will be entirely funded by US taxpayers.

Words fail me...