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Wednesday, March 17, 2010

The Fate of the Welfare State

“An absolute principle of economics,” the late Larry Burkett wrote in his 1992 # 1 best seller, The Coming Economic Earthquake, is that, “no one, government or otherwise, can spend more than he or she makes indefinitely. At some point the compounding interest will consume all the money in the world.”

Saddled by staggering debt, governments all over the world are in fiscal disasters and are teetering on bankruptcy. A financial reckoning unseen since the Great Depression appears to be looming for the welfare and entitlement societies that are so prevalent in the western world.

Every advanced society has some form of welfare and entitlement programs. As such, according to Robert Samuelson, “Almost every advanced country -- the United States, Britain, Germany, Italy, France, Japan, Belgium and others -- faces some combination of huge budget deficits, high debts, aging populations and political paralysis.”

In the U.S., decades after the start of welfare and entitlement programs brought on by FDR’s New Deal and LBJ’s Great Society—to quote Jeremiah Wright—“America’s chickens (financial, that is) have come home to roost.”

Of course, nowhere in the U.S. is there more “roosting” going on than in California. In June 2002, the liberal magazine American Prospect hailed California as a “laboratory” for Democratic Policies. The author of the story, Harold Meyerson, boasted that “with its Democratic governor, U.S. senators, state legislature and congressional delegation, California is the only one of the nation’s 10 largest states that is uniformly under Democratic control.” In California, Meyerson said, “the next New Deal is in tryouts.”

We all now know that California’s “New Deal” was no deal at all. “California is deeply in debt,” said Democratic gubernatorial candidate Jerry Brown. “You could say that it's bankrupt,” he added. (Technically U.S. states cannot declare bankruptcy.)

Of course, California is not alone in its financial struggles. Nearly every U.S. state is seeing declining revenues and facing ever increasing budget shortfalls. However, generally speaking there is a trend among the states that are struggling the most. Forbes recently noted that the “bluest states (are) spilling the most red ink.” The article declared that “The five states in the worst financial condition--Illinois, New York, Connecticut, California and New Jersey--are all among the bluest of blue states.”

“Why do Democratic states appear to be struggling more than Republican ones?” Forbes asks. “It comes down to stronger unions and a larger appetite for public programs, according to Kent Redfield, professor emeritus of political studies and public affairs at the University of Illinois' Center for State Policy and Leadership.”

Part of the Forbes formula in calculating the financial health of each state included unfunded pension liabilities. The insatiable generosity of many, especially “blue,” U.S. states (and cities) with pensions and with free, or almost free, healthcare, is perhaps the largest millstone around their necks. In the last two weeks alone, states such as California, Virginia, and Illinois, along with cities such as Atlanta, have made news because of their pension woes. “Doomsday is here for Illinois,” stated one pundit. In Virginia they are preparing for “the coming war over public sector pensions.” And in Atlanta a lawsuit has been filed, which the AJC declared as “the first shot of the pension wars.”

Of course, along with generous pension and health care plans come higher taxes. Unsurprisingly, according to the Tax Foundation, the top ten for state-local tax burdens in 2008: 10.) Rhode Island 9.) Wisconsin 8.) Vermont 7.) Ohio 6.) California 5.) Hawaii 4.) Maryland 3.) Connecticut 2.) New York 1.) New Jersey. Notice the “blueness” here?

There is another common link among liberal societies that is greatly compounding their financial despair: low fertility rates. You see, it isn’t just the financial folly of liberalism that has set their house of cards to tumbling; it is their foolish social views as well. In their lust (literally) for sexual gratification, liberal cultures have all but abandoned any moral boundaries when it comes to their libidos.

Marriage, family, and good parenting have taken a back seat to this lust, which is a cornerstone of modern liberalism and feminism. For example, virtually all of Europe has a fertility rate below the replacement rate of 2.1. Greece, along with all of its other troubles, has a fertility rate of 1.36. Spain and Italy are at 1.30. Germany is at 1.41. Not to be left behind by the Europeans, Japan is at 1.22.

In the U.S., states with the lowest fertility rates are generally, again, the “bluest of blue.” Vermont, Rhode Island, Maine, Massachusetts, New York, Connecticut, along with D.C., are all in the bottom 10 when it comes to fertility rates in the U.S. As Mark Steyn recently put it, “The 20th century Bismarckian welfare state has run out of people to stick it to.”

U.S. spokesperson for the entitlement society, Nancy Pelosi recently said, “Imagine an economy where people could change jobs, start businesses, become self-employed, whether to pursue their artistic aspirations or be entrepreneurial and start new businesses, if they were not job-locked because they have a child who's bipolar or a family member who's diabetic with a pre-existing condition, and all of the other constraints that having health care or not having health care places on an entrepreneurial spirit.”

There you have it: the classic example of the worldview of modern liberalism. If government would only provide yet another entitlement, then more people would be free to do what whatever they want. Contrast this with the words of President Grover Cleveland near the end of the 19th century:

While taking a stand against government aid involving a very deserving orphanage in New York City during a severe economic crisis, Cleveland, a Democrat, said, “I will not be a party to stealing money from one group of citizens to give to another group of citizens. No matter what the need or apparent justification, once the coffers of the federal government are opened to the public, there will be no shutting them again…It is the responsibility of citizens to support their government. It is not the responsibility of government to support its citizens.”

In 1887, after vetoing a bill that appropriated $10,000 to buy grain for several drought-stricken Texas counties, Cleveland stated, “Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.”

If only today’s Democrat Party were in the same solar system with Cleveland. Ben Franklin said, “When the people find that they can vote themselves money, that will herald the end of the republic.” Never have we been closer to such an end than we are today.

Copyright 2010, Trevor Grant Thomas
At the Intersection of Politics, Science, Faith, and Reason
Trevor and his wife Michelle are the authors of: Debt Free Living in a Debt Filled World
tthomas@trevorgrantthomas.com

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