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A nation of takers and the politics of loss

Friday, June 15th, 2012

In a piece that is timely for our upcoming Nation of Takers event on Wednesday at AEI (register here), panelist Jay Cost (Weekly Standard) writes in National Affairs about “the politics of loss.” Adjusting Harold Lasswell’s definition of politics (“who gets what, when, and how”) to be more applicable to our current state, Cost wonders: “What happens when the focus of the political debate changes from who gets what to who loses what?” This concept, unfamiliar to Americans who have enjoyed over a century of mostly uninterrupted economic growth, is one with which Americans are increasingly going to have to come to terms.

For most of the 20th century, government revenue from income-tax increased by huge percentages, even as the revenue as a share of GDP averaged around eight percent. This was because the economy was growing at such a fast rate. As Cost explains, this meant that law-makers could have their cake and eat it too:

[I]t was this growth-driven windfall that bankrolled the great American share-out of the post-war era. It allowed taxes to be kept low, even as real social-welfare spending per person increased by more than 20% in every decade following the war. Indeed, as the government built the modern bureaucratic state, domestic discretionary spending increased in every decade except the 1980s; in response to the Soviet threat, national-defense spending increased dramatically as well.

In other words, economic growth liberated policymakers from having to make any hard choices. The people could have guns, butter, and low taxes–all thanks to a private economy that seemed to grow regardless of what the government did.

The economic downturn, though, is starting to change this status quo and forcing policymakers to make tough decisions. As this process continues, Cost predicts three major changes to our political order: “first in the divisions between the two parties, second in their relative popularity among the electorate, and third in the republican character of our regime.”

First, the partisan divide will grow markedly. No longer will the parties be able to balance their differing policy goals; low taxes, a strong military, generous social-welfare benefits, and a small deficit will become incompatible. Congressional Republicans will no longer be able to vote again and again to increase Social Security payments; no longer will Democratic presidents cut taxes for capital owners. Something will have to give.

Sooner or later, America’s bondholders are going to demand a serious deficit-reduction plan. When that day comes, Democrats will demand higher taxes to keep social-welfare benefits constant, and Republicans will insist on reforming social-welfare programs to keep taxes low. There will also be sharp disagreements over the level of military spending (with Democrats calling for substantially deeper cuts than the GOP will ever allow), as well as disputes about domestic discretionary spending (with the GOP similarly demanding greater cuts than the Democrats will ever accept). As each fiscal proposal attacks some sacred cow of the left or the right, Democrats and Republicans will eschew grand compromises and ratchet up the partisan rhetoric.

[…]

If sluggish economic growth does turn out to favor liberal Democrats, the third consequence of the federal government’s new fiscal situation may be a decline in the republican character of our regime. While progressives have long fancied themselves the true republicans in our politics, they tend in practice to govern in a deeply anti-republican fashion. For instance, Herbert Croly–one of the founders of the original Progressive movement–cheered the power of big government to equalize the distribution of national wealth among all classes. Implied in this suggestion is the belief that the people cannot be relied upon, through republican institutions, to enact a progressive agenda on their own; true progressivism would require a powerful, centralized state administered by experts. In pursuit of ostensibly republican ends, progressives are thus content to embrace means that actually undermine the practice of republican government.

The problem, however, is that those ends are rarely achieved. While progressives might sound like Jacksonian Democrats or Bryanesque populists on the campaign stump, once in office they are hardly radical; progressives have, time and again, declined to destroy the established order, choosing instead to co-opt it. For instance, while Teddy Roosevelt may have railed against the “malefactors of great wealth,” his Bull Moosers supported high tariffs–a boon for big business–so long as those laws included pro-labor provisions. Their idea was to bring labor and capital to the table, with progressives, of course, at the head. […]

Government that caters to the interests of one faction over those of another–even if the advantaged group amounts to a numerical majority–is not republican government, which seeks always and everywhere to promote the truly public interest. This is why the most ardent republicans of the early 19th century favored a lean, decentralized state, as they understood that a big government invariably caters to the interests of a favored few at the expense of the less influential. Even Andrew Jackson, hailed as the founder of the Democratic Party, once bemoaned the habit of governments “to grant titles, gratuities, and exclusive privileges.”

AEI