Last week, following Standard and Poor’s downgrade of America’s credit rating to AA+, someone opined that, in response, America should slash its “gigantic military expenditure”, and offered that defense cuts would be in the best interest of American taxpayers.
The official position of the congressional Democrats? Or the preferred policy of the Obama administration? Well, yes, as a matter of fact. But the above statements actually came from the PRC, not the DNC.
Yes, it was Red China, the largest foreign holder of American debt, that made the helpful suggestions to the United States about where they might best begin to make cuts to bring spending under control. Starting with, say, and aircraft carrier or two in the West Pacific.
This illustrates not just the apparent fact that the Democratic Party and the Chinese Communist government both have about the same regard for American security and defense interests; but also that the continuing battle over how to reel this country back from the financial edge is and will be a fundamentally consequential one, the central argument being the proper role of government.
The lesson that ought to be taken from this entire mess is that Keynesian economic theory has been (yet again) proven to be a tragic fallacy. Sure, a handful of ineradicable Keynesians, like Paul Krugman (whose credibility as an economist is now about equal to Judas Iscariot’s as an Apostle), still like to pretend that the problem is that the government has not spent ENOUGH taxpayer money. But the dialectic has been changed from the false dichotomy of massive government spending vs. fiscal restraint, and replaced with the question of what government absolutely needs to be spending scarce resources on; in other words, where, and how deep, to cut itself down to size.
Here the liberals have an acute problem; their entire worldview revolves around the government being the answer to every nit and wiggle in the human condition, a position they advance with nearly Jacobinical fervor. Hence their affection for FDR’s New Deal, LBJ’s Great Society, and the preponderance of social programs that they brought forth; as well as the cosmopolitanism which drives their deep admiration for the social democracies of Europe. So it is difficult for them now to admit, in spite of everything, that these offspring of their flawed concepts are bringing about financial ruin to both this nation, and the European paradises of their daydreams.
But one thing they can accept the government not being terribly involved in is defense. In their unique perspective, the purpose of the federal government is more aligned with doling out free stuff, from houses to lunches to needles, to everyone in America, rather than shielding them from nuclear devastation, or hunting down those who would slaughter them by the thousands.
For conservatives, the challenge will be to properly articulate the solution to America’s debt problem in terms of what the logical, historical, and natural functions of a federal government in fact are. Specifically, those primary functions are to defend the nation, her people and constitution; protect and advance American economic, diplomatic, and security interests in the foreign arena; maintain official relations with other nations; prevent interstate trade barriers; issue passports; arrest spies; and chase bank robbers and kidnappers across state lines. Pretty much anything beyond that exceeds the natural boundaries of a national government, and should be delegated to the State’s or the private sector.
What this provides in practical terms is a blueprint for restructuring the government, in the wake of the downgrade, based on prioritization. In the end, this is the only avenue of escape from the Greek-like scenario America is currently headed towards. Higher taxes will not do it, as those will only further constrict the noose around the neck of the private sector, preventing job creation and growth; Krugman’s additional spending will only sink the nation deeper into the morass; perfunctory, cherry picked cuts here and there will not, as S & P pointed out last week, suffice. And sacrificing the nation’s primary responsibility to itself by jeopardizing its security is as irresponsible as the financial negligence that put the U.S. in this position in the first place.
There are so many lessons to be gleaned from this past week. The downgrade taught that this is not merely an academic issue. The Union-backed Democrats failure to succeed in the Wisconsin recall election suggests the political will for reform is there; the savage actions of the spoiled-brat class in Greece and London are a harbinger of what could happen if it is not. And China reminds us how critical it is that we do this right.