To the Members of the 112th Congress:
That America is emphatically an “experiment” in self government is a prominent theme of these letters. It is a noble experiment. We are honorably determined to stake the fate of our country on the capacity of Americans to govern themselves, knowing full well that this capacity is a rare and difficult thing for human beings to achieve and maintain. The capacity to govern ourselves is the capacity to set reasonable limits for ourselves. Our greatest act of self government in this sense was the act by which “we, the people” submitted our sovereign power to the Constitution, which is at once our creation and the Supreme Law over us. We have seen in earlier letters various ways in which the Progressive project—which produced the New Deal, the Great Society, and their contemporary successors—aims to replace the Constitution with a “living constitution,” removing in principle all limits on what government might do or how it might do it. This has been the great challenge to self government for the past century. It remains the great challenge for us. It has not been, and it will not be, easy to meet it.
In his speech on April 13 at George Washington University, President Obama explained in his own way why this is the case. “You see,” he said, by way of explaining America’s deficit problem, “most Americans tend to dislike government spending in the abstract, but like the stuff that it buys.” Here, I think, the President is saying essentially what former Speaker of the House of Representatives, Thomas P. “Tip” O’Neill, meant by his most quoted maxim: “All politics is local.” The Progressive agenda counts on the fact that we Americans like the stuff government spending buys, just as Tip O’Neill counted on all politics being local.
Whenever it was that O’Neill uttered that nugget, he was speaking as a politician, not a political scientist. A Democrat who won his first election—to the Massachusetts legislature—in 1936, the year voters endorsed the New Deal by overwhelmingly reelecting President Franklin Roosevelt, O’Neill won his last election—to a 17th term in Congress—in 1984, the year Ronald Reagan won his landslide reelection by challenging the propriety and feasibility of continuing the New Deal’s commitment to activist government. In saying that all politics was local, O’Neill was pushing back against Reaganism, insisting that even if Americans had become dubious about activist government in general, they were still good New Dealers when it came to the particular benefits their own towns and neighborhoods could receive from government programs. Like Tip O’Neill, President Obama thinks—and not without reason—that Americans will be good New Dealers when push comes to shove. They will like the “stuff” they can get from government so much that, despite their self governing inclinations, they will not be able to resist making themselves more and more dependent on government.
Reagan and O’Neill, the two antagonists of the 1980s, fought to a draw. Government spending on social programs grew more slowly under Reagan than under any other modern president, but he was never able to make good on the promise, announced in his first inaugural address, “to curb the size and influence of the Federal establishment.” At the same time, the nation remained so wary of government’s ambitions that two years after O’Neill’s death a Democratic president, at the start of his own reelection campaign, found it necessary to declare, “The era of big government is over.”
This political ambivalence, in which Americans have been constitutionalists in principle but Progressives in practice (recognizing the dangers of unlimited government in the abstract, but liking “the stuff that it buys”) has been durable, but there are signs it is becoming untenable. At the “local” level, the New York Times reported last year that many bond market experts “fear that as states struggle with their growing debts, investors could decide not to buy the debt of the weakest state or local governments,” which “would force a crisis, since states cannot operate if they cannot borrow.” The crisis seems most formidable in states like California, Illinois, New Jersey and New York—“blue” states, where big government remains very popular.
At the national level, we read of numbers that tend to numb the minds of even the most public-spirited citizens: the Congressional Budget Office recently forecast that the path charted in President Obama’s 2012 budget would require the federal government to borrow $9.5 trillion over the next ten years. Federal government debt held by the public equaled 36% of the U.S. Gross Domestic Product in 2007, before the recession began, and 62% of GDP in 2010. By 2021 (just ten years from now), according to the CBO’s scenario, it will equal 87% of GDP, $20.8 trillion, a level most economists believe would be debilitating, especially since the forces increasing federal deficits are likely to be even stronger in the third decade of this century than in the second. To cite just one problem, CBO projects interest payments on the national debt will rise from 1.7% of GDP in 2012 to 3.9% in 2021, by which time they will exceed $900 billion per year. That’s just the interest, as the President reminded us.
It will not be easy for Americans to be constitutionalists in theory and Progressives in practice if our elected government cannot pay its bills. If the lenders it depends on grow deeply skeptical about its ability to raise taxes or control spending, they will refuse to buy government bonds. (The manager of the world’s largest bond fund recently reduced the percentage of its holdings in U.S. government-issued debt to zero.) Less drastically, lenders will demand a costly interest premium to offset the risk of default by state and local governments, or of inflation sponsored by a federal government to reduce its debt by devaluing the currency. At some point, the question becomes, not whether people like it when the government gives things to us and does things for us—as the President knows, both logic and experience demonstrate conclusively that we do—the crucial question becomes whether people like Progressive government’s endeavors enough to pay for them.
If we don’t, if it becomes democratically impossible either to raise the taxes necessary to fund the government’s operations, or to reduce the scope of its activities to a level that can be accommodated by the taxes the people are willing to pay, then the Progressive project collapses. The people will no longer mediate the disparity between what they demand from government and what they surrender to it. Instead, decisive power over governance will pass to the lenders who keep public-sector operations afloat.
Such a result would be a financial debacle. The hard choices the people and their elected representatives now refuse to make will, in retrospect, be far easier than the policy changes an unsentimental bond market insists on as the price for further credit. But the political failure will be even more deplorable. In the well-known anecdote already recalled in these letters and sure to be noted again, Benjamin Franklin, upon being asked after the final meeting at Independence Hall in 1787 what kind of government the constitutional convention had fashioned, is supposed to have said, “A republic, if you can keep it.” It is to America’s credit that we have kept the republic, and in many ways strengthened and improved it, for 224 years. But we won’t be able to keep it for many more years if we do not return to our self governing ways.