Letters from an Ohio Farmer

The Distributive Constitution and the Election of 2012

To My Fellow Citizens:

In recent letters (here and here), I reflected on the views of some of our learned fellow citizens on the left.  According to one of them, a professor at a public university, democracy requires that citizens enjoy material security.  Without material security, no one has the independence to be a citizen.  Without such security, a citizen lacks the self-respect to stand up for his rights.  A market economy does not provide material security.  It is too unpredictable in its support and leaves citizens at the mercy of a corporate oligarchy.  Since material security is necessary for democracy to function, and since the market cannot provide it, government must do so.  To provide this security, to which every citizen has a right, the government should redistribute wealth.

In response, I argued that what the leftist professor approves in American life would have been impossible, if his argument were correct.  If less well off citizens could not function effectively in a democracy and the corporate oligarchy was all powerful, how did laws favorable to working men get passed and candidates favoring their interests get elected?  That such laws have passed and such candidates have succeeded is a sufficient refutation of the professor's views.  Material security is not necessary for democracy, because those who passed the laws and elected the candidates did not have this security.  But consider this further evidence of how wrong the professor's critique of our democracy is.  Although the left rails that unequal wealth corrupts democracy by giving some more power than others, no one who has studied the connection between money and elections has been able to show that money can buy an election.  Favored candidates attract more money, but more money does not buy favor. 

The professor's claims about what ails our democracy are all wrong.  His remedy, redistribution of wealth, is therefore unnecessary.  If carried out, it would be paradoxical and dreadful in its consequences.  A moment's reflection will assure us that no government, no power on earth, can provide the material security he insists must be considered a right.  Any government with the power and ambition to try would become tyrannical.  The effort to insure democracy through the power of government would paradoxically extinguish freedom.

Arguments like those the left makes about redistribution and democracy do not occur only in theoretical discussions.   They apply directly to political issues.  For example, one of the professor's equally learned colleagues, a distinguished academic, a former President of the American Political Science Association, has written recently that redistribution is central to Affordable Care, the health plan passed by the Obama administration.  She criticizes her fellow leftists for their tepid support of the President.  More needs to be done, she agrees, but then admonishes them that "Affordable Care . . . is a redistributive and regulatory breakthrough" that deserves their support. 

More is at stake, however, in the Affordable Care act, she argues, than just health care.   "Affordable Care, on top of Social Security, Medicare, and Medicaid, could strengthen the bond between middle class Americans and a national government that supports security for all."  The ultimate purpose of these distributive programs, then, is to bind Americans to the national government, to make them dependent on that government.           

A virtue of academics is that they will say clearly what politicians will obscure.  And so our learned friends on the left have posed the issue before us clearly.  For about 100 years, we have sought ways to manage the changes wrought by industrialization.  Those on the left have argued that the concentration of power in corporations brought about by industrialization requires a second revolution, a movement away from the principles of the first American Revolution, a movement away from individuals relying on themselves, their families, friends, and communities, to individuals depending on the government.  Politicians on the left have tended to shy away from talk of revolution, fearing perhaps to associate themselves with such a radical change.  Instead, they and their supporters have focused on specific changes, on Social Security, Medicare, Medicaid, and Affordable Care, for example, not the principle behind such programs, which academic leftists have candidly articulated. 

The piecemeal political approach to revolution worked for a long time.  The real costs were in the future and did not have to be faced.  But now the bills for a system of government dependence are mounting and coming due.  More important, as the pieces of the revolution come together, its character is harder to hide.  It is increasingly evident that it aims to transfer power from the people to the government, so the government can transfer wealth from those it supposes have too much to those it supposes have too little.   The revolution is necessary, the left tells us, to save our independence.  But we see ever more clearly that it aims to makes us dependent on the government.  We see ever more clearly that in the name of saving democracy it will destroy democracy.

As what is at stake becomes clear, it affects our politics.  We currently suffer from political paralysis and bitter political infighting not because of our system or the influence of the media or for any of the other reasons typically offered.  We suffer from paralysis because compromising will no longer work.  Lurking behind the compromises was a fundamental disagreement.  As long as we could afford to, we avoided facing that disagreement.  But as our finances grow threadbare and the threat to free government becomes more evident, the disagreement becomes more obvious, a choice less avoidable.  The learned left is clear again about this too.  "The stakes in 2012 are as high as in any pivotal election in U.S. history (except 1860)" one of them has recently written.

The importance of the election of 2012 is one thing on which we and the left agree.  But we hope its outcome will be a turn away from the distributive constitution toward free government.

Ohio Farmer

The Just Powers of Government

To the Members of the 112^th Congress:

In the last letter, I considered why and how it is that in the American logic of freedom, the just powers of government are derived from the consent of the governed. In this letter, I am concerned with a current development in our politics that threatens dangerously to remove our government from our consent. If the letter seems painfully burdened with acronyms, please forgive the fact as a vice inseparable from the subject.

Several lawsuits have been filed against the Patient Protection and Affordable Care Act (PPACA or "Obamacare") since it was enacted in March 2010.  The ones that have worked their way into the federal court system so far contest the law's "individual mandate," which subjects people to monetary fines if they fail or refuse to enroll in a health insurance policy.  The lawsuits' question, which the court and the people must consider, is whether the legitimate powers of the federal government respect or traduce the inalienable rights of the people by requiring them to buy a financial product from a private vendor.

One lawsuit against PPACA raises a different and equally important question: Does the law violate the constitutional principle of separation of powers?  The Goldwater Institute challenges, specifically, the constitutionality of PPACA's "Independent Payment Advisory Board" (IPAB). The Board is the law's chief mechanism for bending the medical cost curve downward by reducing the growth rate of Medicare outlays to the rate at which the Gross Domestic Product increases, plus one percent.  IPAB's 15 members will be appointed by the president and confirmed by the Senate.  Since it won’t adjust the premiums or deductibles paid by Americans enrolled in Medicare, IPAB's power derives from its mandate to set the rates at which Medicare reimburses doctors for the various services or procedures they perform.

IPAB's power is buttressed by PPACA's extraordinary protections for it, whose constitutionality is at issue.  Even though IPAB is an executive branch agency, its "legislative proposals" – the PPACA uses the term repeatedly – become law unless Congress passes a bill that cuts medical spending by an amount equal to the IPAB proposal. They become law, that is, if Congress does nothing.  If Congress tries to do something, its alternative can prevail over the IPAB proposal only if the former garners a three-fifths majority in the Senate.  The law makes no provision for citizens, such as doctors, to challenge IPAB's determinations administratively or judicially.  Furthermore, PPACA asserts the right to dictate what future Congresses may do, and when: IPAB can only be abolished, according to its provisions, by legislation introduced and enacted between February 1, 2017 and August 15, 2017.  Even if enacted in that small window, the abolition cannot take effect until 2020.

Peter Orszag, President Obama's director of the Office of Management and Budget at the time PPACA was enacted, said, "I believe [IPAB] is the largest yielding of sovereignty from the Congress since the creation of the Federal Reserve."  He was speaking approvingly.  Democratic congressman Pete Stark, who got a 90% rating from the liberal Americans for Democratic Action in 2010, made the same point about IPAB far less fondly, calling it "an unprecedented abrogation of Congressional authority to an unelected, unaccountable body of so-called experts."

In a nation founded upon the principle that governments derive their just powers from the consent of the governed, the decision by Congress to yield so much of its sovereignty to an unelected, unaccountable body is really a decision to yield the people's sovereignty for them.  Thus, if PPACA withstands all its challenges in federal courts, an outraged public could elect a ferociously anti-IPAB Congress in 2012 and 2014 – to no avail whatsoever.  The Board remains beyond the voters' reach until after the 2016 elections – and then only for a 6½-month period, after which the door slams shut again, bolted against meddling by mere citizens for the duration of the republic.  

Like most bad ideas, IPAB is the elaboration of a less bad idea.  Its predecessors include such bodies as the Base Realignment and Closure Commission, which drew up lists of military bases for the Pentagon to close, lists that Congress could accept or reject in their entirety, but could not add to or subtract from.  If Congress did nothing, the BRAC proposal was enacted. 

"Stop us before we pander again," seems to be the legislative principle embedded in these commissions.   Or do you think that is an unfair assessment?  It seems to me that when Congress voluntarily surrenders some of its legislative power to a commission, it is admitting that rendering good government as good politics is too daunting and risky.  Wise and judicious policies, you seem to be saying, might prove to be too hard to explain to the voters; or they might be criticized by a political opponent in a 30-second television ad.  Better, then, to leave the tough calls to commissioners who derive their powers from the consent of the governed in arcane, impenetrable ways.  

Once entrenched, it is doubtful that government of the people by the commissions will ever be dislodged.  The threat comes not only from the prospect that the commissioners' power will tend to corrupt them, but from the citizenry's passive acquiescence in the attenuation of their own sovereignty.  At the heart of the American experiment is the belief that democratic government can also be good government.  If it turns out that only philosopher-kings, benevolent dictators, or unaccountable experts can provide good government, the experiment will have failed. 

IPAB, then, is not just outrageous, it is contemptible.  By out-sourcing its legislative power Congress is saying that it doesn't trust the people to make wise decisions, and doesn't trust itself to explain such decisions to them.  If IPAB stands unchallenged, the American polity will have suffered a grievous blow.

Ohio Farmer

Political Success and Governmental Failure

To the Members of the 112^th Congress:

In his first debate with Stephen Douglas in 1858, Abraham Lincoln said, "In this and like communities, public sentiment is everything. With public sentiment, nothing can fail; without it nothing can succeed."

Seven score and 13 years after those debates we are now engaged in a great political contest over whether the welfare state established by the New Deal and built up continuously since 1932 can long endure. Its growth over the past eight decades and the financial crisis confronting it today suggest the need to qualify Lincoln’s rule: Public sentiment may ensure political success for a policy, but it does not rule out governmental failure.  Indeed, a policy can be a governmental failure precisely because it is a political success.

It is our pride as Americans that our government must answer to our consent. If we insist on consenting to bad government, it will be very hard for a democratic government to be good. When Lincoln was speaking of public sentiment, he knew that it was a public he had to persuade to do the right thing, a public with many strong inclinations to do the wrong thing. His point was that this is the most important job a politician has in a democracy—to persuade the people to do the right thing.

In a New York Times public opinion poll last year, 76 percent of all respondents agreed that “the benefits from government programs such as Social Security and Medicare [are] worth the costs of those programs.”  Even 62 percent of those who said they support the “tea party” movement thought so!  It’s hardly a surprise that public sentiment supports these programs, the mainstays of our welfare state.

The governmental problem is that the benefits of these programs are not only worth what they cost, but worth far more than they cost.  According to a recent study, a husband and wife, each born in 1915 and each earning the average wage during their working years, would have retired in 1980 having paid a total of $190,000 in Social Security taxes and $15,600 in Medicare taxes.  That couple could expect to receive, on average, $446,000 in Social Security benefits and $132,000 in Medicare benefits.  Depending on health and longevity, some couples received more and some less but the average benefits from the two programs would have totaled $578,000.

We shouldn’t be surprised that government programs become highly popular when, in effect, they hand out $372,400 checks rather than gold watches to new retirees. Being popular isn’t the same as being sustainable, however, and the popularity of Social Security and Medicare has gone a long way to help them become unsustainable.  The New Deal’s architects and advocates believed that rapid economic and population growth would make it possible to perpetuate social insurance programs’ large windfalls.  There’s no prospect, however, for the economic growth that would allow the federal government to pay out in the first half of the 21st century the kind of social insurance benefits that Americans came to expect in the second half of the 20th.  And as to population, everyone knows that people these days are having fewer children or, in many more cases now than in the past, none at all. As a result, we see the formation of a demographic bulge, with a disproportionately large number of older people receiving benefits from social insurance programs and a disproportionately small number of younger people paying taxes to finance those benefits.

We have no choice, then, but to address the financial imbalances built into our welfare state. The Democratic Party, defined since 1932 by championing the cause of an ever-larger welfare state, wants government spending to be the independent variable that determines tax levels.  The Republican Party, home to New Deal opponents in the 1930s and New Deal skeptics ever since, wants government spending to be the dependent variable determined by taxes.  Democrats hope that when push comes to shove, and we can no longer borrow our way out of the welfare state’s rickety financing, the people will come to the conclusion that large reductions in welfare state benefits are unthinkable, and they will support the large, widely applied tax increases that will certainly be needed to continue and expand our social insurance programs. Republicans have the opposite hope—that when voters come to realize the size of the tax increases needed to sustain our welfare state they will, at long last, be amenable to the kind of big reductions in government spending that have been ballot box losers for nearly a century.

America’s welfare state has grown for the past 80 years because people like its benefits.  There are two reasons it hasn’t grown even faster.  The lesser one is that people had some qualms, now largely forgotten, about the legitimacy of having the government redistribute wealth from some people to others.  The more politically consequential reason is that people like getting what the welfare state provides much more than they like paying for what it costs.

The Democratic Party has worked hard for many years to reassure people that generous welfare state benefits really are compatible with modest taxes, or ones that only very rich people and large corporations will have to worry about. There are two problems with this reassurance. First, it’s not true: a welfare state like the comprehensive ones in most European countries requires the kind of heavy, widely applied taxes common in Europe. Second, the fact that Democrats have always gravitated to the far-fetched argument that we can have New York’s social welfare system and South Dakota’s taxes suggests they’re afraid that most Americans won’t vote for the comprehensive welfare state Democrats advocate if the price is shown in big print on the first page, rather than buried in a footnote. Those fears form the foundation of the Republicans’ hopes that the welfare state we’ll end up with—if its costs are honestly reckoned and realistically shared—will be much smaller (and much smarter) than the one we have now.

We Americans celebrate our capacity to govern ourselves. Here certainly is a test of our capacity. The government can’t solve this problem without the help of the people, because the right government can’t get elected unless we the people are wise enough to elect those who are committed to make the choices that are necessary. Are we? Can we be persuaded to be?

Ohio Farmer