The Piper Must Be Paidby Victor Davis HansonI think the natural tendency of the U.S. economy to rebound from recession, coupled with the enormous inflationary forces of borrowing another $2 trillion, will result in some sort of a brief economic recovery. But almost immediately we will be hit with a number of consequences that are now rarely voiced. Likewise the new ‘reset’ button foreign policy has a similar tab to come due. What to watch for the next year:
Energy. As the global recovery begins, oil prices will again climb, maybe even skyrocket. Will Obama continue his neglect of nuclear power, clean coal, and natural gas and oil exploration, or will he revert to his campaign expediency, and suddenly call for all such sources to be tapped? Wind and solar sound fine in campaign mode, and during a recession, but should gas hit nearly $5 a gallon again, talk of “green power” most certainly will not be enough. Sadly, this is precisely the time when government should be giving incentives to develop domestic energy of every sort, from nuclear to natural gas.
Taxes. Talking about new taxes in 2009 and paying them in 2010/11 are two quite different things.
Not long ago I tried to explain to an Obama supporter that he belonged to the targeted 5%, who, as an elite taxpayer, had “made out like a bandit under Bush,” was obligated to “spread the wealth around” a bit, and should prove his patriotism by paying more. But it was a hopeless task: most well-off Obama supporters simply do not believe that their marginal tax rates are going up, that they may have to pay a health care surcharge, that the income caps of the FICA payroll tax will come off, subjecting much of their income to steep social security taxes, and that their state income tax in California is now over 10%.
In other words, a number of professionals in my state do not yet grasp that their own icon has them in the cross-hairs, and that within 2 years they will be paying perhaps 65% of their gross income to government — AND — receive no particular thanks by the rest of the population for their contribution, see no reduction in the federal deficit for the new bite out of their income, and probably be in line for future tax increases given their “wealthy” status.
So it will be quite interesting to see how the Obama elites react when they soon discover that they will have about 30-40% of their income to operate on. It is easy to talk about “higher taxes”, but so far all this is mere table chat. Wait until the real bite shows up in smaller monthly checks or larger quarterly estimates.
Interest. Interest rates to curb inflation will have to go up. But the problem is that we are going to be financing a new $2 trillion per annum deficit, on top of an expanding $11 trillion debt. It is relatively easy to do that now in times of crisis and recession by paying the Chinese or Japanese or U.S. bond holders here in the states a mere 1-2% on their treasury holdings, but what happens in recovery when we have to pay 4-5% or even 7-8% on treasury-issued debt to attract buyers?
In other words, in the good times to come we will see enormous strains on the annual budget to pay out the sort of interest needed to attract new borrowers. My larger point is that the current mega-borrowing is scarcely sustainable in a period of low energy and low interest rates, but will become intolerable when prices and interest rates skyrocket. Stocks will plummet once capital diverts to T-bill and passbook holdings that pay well over 5%. Tragically, as we come out of the recession, this was the time to be prudent, balance the budget, and pay down debt at low interest before it climbs, rather than to borrow for cap-and-trade, new education entitlements, and nationalized health care.
Race. Some of us — who read literally and carefully Dreams from My Father, and its quite disturbing declarations about race — were worried about Obama’s racial obsessions. Rev. Wright and Father Pfleger only accentuated that concern. Add in the Pennsylvania slurs, Michelle’s various rantings, “typical white person,” Eric Holder’s “cowards,” and the latest “stupidly,” and I think we see that one cannot so easily be deprogrammed from 20 years of Trinity indoctrination. The point is, however, that ever so slowly the public is starting to become wary (note the reaction in the polls to Gates-gate), that their post-racial President is, in fact, rather angry and, more importantly, for most of his life has benefited by aligning himself with those forces of racial anger.
Note also that Obama’s first impulse, not his second, or third, was to damn the police as acting “stupidly” as culpable racial profilers. The beer summit stuff was damage control that was poll-driven — and never would have been raised had the matter not become an Axelrod political problem. In other words, we learn several things from the Gates matter: 1) even on matters trite and insignificant Obama weighs in spontaneously in a fashion that reflects his racialist world view; 2) such slurs are at odds with public opinion and require remediation; 3) Obama never apologizes for his slander (Ahmadinejad or the E.U., not the Cambridge police department, receives presidential apologies).
If anything, the last racial incident only makes the next one more likely: in some sense, Obama resents the need to explain his clingers speech, to clarify what Michelle or Holder said, to explain his association with Rev. Wright, or to have some irritating staged beer event. And such forced contrition only leads to yet another racial gaffe. Meanwhile, the public is getting tired of this; each new incident is beginning to chip away at his messianic race-healing status, at just the time when his actual policy initiatives are already very unpopular and depend on his erstwhile 55+ approval ratings.
Abroad. Here is the growing general impression, fairly or not, abroad: Israel is the problem in the Middle East. Iran has legitimate interests in nuclear acquisition. Russia was not at fault in the past — only Bush was. The excesses of the American war of terror, not Islamic radicalism and terrorism, are the greater dangers in the world today. Force is off the table in dealing with North Korea or Iran. South American communists and socialists have legitimate grievances; democratic leaders in Columbia and Honduras are not really authentic statesmen, but naively parrot American positions. We care little about human rights abuses in Cuba, Iran, Syria, or Venezuela, which anyway do not approach those seen at Guantanamo. Europe, especially Britain, is a post-colonialist society, and does not represent the future of American strategic interest. Eastern Europe understandably belongs in the Russian sphere of influence; the former Soviet republics all the more so. We hope Iraq and Afghanistan make it once we withdraw, but we are not all that worried if they do not, given that our President’s Third World fides will be able to handle any thug that replaces American-fostered constitutional governments in Kabul and Baghdad.
The result is that we are in a sort of circular stand-off/shoot-out of the sort seen in Grade-B Westerns. A number of thugs are now in a larger circle, the U.S.-inspired postwar order is in the center. Each is eyeing the other, waiting to see who fires first, and what our reaction will be. For now, past deterrence scares the would-be gunslingers, who fear that if they fire on us, we will blast them away — and all those at their side with similar ideas. But soon one will get the bright idea that it is OK to pull the trigger, given the anticipated feeble response. And if that should happen, all the rest will be fanning their six-shooters in unison, and it may become a very Carteresque world again, after all. If North Korea ratchets it up with impunity, so will Iran, and then Russia or China will get bolder, and then we will see more interesting things in South America, and then perhaps in the Middle East as well. Is the world really a nice place, or rather chaotic and dangerous without the U.S.’s underappreciated role.
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