The on-going drama over raising the debt ceiling in the end isn’t about economics and math. On a technical level, the problem is straightforward: a debt level at nearly 100% of GDP, a spending level at 25% of GDP, projected costs of future entitlement spending at $130 trillion all make obvious the solution: the federal government must stop spending more money than it takes in. What complicates this solution is not mathematics but politics, which in a democracy means the competing ideals and interests of various factions.
This political process, moreover, works itself out in public speech. This means words and their meanings, more so than math and data, are the level at which the struggle takes place, for language is the medium of power in a consensual state, no matter if the words are delivered by an orator or an Internet blogger. Beginning with ancient Greece, those who corrupt the political order corrupt language as well, as Thucydides pointed out in his description of the civil war in Corcyra: “The meaning of words had no longer the same relation to things, but was changed by them [factional rivals] as they thought proper.” George Orwell amplified this insight: “political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness.” The current debate over the budge illustrates this traditional critique.
Take the phrase “fair share,” which is used to justify demands that tax rates increase on the “millionaires and billionaires,” itself a deceiving phrase, since the threshold income for raising tax rates is $250,000 for a couple. As I pointed out in an earlier post, the word “fair” begs the question of what exactly defines fairness. In this instance, it is a euphemism for “redistribution,” given that the U.S. has the most progressive income tax among advanced economies, a pretty good indicator of fairness. So with another favorite phrase, “a balanced approach” to solving the deficit problem by combining cuts with tax increases. Set aside the simple fact that raising rates to 100% on those making more than $250,000 wouldn’t even cover this year’s $1.65 trillion deficit. Stephen Moore and Richard Veder’s historical survey shows that since World War II, $1.00 in tax increases has been associated with $1.17 in spending. As reasonable and just as “balanced” sounds, the penchant for politicians to spend whatever they have, and the magnitude of our metastasizing deficits mean that such “balance” would be ruinous.
Then there’s “revenues,” a euphemism for “taxes.” This use also begs a question, since it implies that raising tax rates increases revenues. But decades of empirical data show the reality is just the opposite: lowering marginal tax rates increases revenues. We also hear a lot about “investment” in infrastructure and education as a rationale for increasing government spending even as the debt balloons. The question begged here is that the government is better than the private sector at creating jobs and building things. Based on the stimulus package of a few years back, this seems doubtful, since it cost $185,000 for each job, taking the White House’s dubious claim that 3.6 million jobs were created. And there has been scant impact on the unemployment rate.
As for education, increasing federal money to higher education has led to rampant inflation of tuition costs and the debasement of standards, to the point that an A is now the most awarded grade in higher education even as graduates know less and less. Just as government subsidies and interference in the housing market created a housing bubble, some now are speaking of an “education bubble” created by federal dollars. And let’s not forget “green jobs,” one of the President’s favorite beneficiaries of even more taxpayer-funded “investment” than the $110 billion in green-jobs subsidies that were included in the stimulus. Yet a 2009 report on Spain’s green-jobs subsidies discovered that each job cost $774,000 and eliminated 2.2 jobs in other industries, a reality much different from the connotations of growth in the word “green.” Given that much of the “investments we need to win the future,” as the President put it in his George Mason speech, is directed at one party’s traditional clients and supporters like public employees, “investment” looks like a euphemism for “pork.”
Solving the deficit problem will require the penetrating the fog of feel-good words obscuring the political interests driving the debate. As Orwell wrote, “the slovenliness of our language makes it easier for us to have foolish thoughts.” And right now, the belief that we can continue to spend more than we take in is not just foolish, but dangerous.