Divvying Up the Political Pie   2 comments

There’s a battle coming over America’s political pie with the potential for creating a peaceful revolution that could conceivably return American society back to its liberty roots. I’m all for PEACEFUL (noncoercive) revolution. By 2050, I suspect some major changes in how our political pie is divvied up that might have profound effects on our freedom.

This 2015 chart shows us the political pie.

  • Social Security is 24% of that pie.
  • Healthcare (Medicare/Medicaid/ACA-AHCA/etc.) is 23%.
  • Defense Development (the military & intelligence agencies) is 20%.
  • Non-Defense Discretionary is 18%.
  • Other Mandatory Spending is 13%.
  • Net Interest is 6%.

Sometimes when we look at a pie chart like this, we think of it as static, but that’s not the case with the US budget. Social Security and Healthcare are going to expand for the next 25 years. Every day, 10,000 people go on Medicare. Medicare costs the government over $1,000 a month for each person enrolled. The inflow of eligible recipients is not going to stop for the next 25 years.

Perhaps you’ve heard of the Baby Boom?

People in the 50s and early 60s bred like bunnies and those children are now getting older. Those born in the early part of that demographic bulge are already drawing on the system. The rest of us are following behind. As the right side of the chart grows, other slices of the pie must shrink. You see that category: Non-defense Discretionary? It was 16% in 2015, but it’s probably closer to 14% today. That $585 billion is all the available loot for Washington DC to fight over. The rest of the budget is already obligated. Politics cannot change the rest of the budget. Politics today, in terms of federal spending, is now down to under 14% of the budget, and it is probably heading toward 10% by 2022, regardless of who is president after 2020.

Sometime before the 20’s are over, there will be no more discretionary slice of the budgetary pie. You think Congress is dysfunctional now, just wait. There will be blood in the aisles and K-Street lobbyists jumping off the Washington Monument when political voting blocs that thought the size of their slice was guaranteed will find that it isn’t.

This outcome of battle is going to change the nature of civil government in the United States. A series of battles that parallel ours will take place in Western Europe, where it all began in the 1880’s when Bismarck introduced the welfare state.

Liberty in the West has been under relentless assault for at least a century by the expansion of the administrative state, which has extended the power of central governments into every nook and cranny of European and American life. Bureaucracies have created administrative law courts that have been substituted for civil courts all over the West, providing their own judges and acting as their own juries. They execute the laws that they have interpreted autonomously. This process is well developed, and appears to be irresistible. It is the overturning of the Western legal tradition. The process is relentless and unaffected by politics. It is protected in the United States by Civil Service rules. All over the West, comparable protections exist. Tenured, these people cannot be fired and their word is the law. Here in the United States, the system is manifested in the Federal Register, which publishes over 80,000 pages of fine-print regulations every year.

What stops that? Nothing, except probably budget cuts. There are a lot of schemes offered, but really, nothing else offers any hope.

I’m not suggesting defunding the federal government. I’ve stopped believing it is politically possible. What I’m talking about is default. Washington at some point in the near-future is not going to be able to pay its bills. The unfunded liabilities of Medicare and Social Security will eventually force the bankruptcy of the federal government. The magnitude of these liabilities has been discussed by Prof. Laurence Kotlikoff in his testimony to the Senate Budget Committee in 2015. The only way to stop it will be to cut off Granny.

Reading this, my husband is thinking “Please don’t cut off my mother’s benefits. She’ll have to come live with us and that didn’t work out well in the past.” So, he’s going to vote against cutting off Granny, but Granny is also part of the best organized voting bloc in the United States. The senior citizen vote is unstoppable … as unstoppable as administrative law … and it’s a growing demographic.

I am supposed to retire in 2028, so I know what they’re thinking.

I’ve worked hard all my life to pay those stupid payroll taxes so that my inlaws and brother can live a decent life in retirement and now that I’m reaching retirement age, you’re not going to cut me off of what I bought and paid for.

It’s possible I’m off by a few years one way or another, but sooner or later, the entire budget will become nondiscretionary. Whenever it does, the political battles over who gets the loot will escalate into a bureaucratic war over funding. The gloves will come off the iron fists as the federal government hurtles toward a collision between these two unstoppable forces. One of them is going to prove to be unstoppable. The other one is not only going to be stopped, it is going to be reversed. Let me suggest that the senior citizens are more unstoppable than the administrative state because the senior citizens have family and friends.

“Who gets the loot when 100% of the federal budget is nondiscretionary?”

That central political question will begin around 2025 as Social Security, Medicare, and Medicaid continue to absorb the lion’s share of the federal budget. We’re discussing a statistically inevitability. The Great Default won’t begin with a cutback of checks going to old people. That’s too politically risky. Instead, it will begin with cutbacks to the Pentagon and the administrative state. The Pentagon and the administrative state haven’t organized voting blocs comparable to AARP and the Gray Panthers. The Granny Demographic is going to get an increasing share of the federal pie.

The politicians will respond to the electorate, which means they will be forced to cut funding to the regulatory agencies if they are going to expand the funding of Medicare and Medicaid, which they have to do if they want to maintain power. When money gets re-directed to Medicare, Medicaid, and Social Security, it will have to be redirected from existing executive bureaucracies that make up the administrative state.

I hate the welfare state because I think it enslaves people to the government and strips them, knowingly or not, of dignity and value. So, it’s odd to say this, but the expansion of the federal welfare state offers a great mid-term hope for American liberty. The expansion of Medicare, Medicaid, and Social Security is politically and actuarially unstoppable. Politicians are going to have to put everything else in the budget on the chopping block .. including the Pentagon and the administrative state, which includes.

Politics has always been about divvying up the loot. America has gotten away with having a lot of sacred cows and third rails for many decades because we were a prosperous nation with vast national resources that could innovate itself out of our own stupidity, but that era has passed and, at least for the next 25 years, we’re going to see increasing government debt and fights over divvying up the pie. It won’t be politically conceivable for the federal government to default on the debt in the next two decades (you’ll have to wait for the Baby Boomers to pass and then my kids will probably gladly be ready to shed that monkey), but a lot of sacred cows are going to get slaughtered before 2030 arrives and they will continue to be slaughtered all through the 30’s.

The administrative state, the great enemy of Western civilization, is going to be cut back as a result of the unstoppable expansion of welfare spending on the senior citizen voting bloc. Hooray for the early Baby Boomers. They are going to get their grasping hands on a growing percentage of the federal budget and loot my future. Hey, somebody is going to loot the Treasury; it might as well be my brother’s half of the demographic bulge. I’d rather he gets it than let the administrative state and the Pentagon loot it.

Nondiscretionary spending will be a political battlefield by 2025. At least initially, it will be a three-way battle. The Pentagon, the administrative state, and the senior citizens are going to appeal to the public for a greater share of the pie.

The voters, particularly at the conservative end of the wading pool, are generally gung-ho for the Pentagon. The general public does not understand the administrative state. It will be difficult for the various bureaucracies to make an effective appeal to voting blocs. Their own voting blocs are too small. Federal employees could vote as a bloc and still not move the needle. Special interest groups for particular kinds of regulations have a narrow effect compared to fear of Mohammed and sweet little Granny. It is easy to make fun of bureaucrats in general, but nobody wants another 9-11 and we’d all be loath to be accused of shoving Granny off the cliff. So, Granny and GI Joe win the propaganda battles. Conservatives will back the Pentagon while the Democrats will (probably) back the administrative state. One or the other will surrender a portion of its budget to the other, but both are going to lose out to Granny.

Which brings us back to Brad’s reaction to this article. When push comes to shove, the voters would rather see the money go to their parents than to the Pentagon. In a crisis, the voters would rather see their parents move in with them while still receiving federal checks rather than not receiving them.

Ronald Reagan warned us almost 40 years ago that Social Security would be bankrupt by 2025 and there would be a political clash between the generations: retirees vs. workers. His prophesy still stands: that day will come. But before it does, there will be a grand political alliance between working-age adults and their retired parents. Now, that’s an unstoppable alliance. Voters will become willing to cut back money that goes to the American Empire by way of the Pentagon if that is what it takes to keep the money flowing to senior citizens. There will be political agreement among the generations, so military budget will be cut, followed not long after by reduced funding to the bureaucrats who regulate and strangle the American economy.

The fundamental political questions that lie ahead of us are fiscal. Monetary reality is going to lead to political battles, but at some point, the federal government won’t be able to support Granny. Having already decimated the Pentagon and the administrative state, the federal welfare state will also implode.

We might have a decade or two to find ways to adapt during the transition period, but only if we start talking about it now. This won’t start with the progressive Democrats because they are too invested in the administrative state and lack a faith community to turn too, but the conservative movement and Christian churches should begin to sort out the issues of centralism versus decentralization. The US Constitution has proved remarkable durable, but eventually it will lead to dividing up the loot in Washington, ignoring and subjugating local governments and making individuals reliant upon government promises that it could not keep — exactly the centralization train wreck the anti-Federalists predicted in 1787.

I think we are going to have a decade in which the issue of decentralization will be one of the crucial political issues in America. When Washington’s checks bounce, because the money is going to Granny, America’s academics, intellectuals, social theorists, website editors, and the handful of pastors who speak to the wide breadth of the Christian churches  will have to deal with the fiscal and political reality that nobody is talking about today.

This is the grand opportunity today. It is time for serious thinkers to begin thinking seriously about a world in which the non-discretionary budgets of all national governments in the West must be re-allocated to meet the growing demands of the retired senior citizens. The outcome of this budgeting process and the re-thinking of this process will re-shape society around the world between 2050 and 2100.

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Posted August 22, 2017 by aurorawatcherak in economics, Uncategorized

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2 responses to “Divvying Up the Political Pie

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  1. Right on, Sister. So agree with your analysis.

    Like

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