'Mean' Republicans may be NC's last, best hope against economic ruin

by J. Peder Zane, News and Observer, June 4, 2014.

Close your eyes and you can almost see the Democrats’ vision for North Carolina. In this corner are expanded Medicaid benefits; in that corner are 99 weeks of unemployment insurance – though why stop there? Smack dab in the middle are dramatic increases in teacher salaries without any other budget cuts or reforms.

They claim they can build this progressive paradise with a little tax hike here and another one there – but don’t worry, the bill won’t be coming to your mailbox, unless you’re a greedy plutocrat.

Unfortunately, you must keep your eyes closed to hold onto this dream or you’ll see the darkening nightmare created by the growing entitlement state. It is from this grave danger, already crippling so many other American cities and states and the federal government, that the GOP legislature is trying to save us.

Demanding that we live within our means is branded as just plain mean. In fact, the harsh attacks on the legislature offer strong evidence that liberals have few good answers as the day of reckoning draws near. They are increasingly rebranding government services as human rights because they can no longer defend the cost and efficiency of these programs. They insist on making the moral argument because their math does not add up.

I am not arguing that their approach to government is wrong, though the fact that unemployment has fallen faster and job creation is projected to rise more quickly than the national average under GOP rule does not help their case. The problem apart from that is that their big government approach is undeniably unsustainable.

Consider President’s Obama’s vision for the federal government. “In the decade between 2014 and 2024, if the president’s [2015] budget became law, spending for defense and nondefense ‘discretionary’ programs” would drop sharply, according to William A. Galston of the Brookings Institution. Military outlays would fall to 2.3 percent of GDP from 3.8 percent today. And an increasing share of that spending would be devoured by health care and pension costs. Adjusted for inflation, nondefense discretionary spending – which includes money for everything from education and housing to transportation, science and agriculture – would decline 20 percent.

Where’s the money going? Mandatory entitlement spending on Social Security, Medicare and Medicaid would increase by more than 20 percent, totaling $3.1 trillion, or half of all federal expenditures by 2024, according to the Congressional Budget Office.

Assuming that interest rates will not stay at zero forever, the CBO projects that interest on the federal debt will nearly quadruple, to $812 billion a year in 2024, becoming the third-largest item in the budget. Those payments will finance a debt expected to rise from more than $16 trillion today to $27 trillion.

The upshot is that short of massive tax increases – which even middle class Democrats oppose – entitlement spending will increasingly eliminate the federal government’s ability to make other investments, even as our fiscal picture continues to deteriorate.

The feds do have one thing going for them: They can run giant deficits to fuel their spending binge. The states are not so lucky, and a clear pattern is emerging: Liberal bastions are in decline. Nine of the 12 states (including the District of Columbia) with the highest unemployment rates went for Obama in 2012. Nine of the 10 states with greatest out-migration – led by New York, Illinois, California – are deep blue.

Yes, blue states tend to offer generous services, which provide some benefit to their citizens. But this beneficence is becoming their ruin. The people and businesses they depend on to finance these programs are fleeing to other states – including North Carolina – that have lower taxes and fewer regulations.

States unwilling to compromise their liberal vision through fiscal reform have responded by raising taxes, hastening their decline. Obama’s home state, Illinois, is circling the drain because of this vicious cycle.

I could go on, mentioning liberal cities such as Detroit that have driven themselves into bankruptcy. I might also point to Europe, where the economic failure of welfare state policies is creating social unrest in many countries.

Many of these crises have particular historic roots, but the larger pattern is clear: The IOUs are coming home to roost.

Instead of condemning North Carolina’s lawmakers, we should thank them for responding to the coal mine canaries chirping all around us. Unjustly pilloried as enemies of government, they may be its last, best hope.

Contributing columnist J. Peder Zane can be reached at jpederzane@jpederzane.com.