The Bush Administration's proposed budget for 2004 fills five phone book-size volumes; it is 2,866 pages long. The list of authors alone runs to hundreds of names, arranged alphabetically, occupying four pages of four columns each. The UPS man who delivered my copy had to carry it on his shoulder, puffing as he climbed three flights of stairs. When he plunked it down on the floor of my apartment, the dishes rattled in the cupboard.
The five-volume budget set includes a book of precise details in microscopic type, a book of tables showing how much was spent on the various programs over the years, a book of hints for unlucky staffers who have been assigned to think about matters budgetary, and a main volume -- a reader-friendly book featuring a continuous prose narrative, full-color pictures of your government in action, items of interest set off in attractively typeset boxes, and a reassuring abundance of the familiar phrases of bureaucracy: "homeland," "stewardship," "caregiver." "Transition" gets used a lot as a verb.
I don't have too much of a problem with the budget's desk-crushing backup volumes. I find it kind of interesting to read seven pages of tables detailing highway expenditures from 1940 to the present. It's the part of the budget I'm supposed to like that I really can't stand.
Let me upgrade that remark: The 2004 budget is toxic. It is an epic of distortion and evasion and contradiction and misleading rhetorical ploys. The object of this malodorous epic is to outline the Bush Administration's plan for plunging the nation from surplus into deficit and to cast the blame for the ensuing disaster on the very people -- the retired, the sick, the poor -- who will feel the brunt of its effects. Whether Congress alters this budget, reduces its tax cuts, or rejects it altogether is beside the point. This document we will have always with us, an indelible reminder of what the Bush team would do if they possibly could.
There is nothing inherently wrong with deficits, even massive ones, as a tool of state policy. In wars and recessions it is right and even proper for the federal government to spend more than it takes in, so as to ensure that resources continue to flow to consumers and to those hardest hit, and thus stimulate the economy. The 2004 budget is not concerned with any of that. Here war and recession are merely pretexts for getting the crudest social trends of the last twenty years moving again. This deficit is designed to enrich those at the very top of the social pyramid while cutting services for those lower down. This is not cyclical Keynesianism. This is not a helpful or even a merely benign program of deficit spending. It is a blueprint for sabotage. It is an instruction manual for how to power up a complicated machine and dash it headlong into a stone wall.
After which the president will turn to us and say, See? I told you big government doesn't work."
We know he will say this, because his budget pretty much says it now. In the early days of his administration, George Bush was hailed as the "CEO president," an M.B.A.-bearing true believer who would put management theory into practice. This was thought to mean that he was a practical man who would make things work smoothly, just like they supposedly do in a corporation. What such interpretations overlooked was that management theory holds government to be a uniquely depraved social actor.
M.B.A.-speak is intertwined with contempt for government throughout the 2004 budget. A preliminary chapter called "Governing with Accountability," for example, simply heaps blame on federal shoulders. When corporate scoundrels are accused of wrongdoing, of course, they try to defend themselves, or at least take the Fifth; here the White House can be seen confessing, on behalf of previous administrations and, indeed, the entire federal workforce, to just about anything you care to think of. "Federal agencies," for example, are said to be so out of touch that they have "not managed themselves well enough to know whether they had the right people with the right skills to do their work." Among federal workers "pay and performance are generally unrelated," which is apparently not a problem in the private sector. Another chapter spreads the blame to federal efforts generally, lamenting that "in most cases, we do not know what we are getting for our money." This in turn is said to be a failing of "the Washington mentality," which "has wasted untold billions of dollars..." The books tell of gaping loopholes in the Social Security system, credit-card abuse by federal employees, and preposterous agricultural price supports, all of these problems flowing together to give the overall impression that government is simply a gigantic boondoggle.
When government is relieved of its duties by the private sector, though, the narrative turns chirpy and upbeat. Indeed, the highlight of the budget is meant to be the administration's proposal that every single federal operation embrace a little M.B.A. magic: outsourcing, merit pay, the setting up of websites. Congratulation is due whenever a department manages to toss a bone to the private sector, such as the construction of housing on Army bases or even the taking of bids on the printing of the budget itself, which is such a big deal that it receives its own brag box on page 39. It is surely not a coincidence that the Department of Defense, one of the only departments Dubya likes enough to increase its funding, is flattered on the very first page of its chapter by being compared to a "large corporation." Call it Regime Change, Inc.
That there might also be waste and inefficiency and even fraud in the private sector is a topic the budget chooses to ignore, just as the National Energy Policy, developed by Vice President Dick Cheney in consultation with a cabal of energy executives, refused to acknowledge that electricity problems in California were caused by corporations gaming the system. In the case of the Department of Defense, that organization so like a "large corporation," the problem of private pork is known to be particularly severe. But although the budget tells proudly of a Navy base that has found a way to save on heating bills, the epidemic of mismanagement at defense contractors and the enormous divide between pay and performance all across the private sector are neither described nor criticized, Nor is market manipulation by electricity traders, though it cost the government immense sums. Nor is cherry-picking by the HMOs, into which this budget wants to push even more Medicare recipients. Nor are the disastrous conflicts of interest on Wall Street, even though one of the supplementary budget volumes suggests that Wall Street is a good place for our Social Security savings. Nor are the practices of the oil companies that the budget proposes to turn loose on the Arctic National Wildlife Refuge and, soon enough, on Iraq. That waste and inefficiency is just not up for debate.
Much of the press commentary on this budget has focused on the deficits into which it proposes to plunge us. The budget's authors have, of course, anticipated this reaction. That surplus for which everyone pines was, we are helpfully informed, nothing more than a "revenue bubble" propelled by a bull market that was "already in the process of popping" when the businessman president took office. Although it is obviously true that the booming stock market pumped up tax receipts, and although it was foolish for anyone to count on those inflated tax receipts continuing into the future, to call the surplus a "bubble" is to confuse the issue. In ordinary usage, a "bubble" is a pitfall of the private sector, a situation in which prices are driven to unsustainable heights by collective fantasies of stupendous future profits. A bubble is a swindle -- you know, like the NASDAQ. Here the term is simply used to imply that the surplus was doomed all along and that the current administration, unlike its predecessor, is in no way to blame for its disappearance. Those tax cuts enacted two years ago? They did not cause the deficit. The budget would have been in deficit anyway because of falling revenues after the stock-market crash. Tax cuts, therefore, aren't important. Slam door, walk away.
What this fails to consider is that the deficit is worse, is more bad, than it otherwise would have been had those tax cuts not been enacted.(A) What this further fails to consider are the deficits going forward, which the budget expects to get bigger as we begin to feel the effects of the mammoth new tax cuts that are proposed only four pages earlier in this selfsame document.
But no. "The Real Fiscal Danger," the budget tells us in a chapter of that title, is Social Security and Medicare. When you cut rich people's taxes, no harm can possibly come. When you offer insurance for the average per son's health care and retirement, however, you're playing with fire. The Bush Administration has already distinguished itself by the lengths to which it will go to libel Social Security -- its handpicked commission on privatizing the program actually implied that it was somehow racist -- but here the administration outdoes itself in cynical innuendo. The budget implies that these programs are in such staggering ill repair that they may in fact be responsible for the overall deficit. Here is a sentence that actually occurs on page 31 of the main volume of the 2004 federal budget:
But in 2002 the combined shortfall in Social Security and Medicare of nearly $18 trillion was about five times as large as today's publicly held national debt.
An eighteen trillion dollar shortfall! Frightening, is it not? Until you read further and realize that, in fact, both programs are today in surplus, that Social Security will remain in surplus for fourteen years to come (it will be able to function on the money in its Trust Fund until 2042),(B) and that the $18 trillion figure is a cumulative seventy-five-year estimate based on extreme long-term projections that will probably turn out to bear as much resemblance to reality then as the Futurama exhibit at the 1939 World's Fair does to our reality today. None of this is admitted, however, until the chapter is nearly over, even though the mind-bending $18 trillion number has already been unleashed to do its terrifying work on the very first page. The chapter also includes a boxed heart attack headed "What Does $18 Trillion Mean To You?" which invites the reader to believe that in order to pay for Social Security and Medicare "the federal government would have to confiscate almost half of all household wealth..."
This is irresponsible even on the budget's own terms. In the preceding chapter, the one about deficits, the authors had insisted that federal budgets need only look ahead five years (rather than ten, which had been the previous standard), on the grounds that longer-term forecasts vary so much they are largely worthless. But not if those forecasts might help to impugn Social Security and Medicare! When that is the object, it seems, no technique, however inconsistent or speculative or fanciful or simply wrong, is out of bounds.
By the terms of normal human interaction, this stuff is so dishonest it's well-nigh Enronian. According to one economist I talked to, the $18 trillion number is so groundless that it can have been introduced here only in order to panic and deceive. It is a transparent effort to redirect the blame for the massive cuts in government spending that Bush's tax cut will necessitate. And, one might add, to come up with some figure that might rival the actual, present-day, real-world destruction of more than $7 trillion of household wealth by the collapse of the stock market -- the very place, as it happens, that this administration would rather we put our Social Security money.
Medicare's share of the imaginary $18 trillion is $13 trillion. No one denies that the system is in trouble; health-care costs in America have been out of control for years, soaring above what they are in every other industrialized country, even those that are healthier than we are, even those with socialized medicine. To arrive at its frightening number, the administration projects that this situation will continue and even worsen, with health-care costs ascending at such a rate that they will eventually wreck the entire economy, private sector and all. For normal readers, this prediction is as shattering an indictment of the free-market way as anything ever dreamed up by Eugene Debs. But in keeping with their general belief in the infallibility of markets, the authors of the budget offer no plan for restraining health-care costs, as is done in so many other countries. They take it for granted that all we will care about as the world goes to managed-care hell is this one shocking number, the tab the taxpayer might have to pay, fished up from who knows where and manipulated to imply that the basic idea of social insurance is somehow to blame.
For Social Security that one shocking number is given as $4.6 trillion. The budget asks the reader to imagine this A-bomb of a number, piled up over the next seventy-five years, as though some cosmic collection agency were phoning us night and day demanding we cough it up right now. This is like those pro-abstinence posters that tried to convince us that since the total amount a parent spends on a child over the course of the child's life is something like $100,000, we shouldn't even contemplate having a kid until we'd saved the hundred grand. Consider also that seventy-five years from now the United States will be a much richer country than it currently is; asking us to pay off a debt today from that bigger, wealthier nation of 2078 is sort of like asking Haiti to pay off France's debt.
In truth the only way to understand projected future public debt is as a percentage of projected future economic output. Economist Dean Baker of the Center for Economic Policy Research points out that over the same seventy-five-year horizon gross domestic product is also expected to grow, keeping the Social Security shortfall at less than one percent of future GDP. Measured this way, Baker continues, the $75 billion that President Bush requested from Congress in April to pay for the war in Iraq is "bigger, relative to GDP, than the amount of money needed to make Social Security fully solvent for the next seventy-five years."
Even if you accept the administration's wildly pessimistic view of Social Security's future, the problem is dwarfed by the size of the administration's tax cuts. The Center for Budget and Policy Priorities estimates that this budget's proposed tax cuts, added to those of 2001, will, over the course of seventy-five years, outweigh Social Security's estimated long-term shortfall by a factor of three. Take into consideration who will benefit from each policy choice -- fund Social Security, help out the average American; go ahead with the tax cuts, help out the very wealthiest stratum of society -- and it is clear that what is being proposed here is an historic reconfiguration of the machinery of government to serve the rich rather than the poor or even the middle class.
The real problem with Social Security, of course, is that it is a popular and successful program. Its existence confirms that there are economic functions better served by government than by business, and as such it provides a foundation for the activist government that pro-business conservatives like the current president have dedicated their lives to destroying.
The title that the budget's authors chose to put on the chapter introducing the administration's proposed tax cuts is "For Everyone Willing to Work, a Job." Willingness to work has nothing to do with it, though. To receive the stock dividends that the chapter proposes to make tax-free you don't even have to get out of bed in the morning. Dividends merely require that you have excess money lying around. This budget is the administration's way of showing its support for a population of unproductive freeloaders, as long as they're rich freeloaders.
The rest of us have to work, of course. And as recent headlines confirm, work is becoming scarcer by the day. Hence, I suppose, the chapter's oddly socialist-sounding title. But there is, of course, no full-employment program offered here. In fact, jobs also have nothing to do with what the chapter proposes, except as a hoped-for by-product of the torrential economic activity meant to flow from the dividend windfall for the idle rich. A more accurate title would have been "For Everyone Who Has a Million Dollars, Some More."
For all the media attention that has been paid to the administration's tax package, the budget itself gives the subject surprisingly short shrift. The tax-cut chapter is only four pages long, the figures that it presents are apparently unrelated to those being used by the media, and the breakdown of who will benefit from the tax cuts is as predictably misleading as everything else in this feculent document, proceeding by age group and marital status rather than by the more obvious and useful category of income.
This is unfortunate, at least from a literary standpoint. The tax cut is by far the most daring and controversial and hence interesting aspect of the 2004 budget; if passed by Congress, it would surely be the golden cross on which federal budgets for years to come were crucified. And yet these five volumes and countless words of text give us almost no idea of what the tax cut actually looks like.
So let's put a face on it. The genius of the administration's new tax-cut plan is that it balloons over time as different tax cuts kick in. Passing it now would take only $40 billion or so out of the federal revenues, but by the year 2013 it will have rolled up a total cost, according to the Citizens for Tax Justice, of nearly $2 trillion, including interest. Add to that the $1.6 trillion in lost revenue that will eventually result from the 2001 tax cut, and you can see the vague outlines of the vise in which legislators ten years from now will find themselves squeezed.
Who will benefit from this? According to the administration, we all will; people in the highest income brackets are only the immediate beneficiaries. In fact, 77 percent of this year's tax cuts will go to society's richest 20 percent. Fully 32 percent of the total tax cuts this year will go to society's richest 1 percent. While the average person will get a tax cut of $289 in 2003, people who take in more than a million dollars a year will get tax cuts of more than $30,000 each. Ironically, these are the same people who benefited from the great bull market of the 1990s, as well as from the great bull market of the 1980s. The bull may have exhausted himself now, but with George W. Bush taking up the slack these same folks are going to get their third up-decade in a row.
Just imagine how the president's writers might have illustrated this aspect of the budget. Rather than photos of impoverished children getting school lunches and handicapped people working in a garden, the documents might have included pictures of high-income Americans posing proudly on their new sailboat, or pointing to the gleaming copper gutters they've had installed on their suburban manse, or sharing a laugh with the eager young staff of the rule-breaking libertarian magazine they've endowed. We could gawk at their titanium tree house designed by Frank Gehry, their Turnbull & Asser ties, their friend the congressman, their trip through Indochina on a sedan chair.
Think also of the drama lurking on the other side of the ledger. One of the reasons the Bush people love tax cuts is that tax cuts defund government -- but gradually and indirectly, allowing plenty of time for blame evasion later. Although it may not look like much now, this tax cut is a time bomb planted in the heart of activist government: as it grows, the whopping giveaway to the rich will compel massive cuts in government spending somewhere down the road. Imagine as all the deficit-reduction battles of the early nineties are fought all over again, only with much greater stakes. Imagine the look of dawning desperation on those politicians' faces as they begin to understand Bush's masterful fait accompli. Like the U.N. delegates Bush has similarly outmaneuvered, they will vote and speechify in vain. The public will laugh at their impotence. And then will come the moment of hard truth. On whom will death set his fateful hand? Who will be defunded? Maybe it will be Head Start. Or Medicaid. Or Food Stamps. Or perhaps the windbags in D.C. will accede at long last to the administration's desires and do the only thing that will rescue them from this elegant trap -- gut Social Security.
Cutting the taxes of the wealthy while heaping calumny on Social Security and Medicare for not having enough money in the bank might seem to many readers like a perverse way of doing things, but through the prism of management thought it makes perfect sense. After all, the Bush plan certainly does "build shareholder value," doesn't it? And it rewards top management in the manner to which they are most decidedly accustomed. Everyone knows that to attract and retain top talent you have to offer top compensation packages.
Consider also how the 2004 budget deals with labor, the chronic buzz-kill of the M.B.A. world. In the spirit of such classic market-model solutions as medical savings accounts and school vouchers, it unveils what it calls "Personal Re-employment Accounts" (PRAs), a bold new program that may someday supplant traditional unemployment insurance altogether. The budget describes our existing unemployment system as "an unwieldy relic," mainly because it relies on taxes levied on the worker's former employer, and because "employers complain that their federal unemployment taxes are too high." Awww. PRAs, on the other hand, will provide the unemployed worker with a fixed sum of money (up to $3,000, apparently regardless of the worker's expenses or previous state of employment), doled out to her in installments while she remains unemployed, the balance deliverable as soon as she finds work. The PRA is thus supposed to give the worker -- get this -- an incentive to find a job. Evidently that's what's lacking in these recessionary times: the will of workers to get off their ass and stop being poor.
Imagine how an observer who is utterly innocent of American ways might respond to this. "Won't this incentive business simply be negated by the above-described dividend business?" they might ask. "Won't those unemployed workers simply fall back on their newly tax-free dividends and continue their lazy ways?" Imagine how the room would fall silent and everyone would blush at the stranger's naivete, how some thoughtful Bushite would take him aside and explain to him that we have, in America, something called social class. The policies aren't contradictory, since the people who receive unemployment and the people who receive dividends come from very, very different groups. Handouts are okay for the rich, who own most of the stock, but workers -- well, workers need to learn discipline.
The groups that claim to represent workers need to be taught a lesson, too. Just as Secretary of Labor Elaine Chao recently took the opportunity of addressing the AFL-CIO's annual meeting to read aloud from a list of union-related crimes, the budget for the Department of Labor proposes, under the heading "Standing Up for the Rights of Union Members," to increase the budget for investigating and prosecuting unions. "Cracking Down on Labor Racketeering," as the budget puts it, might be of some benefit, but it is by no means a burning requirement of the moment. (Did unions destroy the NASDAQ?) The notion's prominent place in the budget is yet another blame-dispersal device, this one lifted from the playbook of the auto industry: whatever goes wrong, blame the unions. In the meantime, the initiative will impose costs on innocent unions as well as villainous ones, and is thus a clear signal of where the administration's sympathies lie. The Labor Department budget is getting smaller, remember, not bigger, and while the dollars flow for down-cracking, other programs from the days when unions had a say in how the country was run are simply being defunded.
Every kid growing up in Kansas in the seventies knew, as I did, that the Republicans were the party of sound government. Whereas Democrats practiced a degraded politics of tax and tax, spend and spend, elect and elect, Republicans were upright men who stood for balanced budgets and deplored the dalliance with deficits in which the country had engaged since the 1930s. Republicans were insiders, responsible businessmen, people with a personal stake in the fiscal probity of our public institutions.
Now all that stuff sounds like the quaint idealism of youth, something akin to my Boy Scout faith that the United States would never strike first in a war. To believe either today you'd have to have spent a long time on another planet.
There still are honorable, balanced-budget Republicans, of course. But the dominant, conservative strain of the party's thought and rhetoric has gone way beyond probity. Today the GOP is not the responsible government party; it is the antigovernment party.
"Government is not the solution to our problem," Ronald Reagan famously said in his first inaugural address. "Government is the problem." Today the phrase reverberates across the years, echoed by a mighty chorus: Limbaugh, Coulter, Liddy, North, O'Reilly, Hannity; Fox News, Conrad Black, FreeRepublic.com; Gingrich, Barr, DeLay; Hayworth, Gramm, Santorum. Yesterday's far right is today's mainstream, and the belief that government is merely misguided has given way to the belief that government is unredeemable; that the liberals who staff it are elitist, un-American, treasonable. Talk to the average Kansan about politics today and you will find that he despises the federal government the way one would despise a colonial tyrant. He believes it has nothing to offer him, despite the fact that it paid for his college education and has subsidized his way of life with agricultural price supports. He imagines that by writing government-hating emails on some listserv, he is participating in a noble brotherhood of revolutionary patriots not unlike the Founding Fathers.
Much of the GOP's most spectacular initiatives over the last ten years seem to have been designed less to accomplish some overt object than to throw a wrench into the works of this despised institution. Conservatives turn a budget debate into a crusade to shut the government down. They paralyze the executive branch with harassing investigations and impeachment proceedings. They joke about assassinating a Democratic president. They fantasize about abolishing entire departments. They cut the wages of federal workers. They dream up ways to make the tax code bear more heavily on the poor, in order to turn the poor against government and "get [their] blood boiling with tax rage," as the Wall Street Journal recently put it.(C) They suggest that they might default on government bonds. They "strengthen" Social Security by making it appear weaker. Even Republican blunders such as Watergate wind up reinforcing their message: You just can't trust government!
Reckless, massive deficits have become, since Reagan, the signature gesture of Republican administrations. The goal is not so much to prime the economic pump, as in the liberals' beloved Keynesian theory, but to break it. And along the way, to do unto the despised liberals as the conservatives believe the liberals have done unto them for decades. Traditional deficit spending, according to conservative dogma, redistributes the hard-earned wealth of real Americans down into the pockets of liberalism's contemptible constituents. Republican deficit spending, by contrast, reverses this flow and redistributes wealth upward, into the bank accounts of their people.
That's the goal it you believe this has all been thought through. It seems equally likely that this budget document, in both its juvenile rhetorical tricks and its idiotic plans for the nation, is merely supposed to teach us a lesson in how badly government can misbehave. Conservatives know that what will be discredited as we slide toward the inevitable reckoning is not the Republican Party but deficit spending, the whole hated concept of an interventionist government.
Historians often describe the New Deal of the 1930s as an effort to save capitalism from itself. Maybe that's what the policies of the Bush Administration are, too, coming as they do after a systemic crisis that in many ways resembles that of 1929-33. The technique, however, is different. The Bush team seems bent on so battering and stigmatizing the only institution capable of policing capitalism that we will be left with no practical alternative. They will fritter away the surplus. They will squander the goodwill of the world. They will jam the locomotive into reverse, toss something heavy on the throttle, and jump for it.
In 1981 the conservative thinker George Gilder published Wealth and Poverty, a fire-breathing damnation of government's interference with capitalism that inspired the Reagan Administration's own strategy of deficit-inducing tax cuts. Twenty-two years later, Gilder is still hammering away at the villainy of government, though the particulars of the indictment have changed a little. Today it's all about "trust," a property the private sector is said to possess in great abundance but that government lacks. In a free market, Gilder asserts in the December issue of Forbes magazine, "the truth will out in a relatively short time," and the laws of nature will see to it that those who have abused our trust will face the consequences. Weaselly, unaccountable government, however, screws up everything that it touches -- naturally, Gilder finds malevolent significance in the term "antitrust" -- and the moral gulf between government and the pursuit of private profit strikes Gilder as so vast that he "trust[s] Kenneth Lay of Enron and Bernard Ebbers of WorldCom" even more than he trusts Justices Rehnquist and Scalia.
Gilder apparently has much to teach us about the ways in which trust and accountability work in America circa 2003. After writing speeches for Reagan, he became a freelance prophet of Silicon Valley, discovering that the microchip agreed with Reagan in many important respects. He was a one-man Wired magazine, with heavy religious overtones: constructing a virtual theology of what he called the "telecosm," worshiping at the shrine of the entrepreneur, becoming a superstar stock picker. And he bore as much responsibility for puffing the "New Economy" bubble as anyone in America.
Today the telecoms have imploded, and Gilder's portfolio of tech-stock picks, the subject of journalistic awe three years ago, has lost more than 90 percent of its peak value. If you trusted Gilder, you would be sorry now. Yet here he is, like those CEOs who walk away with millions while their companies die, still at it, inveighing against government in the pages of Forbes, proclaiming that the only way to react to the economic downturn he insists capitalism didn't cause is by doing absolutely nothing, by letting the market enforce its trust laws in its own mysterious way. Were one not struck speechless by the self-serving audacity of Gilder's arguments, one might respond that his own continuing prominence rather neatly disproves the whole accountability myth.
Gilder is able to soldier on because the fantasy world he imagines in such vivid colors -- that perfect libertarian universe in which markets work flawlessly and the blame for anything that goes wrong can be neatly outsourced to government -- is one in which the very, very wealthy dearly like to believe. In March, I attended one of Gilder's high-tech business conferences, this one having to do with what he calls "Storewidth." The high point of the gathering was not the technical presentations, even with their projections of amazing entrepreneurship to come; it was a political stem-winder delivered by Gilder's friend and patron Steve Forbes, the publisher and onetime presidential candidate.
Naturally the Bush tax plan was prominent in Forbes's thoughts. In fact, he was ecstatic about the prospects, calling the elimination of the dividends tax a "step forward to the flat tax," his own pet idea for enriching the rich. With those who complain about the return of deficits Forbes had no patience at all, since obviously the federal shortfalls would quickly be made good by the economic growth that the tax cuts would surely unleash. The doubters, he went on, were motivated by a congenital hatred of the very idea of tax cuts; besides, Washington used accounting that would "make Enron look honest." And this was an odd thing to say: Wasn't Forbes's own magazine one of the many business publications that literally did make Enron look honest? And not just Enron, but electricity deregulation itself, the billions to be made in bandwidth, the whole New Economy swindle?
Maybe so, but Forbes was showing no contrition. The business class had led us into disaster, but now they thought they deserved some help from Uncle Sam. They wanted what Forbes called "the dead weight of Washington" off their backs. They wanted the entire world to embrace their deregulatory agenda. They wanted a tax cut.
Walking around the luxurious hotel in which the conference was being held, it wasn't hard to see why. The St. Regis Monarch Beach Resort & Spa was built two years ago, at the tail end of the bull market, in the southern California city of Dana Point, just a little inland from the even posher Ritz-Carlton. It's the kind of place that sifts people like me out even before we get inside: arriving by car, you either pay the valet and come sweeping in the grand, chandeliered main entrance or you park it yourself and enter via an unmarked door tucked away behind the registration counter. The hotel has its own high-end antiques store; it has its own bakery/coffee shop with old-style wood trimmings; it has a fine restaurant with the requisite jeroboams of champagne posted by the door; it has a Versailles-size fountain and a golf course overlooking the Pacific; hanging over the bar it has an enormous reproduction of Maxfield Parrish's Garden of Allah, one of those idyllic dream-scenes in which everything shimmers in a golden haze. And aside from the conference attendees, the hotel was almost deserted.
I sat by myself on the hotel's vast, sweeping veranda and looked out past the empty balconies of the hotel rooms, the empty deck chairs by the empty swimming pool, the empty terrace with the oversize planters, out to the brand new empty suburb erupting from a nearby hillside, all the ocher-colored homes ready to be occupied. The instant civilization of upper-class America was all here, antiques to zabaglione, but no one had come to consume it.
They call this "excess capacity." Just like in Gilder's beloved telecom industry, which so overbuilt during the bubble years that only 5 percent of all fiber-optic lines worldwide are currently in use, someone had made a huge miscalculation here. They had plunked down an enormous bet on good times for the rich carrying on forever, just when the free money from Silicon Valley was starting to dry up.
But now comes George W. Bush, savior of his class, to get the good times rolling again, to give us a tax cut of such magnitude that it may well replace the NASDAQ and keep the people of southern California relaxing in style. Social Security will be steered deliberately into the ground, but excess capacity in the luxury industry is one problem that the federal budget for 2004 will undoubtedly solve. Their coffers swelled with tax-free dividends and inheritances, the Republicans will soon be back in Monarch Beach. Tan men dressed in business casual will pull up to the grand entrance in Boxsters and Ferraris. Cosmopolitans will clink under the Maxfield Parrish. Hungover heiresses will chew biscotti in the European-style coffee shop. And the venture capitalists will return at last, toasting their clients out on the veranda, opening that jeroboam, celebrating as though none of it had ever happened.
(A) A study by the Center on Budget and Policy Priorities shows that the 2001 and 2002 tax cuts caused roughly 30 percent of the decline into deficit and that if they had not been enacted the budget would soon be back in surplus.
(B) The Social Security Trust Fund is not mentioned in the main budget document. This date is given in the 2003 report of the Social Security trustees. It is a revealing number in and of itself. We have been hearing catastrophic predictions about Social Security for almost ten years now, and yet during this time the date when economists expect the Social Security Trust Fund to run dry keeps getting pushed further and further into the future. The Social Security Trustees' report for 2000 gave the expiration date for the Trust Fund as 2037; this year's report gives it as 2042, yielding a gain of five future years per every three actual years. If that rate holds, by 2017, the year the budget names as the beginning of the end, economist will be gravely warning us that the Trust Fund will expire in 2064.
(C) In my home state of Kansas, which is currently caught in a budget crisis of its own thanks to rabid tax cutting in the 1990s, the Republican-dominated state legislature proposed to deal with the problem by delaying state tax refunds. This will, of course, infuriate voters, but, as Mike Hendricks of the Kansas City Star recently pointed out, their fury will likely fall not on the stridently anti-tax Republicans who did this to them but on the usual targets -- the state revenue department and the machinery of state government, which happens to have a Democratic governor at its head.
Thomas Frank is the editor of The Baffler and the author, most recently, of One Market Under God. His last essay for Harper's Magazine, "The Trillon-Dollar Hustle," appeared in the January 2002 issue.