State of the Democratic party

During an election campaign, political operatives are fond of seeking to induce in their opponent a negative "defining moment." That is to say a highly publicized moment when their opponent portrays everything that is wrong with him. In 2004, John Kerry provided that moment when he said he voted for the $87 billion before he voted against it.

Surely, at the State of the Union address the Democratic Party provided such a moment when, as has already been well commented on by others, they wildly applauded President Bush's statement that Congress failed to pass Social Security reform last year.

As the party of reactionary inertia -- as the party that not only doesn't have any solutions to today's dangers and problems but denies that such problems exist -- the Democrats on the floor of the House Tuesday night demonstrated a flawless, intuitive sense of its new, disfunctional self.

The Democrats' wild applause on behalf of doing nothing was more than a merely tactical political blunder. It displayed a deeper truth about them.

If one recalls, last year, the official position of the Democratic Party was not only that they opposed President Bush's Social Security reform, they argued there was no crisis -- no major problem that required rectification.

(In fact, Social Security has $4 trillion of unfunded liability, and if major changes are not made quickly, we will only be able to pay the retired baby boomers about 70 cents for each dollar of promised benefits.)

Social Security is the single most iconic Democratic Party issue of the past hundred years -- the Democrats created Social Security in 1935, and have won countless elections since then by beating up Republicans for allegedly not supporting it. It was the Democratic Party's sacred virgin. They would lie for it, die for it, steal for it, demagogue for it -- but never cheer its demise or harm, even sarcastically.

Their collective decision to cheer the failure of the body politic to provide for sufficient revenues to pay the benefits was an act of historic shame for the Democratic Party.

Worse than that for the Democrats, it shows how severely degraded their political instincts have become. Tip O'Neil's Democratic Party of 20 years ago would never have cheered the failure of Social Security -- even to try to make a small political point. To be sure, they would demagogue the issue ruthlessly, but never be seen to be walking away from the sacred program.

Until George Bush became president, the Democrats, for better and for worse, were a liberal party. Deformed by hatred of the current president, the Democrats have become a nihilist party.

It is one thing to oppose one's opponent's policies. After all, Benjamin Disraeli, the founder of the modern British Tory Party, once famously observed that the job of an opposition party is to oppose. But he also said they should oppose but not obstruct. And while in the minority he carefully proposed policies he would implement when his party came into power.

But today's Democrats largely refuse to even admit that the problems President Bush is trying to solve even exist. They offer nothing. And this mentality was also on display Tuesday night in Congress. On most of the president's major pronouncements regarding our war against radical Islam, the Democrats sat on their hands.

Or, in the case of Hillary Clinton when a non-response was politically impossible, she would, with an icy look that could freeze a furnace, applaud in a slow, robotic, menacing manner. Woe betide the object of that frigid esteem. On Iraq, on Iran, on intercepting terrorist communications, they have no positive proposals for success.

President Bush caught the essence of today's Democratic Party in a rather elegant double epigram: "Hindsight alone is not wisdom, And second-guessing is not a strategy."

I wouldn't be surprised to see that thought become the strategic negative communication theme for the Republican Party this campaign season. That is the trouble with being a rotten tomato-throwing member of the bleacher crowd. One may develop a small following amongst one's fellow complainers, but no large group of people are going to ask you to come out and lead the team.

But not satisfied to be a head in the sand, reflexively negative opposition party, an increasing number of Democrats and their supporters in the leftish fever swamps have started calling for President Bush's impeachment.

While I haven't seen any polls yet on the subject, I would guess that something less than 10 percent of the American voting public would look forward to seeing the last two years of the Bush presidency consumed with a Democratic Party-controlled Congress trying to impeach the president during a time of war.

Somehow the Democratic Party -- for 180 years the most electorally successful political party on the planet -- has now almost completely mutated into a party too loathsome to be seen in public, and too nihilistic to be trusted with control of even a single branch of government.

Tony Blankley is the author of The West's Last Chance and editorial page editor for the Washington Times.

Given that tax hikes, spending reductions, or benefit cuts to entitlements all do not share wide-spread support amongst Americans in the aggregate, isn't the writing to Social Security's problems [unfunded liabilities, accounting gimmicks, worthless trust fund notes, etc.] on the wall?

“There are still more trillions of dollars being promised in Social Security pensions and Medicare payments, for which there is not enough money in the till. It is like writing checks without enough money in the bank to redeem them.

“Present members of Congress win votes by promising such goodies. That leaves it up to future members of Congress to figure out how to welsh on those promises, which could not be met without jacking up tax rates to unprecedented levels.

“Even that probably wouldn't provide enough money, since confiscatory tax rates confiscate the incentives needed to keep the economy going. An alternative political ploy would be to pay people the amount of money that was promised but in dollars so inflated that they won't buy anything close to what dollars bought when they were paid into the Social Security system.” ~ Dr. Thomas Sowell in part one of a three part editorial, Jan 24, 2006

Government Revenue From Inflation

“Financing government spending by increasing the quantity of money looks like magic, like getting something for nothing. To take a simple example, the government builds a road, paying for it in newly printed Federal Reserve notes. It looks as if everyone is better off. The workers who built the road to get their pay and can buy food, clothing, and now a road where there was none before. Who has really paid for it?

“The answer is that all holders of money have paid for the road. The extra money that is printed raises prices when it is used to induce the workers to build the road instead of engage in some other productive activity. Those higher prices are maintained as the extra money circulates in the spending stream from the workers to the sellers of what they buy, from those sellers to others, and so on...

“Inflation may also yield revenue indirectly by automatically raising effective tax rates. Until 1985, as personal dollar incomes went up with inflation, the income was pushed into higher and higher brackets and was taxed at higher rates…

“A third way that inflation yields revenue to the government is by paying off – or repudiating, if you will – part of the government’s debt. Government borrows in dollars and pays back in dollars. However, thanks to inflation, the dollars it pays back buys less than the dollars it borrowed do. That would not be a net gain to the government if it the interim it had paid a high enough interest rate on the debt to compensate the lender for inflation. For the most part, it has not done so. Savings bonds are the clearest example. Suppose you had bought a savings bond in December 1968, had held it until December 1978, and then had cashed it in. You would have paid $37.50 in 1968 for a ten-year bond with a face value of $50 and would have received $64.74 in 1978, when you cashed it in (because the government raised the interest rate in the interim to make some allowances for inflation). But by 1978 it took $70 to buy as much as $37.50 would have bought back in 1968. Yet not only would you have gotten back only $64.74; you would have also have had to pay the income tax on the $27.24 difference between what you received and what you paid – in effect, you would have ended up paying for the dubious privilege of lending your money to the government.” ~ Dr. Milton Friedman from Chapter Eight of his 1992 book titled Money Mischief

Time to take a substantial position...in commodities!

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