Revolution abroad, entropy at home

The great crisis of 1914-45 (1914-21 or so in Eastern Europe, 1933-45 in Western Europe, East Asia and the United States) pitted competing authorities against one another. Beginning in 1917 in Eastern Europe, centuries-old empires gave way to Communist revolution and, after a failed attempt to introduce democracy, military and authoritarian rule in most of the region. In Western and Southern Europe several totalitarian regimes took power, and in Japan, an effective dictatorship of Navy and Army officers terrorized the civilian government. The new governments of Japan, Germany and Italy unleashed a world war. It becomes clearer and clearer that we will not face anything similar in our lifetime. Instead of competing authorities, our problem is a collapse of authority.

Although we are once again distracted by a natural and man-made catastrophe--the earthquake and tsunami in Japan, which has brought about a meltdown at a nuclear plant--the situation in the Middle East has much greater long-term implications. Like the Communist regime in Eastern Europe, Middle Eastern regimes are collapsing more or less on schedule. The post-colonial Tunisian and Egyptian regimes dated from the early 1950s, and Egypt experienced an Awakening (largely thwarted by the government after Anwar Sadat's assassination) in the 1970s. Now they are 60 years old, the age at which old regimes begin to totter. They are not, however completely dead: although their leaders have been forced out, their militaries and governments continue to function, rather like Russia in the first half of 1917, and their future remains completely uncertain. Qadaffi's regime in Libya, however, is almost twenty years younger, and he can still draw on a cadre of middle-aged subordinates who were only children when he took power. After appearing to teeter on the edge of collapse, he now seems to have recovered the initiative, and the West is faced with pressure to intervene. News reports today suggest that the highly touted no-fly zone may well prove ineffective, since Qadaffi is not primarily relying upon air power as he roles back the rebels. The American foreign policy elite, however, is still in the grip of the idea that it should not allow evil to continue to exist in the world, and the pressure on the Obama Administration will grow. Secretary Gates has emerged as the somewhat unlikely hero of the drama, swearing off any further large-scale military interventions in Asia (or presumably Africa) at West Point, and trying at last to push for more reasonable foreign policy objectives.

Trouble continues, meanwhile, in Bahrain and Saudi Arabia. In Bahrain a Sunni monarchy rules a Shi'ite majority; in Saudi Arabia the Shi'ite minority is restive and the whole people may be chafing under dictatorship. Bahrain hosts the U.S. naval presence in the area and Saudi Arabia is of course the world's leading oil producer. The Saudis are a completely traditional society that has never known western institutions or western rule, and I have never succeeded in identifying any generational rhythm in their politics. Something similar could have been said of Russia before 1917. We do not know where this will go.

In 1933-45, the governments of Germany, Japan, the Soviet Union, Great Britain (after 1940), and the United States became much stronger to deal with foreign and domestic problems. Now the government of the United States is getting steadily weaker. The new Republican House majority is determined to do away with much of the federal government as we have come to know it, including the Corporation for Public Broadcasting, the Legal Services Corporation (which for decades now as provided poorer Americans with the only access to the courts that they have), and much of Head Start. They are also trying to destroy Planned Parenthood, a purely ideological move. Those cuts are already part of the House Budget proposal. Michelle Bachmann has just introduced a bill to end the regulation of light bulbs as well, allowing to continue relying on 100-watt incandescent bulbs rather than save energy with the new generation that we now use in my house. So far the Republicans have not, of course, done anything about the real sources of our financial problems, our income tax rate (too low since 2001), the wars in Iraq and Afghanistan, the economic downturn, and the exploding cost of health care. Indeed, they rode into office promising to repeal the Administration's attempt to get health costs under control, and the Supreme Court may eventually collaborate in that effort.

In the last few months, jousting with some (but not all) of the posters from Generation X on fourthturning.com, I have come to understand that there is a powerful generational component to what is happening in the United States. The Boom generation rebelled against the institutions created by its parents and grandparents, but assumed that all would be well as soon as they got in charge of institutions themselves. (The result, of course, has been the opposite, in the economy, in universities, and in politics.) Generation X, however, was born in the era of collapsing authority, the 1960s and 1970s. It is not much of an exaggeration to say that they have never seen the federal government accomplish a major task successfully. Many of their childhoods were marked by the collapse of their parents' marriages and that helped give them a lifelong distrust of institutions. They care fiercely about their own families and will do anything to give their children the security their own childhoods lacked, but they have no faith in political parties or politicians. This is not new. Previous Nomad generations showed the same pattern. The Gilded generation (born about 1822-41) brought government in the United States to a low point late in the nineteenth century, and the Lost generation (born 1884-1903) generally disliked FDR and even voted for Barry Goldwater in 1964, the only generation to do so. The Lost, however, lost the great political battles of their age to a coalition of the older Missionaries, led by FDR, and the younger GIs, who provided the votes for him. It seems clear that there will be no similar coalition between a left-wing Boomer President and the young Millennials this time. Governor Walker and the Republican legislators who have just rolled back workers' rights in Wisconsin belong to Gen X, and so do many (I don't know how many) of the new Republican members of Congress. We have reached the point where few if any new Baby Boomers will be entering elective office any more.

President Obama, meanwhile, continues to put the best face possible on everything that is happening and shies away from any direct confrontation with the Republicans. In a rare press conference on Friday, he bragged that domestic oil production was at its highest level since 2003, while looking forward to the promotion of new energy sources, and insisted that the housing market would slowly recover. He committed himself once again to the idea that Qadaffi should leave Libya but was very cautious about how the United States might bring this about. Regarding the ongoing budget negotiations, he pointed out correctly that even the maximum proposed Republican cuts, which have now been rejected by the Senate, would not make a significant dent in the budget deficit, but he asked only for a "conversation" on what we could do about Medicare and Medicaid, rather than make any proposals of his own. He cited just two programs--Pell Grants for college students and Head Start for children--in which he said he would not accept cuts, and he said nothing about planned parenthood and nothing in support of NPR. I was struck that not a single major newspaper, as far as I can see, printed the text of the press conference, and even more amazed that the White House web site has not posted the transcript. I honestly have begun to think that the Presidential handlers have decided that presidential exposure is bad for his poll numbers.

I am disturbed that earthquakes in Asia and revolts in the Middle East are forcing our own domestic crisis off the front pages. The outcome of the Republican attack on public employee unions remains uncertain. Governor Walker and many of the Republican legislators will be the subject of recall petitions and some polls suggest they have overplayed their hand, but they may yet succeed, and similar battles continue in many states. There is no real counterbalance in our political life to the Republican attack on government. Slowly but surely, we are being forced, finally, to let more of the rest of the world take care of itself. The Afghan government--the one in the rest of the world on which we are spending by far the most money--evidently does not even want us there. But sadly, it does not seem that we have developed the will to take care of ourselves.

The financial mess

For at least three years the country has been struggling with our financial collapse and its aftermath. Congress has passed laws, two Administrations arranged bail-outs, many books have been written (several reviewed here), and I have done many posts about the situation. And thus I am rather astonished that suddenly, over the last 48 hours, I finally had a revelation--I think--about exactly how our new, post-Clinton financial system operates, why it has made untold millions for men and women who are contributing very little to the rest of society, and why the Obama Administration made no serious effort to reform it. I do not have time to research the issue thoroughly myself, and my favorite financial expert friends are not readily available (I will refer each of them to this post for comment.) But I honestly think that I have figured it out.

As most of us have learned, the 1933 Glass-Steagall Act separated depository banking and commercial banking on the one hand from investment banking on the other. Investment banking was a relatively small part of the banking system even in the 1960s--I paid close attention to my Economics 1 class in 1965-6, and I don't recall it ever even being mentioned. And crucially, the Federal Reserve had nothing to do with investment banking at all. It lent money to depository banks and commercial banks, which in turn lent it out to customers--customers in the business world who needed money to finance their operations, and consumers, who wanted, for example, to take out a mortgage on their house. Those were relatively low-profit investments which had to be watched carefully. Meanwhile, as far as I can tell, investment banks had to put together deals financed by other people's money.

As we all know, that kind of loan is now a relatively small part, it seems, of our banking industry, especially, of course, for Citibank, Goldman Sachs, and the other giants. Instead, they invest enormous amounts of money in securities of all kinds--many of which, of course, turned out during the crash to be worthless--as well as in commodities, hedge funds, and heaven knows what else. And--and this is the critical point--since the repeal of Glass-Steagall, they can, as I understand it, now borrow money from the Federal Reserve, whose rates have been at historically low levels for most the last decade--coincidentally (?) the period following the repeal of Glass-Steagall. And that is how the banking world has become almost entirely disconnected from the rest of the economy. It's essentially a game of monopoly in which loans at 1% interest take the place the $200 you collect for passing Go. In such a system, it's easy to bid up the price of both stocks and commodities like oil, even in hard economic times like these--and that is what has happened since 2009. And a rise of just 5% in the price of such assets obviously translates into huge profits and bonuses.

One can read in the business pages, and confirm from any small businessman one happens to know, that today's banks are refusing to lend money to commercial customers. Why should they when safer, more profitable alternatives are available? The wisdom of Glass-Steagall has become painfully obvious: commercial and consumer lending is hard work, requiring a lot of careful analysis and not guaranteeing any huge profits--but it absolutely essential to a functioning economy. Glass-Steagall forced thousands of institutions to undertake it, because they were forbidden from doing anything else. In the Depression both Hoover and Roosevelt actually created some new financial institutions such as the Reconstruction Finance Corporation to make loans that banks would not make. That was what we needed in 2009, but no one apparently suggested to President Obama that he go that route.

I do not have the expertise to parse out the real implications of our new system. We now know that it can lead to catastrophic financial failure, but we don't know if it can lead to anything else. Suddenly, however, it seems to me that the focus on bailouts was misplaced. The Fed should not be blamed mainly for saving the system, which had to be done (albeit not necessarily on such generous terms for the banks.) It should be blamed for its new function of financing a continuous speculative orgy that serves no useful social purpose.

On a completely different front, it has occurred to me recently that we are now seeing the effects of the shrinking of print media over the last half-century. I remember in the 1970s when newspapers, apparently for economic reasons, went from 8 columns to six, which meant 25% fewer stories on the front page. Meanwhile, of course, budgets have been cut, newspapers have been dying, and Sunday sections have shrunk. I feel I have seen the impact of this lately, especially since the outbreak of revolts all over the Middle East, which are soaking up so much news space that the crises in Washington, in Wisconsin and in other states are getting much too litte coverage even in papers like the New York Times. We are faced with a really critical budget deal, but it is hard to find much of anything written about the talks that are going on. We will find in years to come whether either the public or our leadership is still sufficiently well informed to handle the problems we face.

Echoes from the fifties

The first volume of Robert Caro's massive biography of LBJ came out in the early 1980s, covering his career until the outbreak of the Second World War. Despite some irritating aspects--as I recall, it took the better part of 200 pages for LBJ to be born, and Caro as always tended to romanticize some of his characters--it was clearly an historical masterpiece, based mainly on remarkable interviews with men and women who had known LBJ at least since college. LBJ was one of those people, like his successor in the White House, who could not trust almost any other human being, and his associates repaid him after his death with an extraordinary willingness to reveal just about everything they knew about him. Caro's book was the closest thing I had read to a real-life version of All the King's Men, because it illustrated the extraordinary mixture of evil and good motives that go into even the best public policy. The conflict was reflected in the structure of the book. I remember a colleague at Carnegie Mellon remarking that he would have loved to have written a chapter like Caro's "The Sad Irons," which described the wretched lives of Texas farm wives before Johnson managed to help bring electricity to them as part of the New Deal. I replied that I would have gotten more of a kick out of writing another chapter, "The Dam," which told how Johnson, a newly minted Congressman, had arranged illegal federal financing for a dam on the lower Colorado River that had been begun by the firm of Brown and Root, run by two of his major patrons, George and Herman Brown. (Brown and Root, which later won a contract to dredge Cam Ranh Bay in Vietnam, is now part of Halliburton.) Caro's second volume appeared later in the 1980s and disappointed nearly everyone, including myself. It focused very heavily upon Johnson's theft of his election to the Senate in 1948 and unduly praised his opponent in that race. The third volume, Master of the Senate, took about fifteen years to appear, and took me about eight years to read, but it was worth it. I am not aware of any history of the twentieth century that has gone into a series of key legislative battles as closely as Caro handled those of the years 1949-57. This is the kind of book professional historians used to write, but I am not aware of a single such project being worked on in any university department today.

The main driving force in Johnson's life--as in his two most famous contemporaries', Kennedy and Nixon--was his ambition to become President. Kennedy got to the White House thanks mainly to his personal qualities, something that Johnson and Nixon could not do. They therefore had to focus singlemindedly on cultivating power, usually by winning the hearts and minds of older and more powerful men, but also by tacking with the times (and of the three, Johnson, the oldest, had by far the longest political career.) Caro's first volume showed how Johnson had risen during the New Deal era by cultivating FDR and Sam Rayburn, establishing himself as progressive southerner. But the narrative in this volume begins in 1949, when Roosevelt was four years dead and a conservative reaction was well underway. It also finds LBJ in the Senate, not the House, which was dominated by southern conservatives led by Richard Russell of Georgia. Johnson swung accordingly to the right. His maiden speech in the Senate was a defense of the filibuster, which the southerners intended to invoke to defeat the civil rights measures which Harry Truman had now endorsed. Shortly thereafter, Johnson ingratiated himself with his backers in the oil and gas industry by destroying the career of Leland Olds, a federal power commissioner who had become an advocate for public power and regulated energy rates in the 1930s. To do so Johnson and his allies used the crudest McCarthyism--a full year before McCarthy himself burst upon the national scene. The cultivation of Russell paid off in 1951 when, after the Democratic leader and whip had been defeated, Russell tapped Johnson for the number two spot. Two years later, in 1952, Johnson became the minority leader, and in 1954, when the Democrats regained control of Congress, he became, in Caro's words, the Master of the Senate.

Last week, looking at the darker possibilities that confront us, and speculating that the new Republican House of Representatives was going to plunge us into a deeper crisis, I suggested that Barack Obama was going to be the Herbert Hoover of our current crisis. This week I will focus on the alternative possibility: that we might in the next few years emerge from the crisis and that Obama might realize what appears to be his real dream, that of being Dwight D. Eisenhower. (The news of the day, reporting a serious Congressional effort to forge a budget deal and avoid a shutdown, points in that direction, although we a long way to go.) Caro's book reminded me of what that would mean. Then as now, the average Congressional Republican hated the New Deal and all its works--but also rejected America's new role in the world. Eisenhower, an establishment Republican, had to govern with the help of establishment Democrats like LBJ, and southerners, led by Russell, who were devoted to white supremacy at home but also believed in the essence of the Cold War abroad. And thus, Johnson and Eisenhower worked together to defeat the Bricker Amendment, which would have drastically curtailed the President's treaty-making power; to forestall a potentially divisive investigation of the Yalta agreements; to pass desperately needed housing legislation; and, in 1954, finally to destroy the career of Joe McCarthy, after he had turned his sights on his own Administration. Domestically that era, like this one, was an era of reaction, and the embattled liberals of the Senate, including Estes Kefauver of Tennessee, Paul Douglas of Illinois, Herbert Lehman of New York, and Hubert Humphrey of Minnesota, initially earned nothing but Johnson's contempt. But because he knew he could not become President--still his dream--without some northern support, Johnson eventually began to cultivate Humphrey himself, and he moved further in their direction as the decade wore on and more GI liberals replaced Lost conservatives in the US Senate, most notably in 1958.

The question now is whether Barack Obama can in fact emulate Eisenhower from the other side of the aisle. In one respect he already has. Having passed the Health Care bill, his one major reform--which may or may not survive a Supreme Court challenge--he has now given up on any serious expansion of federal power, just as Eisenhower quickly accepted the changes wrought by the New Deal. Obama does indeed seem to be acting more and more like Eisenhower--his almost complete silence over the last few weeks, in the midst of a series of international and domestic crises, is quite striking, and indeed the conservative accusations that he is weak an indecisive--are quite similar to the charges against Ike that I heard in my childhood. But are there Republicans in Congress of the Johnson-Russell type who are willing to put partisanship aside to allow the government to function and preserve some civility in our politics? That question remains open. Similar questions hang over our second revolutionary front, in Wisconsin, where the motives of Governor Walker, as Paul Krugman pointed out brilliantly yesterday, are becoming more and more suspect. Several other Republican governors are backing away from extreme anti-union positions, and it is possible that the Tea Party movement will in fact have run its course by 2012--though hardly certain.

The long-term prospects for any new leftward shift, however, seem to me just about non-existent, partly for demographic reasons. The New Deal represented a coalition between left-wing members of the Missionary Prophet generation, led by FDR himself, and young GI voters; the Nomad Lost generation generally opposed it. Obama, a Nomad himself, won in 2008 by mobilizing Millennials on his side, but he could not do the same in 2010. Meanwhile, the Congressional elections marked a profound generational shift in the House of Representatives, where Silent and Boomer Democrats gave way, in dozens of districts, to very conservative Gen X Republicans. President Obama is virtually the only elected Generation X Democrat of any significance to emerge to date (although Andrew Cuomo could become another.) We remain very finely balanced at a critical point in American history. If Obama, like Ike, cobbles together some sort of governing coalition, we may move into a High by the end of his term. If exogenous events or Republican policies plunge us deeper into crisis, then anything could happen.

I cannot resist one more story from Caro's book. In early 1956, Johnson was pushing hard for a bill to deregulate the price of natural gas--a bill worth tens of millions of dollars to George and Herman Brown and other Texas oil men. Liberals, including the columnist Drew Pearson, were fighting the bill hard. In the midst of the controversy, a Senator from North Dakota revealed that a lobbyist had handed him an envelope containing $5000 in cash in exchange for his vote. (That was, of course, a lot more money then than it is now, although it's probably fair to say that votes were much cheaper, even adjusting for inflation, then than now.) That incident, Caro shows, was merely the tip of a huge iceberg, and a scandal erupted. Johnson managed, in typical fashion, to appoint a reliable trio of Senators to an ad hoc committee to investigate, and bury, the investigation, and in due time, the bill passed. But in an extraordinary moment in postwar history, Eisenhower--who had staunchly supported the legislation on free market grounds--vetoed it, explaining that he had to avoid giving the impression that powerful interests could buy legislation. I wonder if President Obama could think of a comparable gesture he might make down the road. It could do the country significant good.

The Revolutionary Road

It was a little over a year ago, on January 15, 2010, that I first introduced the analogy between the last two years of the Obama Administration and the Weimar Republic here. While I must again routinely disclaim any opinion to the effect that the United States is headed for Nazism, I regret to say that the analogy is looking better and better all the time. The United States remains in crisis, but the anger generated by the crisis is now focused on the destruction of state, local and federal governments. In the first instance this is almost certain to lead, within a couple of weeks, to a shutdown of the federal government. During the next two years it will cripple the economy and perhaps plunge us into yet another recession. No one can possibly predict what the outcome of all this will be in the presidential election to come, but anything is possible.

When Barack Obama took office in 2009, comparisons between him and Franklin Roosevelt were all the rage, and Time put a picture of Obama as FDR on the cover, riding a 1930s limousine and sporting (appropriately enough) a cigarette holder. Our financial system was once again teetering on the edge of collapse, and millions of Americans were being thrown out of work. Obama took important actions during his first year, including the stimulus, which did save several million jobs, but he was trapped both by circumstances beyond his control and by his own personality. To begin with, since George Bush had already created a permanent $400 billion deficit in peacetime, Obama did not think he could afford a stimulus big enough actually to reverse the unemployment decline and put people back to work. Secondly, having risen through the ranks of the establishment and studied at our most prominent institutions, he had developed a most unfortunate respect for the consensus opinion of experts like Ben Bernanke, Tim Geithner, and Larry Summers. Roosevelt's economic advisers gave him the same kind of advice they gave Obama, but he disregarded it because he knew Americans simply had to get back to work in the maximum numbers possible. As a result, he won a remarkable victory in the 1934 elections. Obama suffered a calamitous defeat.

And now, it seems increasingly likely that Obama will be the Hoover, not the FDR, of this crisis. Hoover, like Obama, initially responded to the first year of the Depression with some modest stimulus, a stimulus that even less effective than Obama's. He too was rewarded with a smashing defeat in the 1930 Congressional elections, although the Republicans initially retained a bare majority in the Congress. Then, in his second two years, he did what Obama is doing: he turned to budget-cutting. This made things worse again. By late 1932 about 25% of the country was unemployed and FDR and the Democrats swept into power with huge majorities. Roosevelt used those majorities to reshape the United States.

There is, however, a new and frightening element in our situation today. No consensus about what to do existed when FDR came into office. That is why he had the freedom, particularly in his first year, to try almost anything. The Democrats elected in 1930--once again, the election most parallel to the one we have just been through--had no particular program. The Republicans who have just come to Washington do. They intend to destroy as much as possible of the whole apparatus of domestic government that has built up not just since Roosevelt--Theodore Roosevelt, not Franklin. They and their constituency have imbibed the false lessons of thirty years of free-market propaganda and talk radio. They apparently honestly believe, wrongly, that cutting and eliminating agencies like the Securities and Exchange Commission, the Corporation for Public Broadcasting, and the Environmental Protection Agency will unleash a wave of entrepreneurship. They also, of course, want to destroy the health care law, and are passing clearly unconstitutional provisions of appropriations bills to do so. Many of them belong to Generation X and thus have never seen the federal government do anything particularly impressive for the American people. They have no respect for the governing traditions that have evolved over the last eighty years. They are not yet the whole Republican Party, but they are its driving force, and the remaining establishment Republicans are deathly afraid of them.

And, of course, their work will not be confined to Washington. The budget-cutting mantra is all the rage in all the states where Republicans won governorships and legislatures last fall, led, of course, by Wisconsin. The Republicans in those states state their agenda bluntly: state employees should no longer enjoy benefits which private employees (whose unions have already been crippled or destroyed) no longer have. I actually have some sympathy for this idea. Certain benefits--especially pensions for police and firefighters which many people start collecting in their forties--are too generous, and do have to be cut back. (Most civilian federal employees, as I know very well, lost those kinds of pensions in the 1980s.) But I lost any sympathy for Wisconsin's Governor Walker when I learned that his new proposals to take away most of the bargaining rights of state workers do not extend to police and firefighters. He is punishing the stereotyped bureaucrat whom Republicans have been blaming for our ills since before I was born. He also has the legislature behind him. This is a truly democratic revolution, alas.

The mainstream media have been in denial about the meaning of all this for months and still are. Every story I have seen about the spending cuts the Tea Partiers forced through the House over the weekend notes reassuringly that the Senate and the White House will never agree to them. That misses the point. Appropriations for, say, the Corporation for Public Broadcasting or aid to Planned Parenthood require an affirmative vote of both Houses. The mainstream view of all this assumes that Boehner, Ross and company will compromise. I do not believe that they will. I cannot imagine where all this will come out, but I think there will almost surely be a government shutdown, and that many of their cuts will in the end go through. President Obama's dream of establishing a new 1950s-style consensus is dead on arrival. The Republicans reject the status quo.

There are short-term and long-term political aspects to this crisis. The Obama Administration is dominated by former Clintonistas who fondly remember the impact of the 1995 shutdown and apparently expect a repeat--but we live in an entirely different world now. In addition, this time the Republicans have kept their hands off Medicare, which left them open to damaging attacks 16 years ago. The President may not be strengthened by the crisis at all. The long run implications are much more frightening. Laying off tens or hundreds of thousands of government employees will deal another body blow to the economy and may well trigger a second recession. This was exactly the scenario that played out in both Germany and the United States in 1929-33. Who it might bring into power in 2012, I have no idea.

If Barack Obama is going to make a comeback and save us from a real catastrophe, he must take the rhetorical offensive at once. He must try to explain to his contemporaries that yes, we need a government and that we need to keep people employed. And somehow, he must try to find a critical mass of Republicans who will cooperate to prevent things from getting worse. We face not only increasing economic hardship, but also a complete loss of confidence in our institutions, something no advanced society can afford. The Boom generation started this, as I discussed at length from 2004 to 2008. Now Generation X is following the same false idols. The Republican revolution is real, and it needs to be stopped. But how?

The Social Security disaster

The other day I saw a rather shocking story, claiming that the Social Security Administration will not take in enough money this year to pay the benefits that are owed. I was initially shocked because I didn't expect that milestone to be passed for some years at least. Then I realized there was a reason: the disastrous 2% payroll tax cut that President Obama included as part of the deal with the Republicans in December. A few quick numbers will explain what has happened.

A 2% cut doesn't sound like much, because we instinctively think of it like a 2% cut in our income taxes. The problem, of course, is that many of us pay a marginal income tax rate of 30% or more, while the payroll tax brings in 12.4% of the first $106,000 everyone earns. The cut was a 30% cut in payroll taxes for each individual, and a 16% cut in the government's income from payroll taxes. And in 2009, the government's revenue from Social Security--$889 billion--was almost identical, incredibly, to its revenue from personal income taxes, $915 billion. Corporate income taxes brought in just $938 billion. The 16% decline in social security revenues will add up to $142 billion dollars of additional deficit for each of the next two years. Meanwhile the Republicans are threatening to gut the discretionary spending of the federal government to save $100 billion a year. And the nightmare with which the conservatives have been threatening us--the deficit in the Social Security system itself--is here, years ahead of schedule, because of this disastrous measure.

Senate Democrats are promising to pay the benefits owed, but that means more borrowing when we cannot afford it. Meanwhile restoring the income tax to a more reasonable share of our revenue has been delayed again. I have no idea--and would appreciate any data any one can give me--where this idea came from and what on earth moved the Obama White House to go along with it. It's true that Social Security is our most regressive tax, and this was the only way to cut taxes on genuinely poor Americans who still hold jobs. But it was a devastating blow to our most reliable social program, and I am afraid the consequences may be severe.