Margaret Thatcher: The Lady’s Not for Turning

Margaret Thatcher was a great hero. The model of a politician who was in it not to be something but to do something. And boy, what she did.

Margaret Roberts, grocer’s daughter, candidate for Parliament, 1951, her second try; elected 1959

Thatcher became Britain’s first woman prime minister at a time when that was amazing. It’s no longer true in modern nations that a woman must be twice as good as a man to get half as far; but it was true in the ‘70s. Margaret Thatcher rising, from modest antecedents, to surmount not only those gender obstacles but immense political obstacles as well, makes her a promethean figure.

Indeed, when she came to power in 1979, the gender novelty was a footnote. Britain was in deep trouble; it was called “British disease,” the final legacy of three decades of socialism and, particularly, labor unions holding government by the balls. It wasn’t that Thatcher lacked that anatomical feature; rather, hers were too big for the unions to squeeze. She broke their power, showing how entrenched interests can be overcome with sufficient political will. She also lifted the smothering blanket of statist paternalism to resuscitate economic vitality. British disease was cured.

Eurocrat Jean-Claude Juncker is often quoted: “We all know what to do, but we don’t know how to get re-elected once we’ve done it.” What rot. Margaret Thatcher gave a famous speech acknowledging the political pressures for a policy U-turn. “You turn if you want to,” she said; “the lady’s not for turning.”* Unlike Juncker, she trusted voters, and believed that right policies can be successfully defended in public debate. And, despite vicious opposition, she did get re-elected, twice. (In 1990, her own Conservative party, to its eternal shame, lost its will and dumped her.)

Her first re-election did owe something to the Falklands War. In 1982, an Argentine junta thought to curry popularity by grabbing the Falkland Islands, a British possession. They didn’t imagine an enfeebled old European nation would actually fight them. But fight them Margaret Thatcher did, and not just with words. She sent the fleet.

I see her still as Britannia, with helmet and spear, standing resolute on the prow of a warship, steaming toward the Falklands.

*It’s a pun on the title of a play about Joan of Arc, “The Lady’s Not for Burning.”

My New Book – Angels and Pinheads

My new book is Angels and Pinheads: A Guide to Which is Which and What’s What. In 226 pages it packs 146 entertaining and provocative essays, commentaries, book reviews, etc., on a wide range of topics, skewering numerous sacred cows; the kinds of things you shouldn’t discuss at Thanksgiving dinner lest you wind up with gravy and mashed potatoes in your face.

The entries are selected as the best from this blog. Of course you can read them here, but the book provides a handy little package that you can enjoy at the beach or in the john.

It’s published by Verity Press International at just $9.95. For more information and ordering details, click here.

The Sequester: Where the Buck Stops

Speaking of reality (or not), the President is going around telling horror stories about the “sequester’s” March 1 budget cuts, and blaming Republicans because they resist raising taxes on the rich.

The reality is that the cuts will happen only because Obama himself insists on such tax hikes. Yet taxes aren’t even part of the sequester (which, incidentally, Obama himself originally ushered into place) — it only concerns spending, and Republicans are willing to compromise on spending. But Obama refuses unless he gets another round of tax hikes into the bargain. Remember, Republicans did already agree to raise taxes on the rich, just weeks ago, in the fiscal cliff deal. In fact, they agreed without any compensatory spending concessions (big mistake). But now Obama demands even more.

Dark red = 2009-12; bright red = 2013-22

If the cuts are as awful as he says, then it’s his responsibility to avert them. After all, he’s president. As Truman said, “the buck stops here.” Passing it to Republicans doesn’t wash, if the problem can be solved simply by Obama relenting in his monomania on taxes. But he thinks “tax the rich” continues to work for him politically, and he won’t drop it.

Furthermore, as head of the government, he could do plenty to prevent sequestration’s worst impacts; but instead he actually seems intent on heightening the pain, believing he’ll get away with blaming Republicans. This is all political theater, aimed at Democrats retaking the House in 2014, reviving their otherwise unpassable legislative agenda.

It’s tempting to actually welcome the sequester as at least achieving what Washington has been so incapable of: cutting spending. Unfortunately, it’s entirely the wrong way to go about it, indiscriminately cutting across-the-board rather than sensibly prioritizing. For example, as I’ve said, the Defense budget is way over-bloated, but the sequester will target the muscle equally with the fat.

Meantime it will hardly touch the real heart of our budgetary mess: Medicare, Medicaid, and Social Security. But at least this does cast a spotlight on the fix we’re in. So sacred are these cows that they were largely exempted even from the sequester’s otherwise “across-the-board” cuts. Concentrating those cuts on lesser non-entitlement discretionary spending intensifies the effect there. But even so, these cuts are still a tiny percentage. That it’s so contentious to cut even this little bit from such a huge budget shows the depth of the problem.

What we need is a long term plan to get deficits into manageable territory by reforming entitlements, mainly by constraining benefits for the affluent. The President isn’t interested. Without this, entitlements are on track to swamp the budget and eventually crowd out all other expenditures. The sequester gives us a small foretaste of that future. We’ll wind up with a government confined mainly to sending out benefit checks, able to afford little else.

This will be the supremely ironic endgame for the liberal dream of muscular government fixing all problems and righting all wrongs.

State of the Union: US: Sweden

So the President gets up there and unveils a host of big new government programs. Then he says they won’t add a dime to the deficit. That would be true only if:

a) They don’t pass Congress, or
b) Taxes are raised, or
c) Other programs are cut

As to (c), of course the President has proposed no such cuts. In fact, after years of talking about a balance of tax hikes and spending cuts, and indeed campaigning on that issue, Obama in the recent fiscal cliff deal got taxes raised without any spending cuts at all.

Cartoon by Eric Allie, Townhall.com

This he actually thought was a glorious triumph; liberals are cock-a-hoop that they’ve really stuck it to Republicans.

The Pre-K education proposal epitomizes how they think. Pre-K is actually desperately needed to help disadvantaged kids who are otherwise being done down by crappy schools. But does Obama’s proposal target those kids? No. It’s “universal.” Which means that just like Medicare and farm subsidies and so many other government programs, it will mainly give yet more welfare to the affluent, with the disadvantaged getting only a lesser share of the benefits.

This is not the time to be adding a big new “universal” federal program.

Whatever benefit it may buy will be more than wiped out when the shit hits the fan and our economy sinks under the weight of unsustainable debt. That’s true of all Obama’s economic initiatives. They will all come to nothing and worse if we don’t tackle the one big monster looming on the horizon, our debt. Eyes closed to this, Obama is taking us down the road to ruin.

It doesn’t have to be this way. The Economist recently ran an illuminating survey of the Nordic countries. Remember Sweden, the poster boy for a tax-and-spend “social welfare” state, of cradle-to-grave government cosseting, soaking up the lion’s share of GDP? Well, it’s not your father’s Sweden anymore. That model, the Swedes and other Nordics realized, was doomed, so they reformed; in The Economist’s words, they “put an end to the region’s magical thinking about welfare.”

So they enacted sweeping pension and benefit reforms and put their budgets in balance; Sweden reduced national debt from 84% of GDP in 1996 to 49% in 2011; government’s share of GDP fell by a whopping 18 percentage points. The Nordic countries have also become much more enthusiastic toward the free market and entrepreneurialism, moving their economies away from statism. They embrace free trade and resist the siren song of protectionism. The Swedes now even let private companies compete with government bodies to provide services; a majority of new kindergartens and health clinics are being built by businesses, and citizens can shop around.

This includes school choice; Sweden is now the world’s leading adopter of vouchers. Almost half its schoolkids are in non-public classrooms. And the most comprehensive study of the results shows great performance improvement – especially in the public schools, which competition has forced to raise their game. (Milton Friedman, father of the voucher concept, said the point was not that privately-run schools would be better; rather, all types of schools would be better if they must compete.)

Finland too is a hotbed of educational success. Interestingly, Finland spends proportionately less on schools than America, and teacher pay is relatively low. Yet Finland attracts high quality teachers by giving them something more valuable than money: respect, and thus a high degree of autonomy and responsibility for what they do in class.

So, does all this reform throw granny over the cliff, as in liberal nightmares? No. As I keep saying, rich countries have plenty of money to take care of the needy; it’s welfare for the rich that’s bankrupting us. Nordic budgets have not been balanced on the backs of the disadvantaged. What they have done is to create the conditions for everyone to flourish. And, by all accounts, their populations are quite happy with the change, facing the future with a positive attitude.

Why can’t America get its act together like that? Yes, I know all about our frozen politics and the influence of special interests (like the teachers’ unions). But Sweden and Finland were not utopian paradises free of such societal baggage. Those fat and happy with their old paternalistic policies were equally wedded to them. But their special pleading was overcome. It takes leadership and grit. I continue to believe Americans would support sensible reforms like the Nordics, if only some real leadership were shown.

I guess we’ll have to await another president. Let’s hope it won’t be too late.

How To Solve All Societal Problems

The theme of Rebecca Costa’s 2010 book The Watchman’s Rattle* is that the complexity of modern life is itself the key to the complex problems we face. Our brains did evolve to handle complexity, especially that of social relations. But the resulting cultural evolution outruns our brains’ biological evolution, and thus our cognitive abilities.

Early on, Costa discusses the Mayans, who she believes succumbed mainly to drought. Their end game degenerated into religious mysticism. Why, Costa asks, didn’t they instead continue pursuing rational solutions? – more wells, reservoirs, cisterns, etc.? In fact, she had earlier called the Mayan hydraulic systems “masterpieces of design and engineering.” But she thinks they hit what she labels a “cognitive threshold.” Actually, however, it seems that rational solutions reached their limit – there was nothing the Mayans could have done to overcome their water deficit.

Yet Costa draws a parallel with California’s water shortage problem. Here too, all current efforts seem doomed to eventual inadequacy. A frustrated Costa declares: “We need to manufacture more water.” (Her italics) What she means is desalination (making seawater usable). What’s stopping us? Not technology; unlike the Mayans, we could do it. Our problem, Costa says, is attitudinal.

To explain, she invokes the concept of the meme (coined by scientist Richard Dawkins), the cultural equivalent of genes. Memes are ideas that propagate, and can pre-empt other forms of thought. Like religion, a powerful set of memes that certainly obstruct other, incompatible kinds of thinking.

Costa uses the term “supermeme,” and focuses on several. One she calls “irrational opposition.” While I think this misapplies the meme concept, Costa is certainly on to something: a culturally rooted thinking pattern of “rejecting, criticizing, suppressing, ignoring, misrepresenting, [and] marginalizing rational solutions.”

Being against something can be far more emotionally satisfying than supporting it; criticizing a lot easier than defending. But, Costa says, people in opposition mode rarely have any positive solutions to offer. Desalination is a case in point – lots of vocal opposition but, typical of nimbyism, no answers to the problem. Similarly (not in the book), anti-fracking hysteria exemplifies Costa’s point – people need the energy, but obsess over largely hypothetical dangers, while ignoring the far worse ill-effects of familiar energy production modes we already use.

Climate change is a problem where a “cognitive threshold” does seem to be a stumbling block. Interestingly, it’s the environmentalists Costa faults here, for turning their beliefs into a kind of religion rather than a fact-based program for rational action. She’s talking about their insistence solely upon reducing carbon emissions. This does have earmarks of religious belief, both in its moralistic manichaeanism – casting humanity as a pack of sinners who need to don hair shirts in penance – and its disregard for factual reality. Indeed, it’s not just the climate denialists with their heads in the sand – the believers are wedded to a plan that cannot possibly work. Even if carbon emissions went to zero, global temperatures would still continue to rise significantly.

Costa instead advocates geo-engineering solutions – for example, replicating the effect of volcanoes by putting sulfate particles in the upper atmosphere to cool the planet – a vastly more efficacious and vastly less costly approach (as I’ve discussed). Yet all such proposals the McKibbenite climate zealots demonize as heresy.

Costa also applies her analysis to politics, where again inciting opposition is far easier than enlisting support for anything positive. That explains negative campaigning. All you need do is give voters one reason to reject an opponent. Thus we get Willie Horton and foofaws over “legitimate rape.” And while everyone says politicians should compromise, the actual elements of any policy compromise typically engender far more vehement opposition than support.

Though much of the book is great, unfortunately some is utter nonsense. While Costa pokes fun at the old wives’ tale about not swimming for an hour after eating, she falls for the equally false myth of needing eight glasses of water daily.

Worse, Costa doesn’t much hold with personal responsibility. One person’s obesity might be his own fault; but the obesity of millions rises to being systemic. She mocks personal efforts like recycling trash, explaining what little difference it actually makes (household trash being a small fraction of our industrial total). The problems at issue are societal, true enough. But who is society but us? On Costa’s logic, voting too is pointless because one vote can’t make any difference; but obviously, collectively it can be momentous. There is no sense in talking about what “society” can or must do, divorced from what its individual constituent members do.

And while one of Costa’s supermemes is labeled “extreme economics,” I wish she had instead addressed economic irrationality — her own chapter being a prime exemplar. It’s the familiar trope that everything today is reduced to money and profit. Thus she laments that we can’t deploy a device invented by Dean Kamen to produce clean water with minimal electricity because, at two grand a pop, nobody can figure out how to profit. But who again is this “we”? If the economics don’t work, then someone must get stuck with the bill. Costa similarly bemoans things that used to be “free” but now incur charges. But nothing is ever really free. There’s no manna from Heaven. Economics is all about how non-free resources get allocated (and who pays). Failure to understand this can only impede solving the kinds of problems Costa addresses.

Anyway, after going through a litany of those problems, and all our mental obstacles for tackling them, Costa finally comes down with a single catch-all answer: insight. Our brains have this fantastic capability for “Eureka!” moments – like when Newton “discovered gravity” (sic). So we just have to do more of that.

If I sound sarcastic, it’s only partly true. Costa argues that we can improve brain function through mental exercise, and there’s much supporting evidence. Indeed, it appears that fairly modest bouts of brain exercise can have long-lasting cognitive benefits. Why don’t our schools include this? I’ve written (“The Marshmallow Test”) about how inculcating some kinds of character discipline can have big effects, improving kids’ ability to thrive in school and life; and without this, conventional “3Rs” teaching may be largely futile for many students. The same applies to mental exercise to sharpen cognitive functioning. Oddly, Costa doesn’t say this, but our society’s failure to utilize these beneficial techniques is a perfect example of the problem, and changing this could be an important part of the solution.

Meantime, in fact, humans have been thinking smarter and better. This, as I’ve noted, is a key reason Pinker fingered for declining violence in his book, The Better Angels of Our Nature. And, yes, it is declining (read the damn book). Of course we haven’t attained perfection but we’re getting there. And while Costa stresses that our lives’ complexity is outrunning our brain evolution, that only applies to our individual brains. But our mental power is collective. No single person today completely understands any advanced technology, but we don’t need that, when we can combine and coordinate the understandings of the many.

Further, the more of us there are, the more ideas are created; and modernity puts ever more of us in contact with other people and their ideas, so we get ideas bouncing off each other, flowering like branches off a tree, metastasizing. This is why progress happens, and in fact accelerates; it’s the very thing that produces all the complexity Costa talks about. So in the end it’s wrong to see complexity as the problem. It’s why I am an optimist about humankind.

* This title is intended to evoke old-time watchmen who used rattles to signal danger.

Who was America’s Worst President?

During the holidays my sister-in-law got me into a heated discussion on how I could possibly have voted for such a flawed, problematic bumbler with weird religious beliefs, rather than the cool, cerebral, eloquent golden boy Obama.

What is remarkable about the recent “fiscal cliff” deal is that while during the earlier negotiations, President Obama offered relatively piddling spending cuts, the Republicans actually wound up getting even less – zero, in fact. And correspondingly, Obama actually wound up getting less in added tax revenue than Republicans had earlier offered.* These tax increases too are piddly – and, astoundingly, are offset by a new round of tax breaks for corporations which Obama – yes, Obama – insisted on.

I just read the local Metroland paper’s lefty columnist, wishing that liberals would “go off script” for a change and – wait for it – stop being apologetic about protecting entitlement spending and socking it to the rich on taxes!

Congressional Republicans now say the next needed debt ceiling vote is when they’ll really really, yes really, get serious on spending. Actually, that’s not when it will happen. It will be when pigs fly. Or when voters truly want it, which comes to the same thing.

Incidentally, remember how Republicans did extract some modest spending cuts in exchange for averting a government shut-down a couple of years back? Turns out they were snookered. Those spending cuts were a mirage. And what about that $700+ billion Obama was accused, during the campaign, of cutting from Medicare? He didn’t want to give the true rebuttal, which is that those cuts too were a fake – promised reductions in payment rates for hospitals and doctors. Congress keeps pretending to legislate such cuts, and then rescinds them when the powerful medical lobbies scream (and pony up campaign contributions — it’s really an extortion scam by legislators).

Federal debt is roughly 100% of GDP, and growing at over a trillion a year, with no let-up in sight. Medicare is the gorilla. Its cost is on track to double in a decade. In three decades, it’s set to push national debt to an impossible 250% of GDP. Tax to the max on the rich and you’ll barely nibble at the problem. No conceivable level of tax increases on everybody can close this gap.

Obamacare will not reduce health costs for one fundamental reason. Call this Robinson’s law – when government pays the bill, the price does not go down. (Just look at college tuition. The more government pays, through subsidized student loans (often defaulted), the more colleges raise tuition to milk that cow.)

Already, interest payments on the debt consume a sizeable chunk of the federal budget. But that’s with interest rates at historic lows, near zero. America can finance so cheaply today because its bonds are still seen as the world’s safest. But at some point, as our debt spirals out of control, the bond market will have second thoughts. Even interest rates returning to historically typical levels of just a few percentage points could mean a tripling or quadrupling of our interest costs – not only on new debt, but on rolling over all the old debt, all $20 trillion or whatever.

Goodbye Charlie. Hello Greece.

Take your pick of worst presidents – Buchanan, Andrew Johnson, Harding, even George W. Bush. But none left the nation as catastrophic a legacy as Obama’s willingness to let America slide into economic destruction.

* Note that while Democrats made a career of condemning the “Bush tax cuts for the rich,” the smallness of the revenue from repealing those cuts for the 1% shows that the bulk of the benefit actually went to the 99% — whose Bush tax cuts Congressional Democrats have now cheerfully voted to make permanent.

We have met the enemy and it’s us

Recently I got one of those virally forwarded e-mail blasts, flaying Washington politicians and demanding an array of draconian punishments for them, stopping just short, perhaps, of tumbrils.

But who elected these miscreants?

It doesn’t take a political science genius to understand politicians’ behavior. There’s but a single explanatory factor: winning elections. That means following voter wishes.

So why doesn’t the fiscal cliff deal tackle spending? Don’t voters want that? Oh, yes, absolutely they do, just so long as you don’t cut Social Security or Medicare or education or farm programs or defense or, well, anything, except of course for foreign aid. (On which the average American thinks we should spend no more than 10%. In fact it’s less than 1%.)

Republicans, especially Tea Partiers, really really want spending cuts. But just ask exactly what to cut, besides Big Bird (0.014% of the budget). And just whisper a suggestion and you get the campaign ads with granny shoved over a cliff. Of course Republicans don’t want to hand Democrats this nuclear weapon. What they’d like is for Democrats to disarm by joining them in the spending cuts. But any Democrat doing that would get the granny-over-the-cliff ad himself in his own next primary.

We imagined that Republicans would make a deal with President Obama, agreeing to higher taxes for the rich in exchange for spending cuts. How foolishly naïve. We forgot the nuclear weapon. We forgot that whereas soaking the rich is popular, cutting spending risks granny-over-the-cliff ads and political annihilation. So what we got was soak-the-rich and nothing on spending.

Why did Republicans agree? In the end, instead of trading off soak-the-rich taxes for spending cuts, they were forced to swallow the tax hikes merely in exchange for avoiding even bigger tax hikes.

The New York Times editorially labeled this a big payoff for Republicans, rewarding their “intransigence”! The Times fulminated that the rich aren’t being soaked enough – while saying hardly a word about spending – nor noting that under this deal, deficits will continue to balloon – or that no conceivable level of taxes on the rich could close that gap.

Devotees of this blog may recall how accurately I foresaw this outcome. The Democrats did get their Great White Whale, with Bush’s tax cuts terminated for high incomes. And the argument over spending can seemingly continue. I say “seemingly” because for all the sturm-und-drang, nothing serious will be done about spending because Republicans have now squandered their biggest bargaining chip. Any further blackmail they might attempt would be seen as just that, blackmail, politically suicidal.

I hope President Obama enjoys his whale meat. He might have exercised responsible leadership. He might have forced Democrats to accept the need for spending action, as a trade-off for the tax increases they craved. This fiscal cliff moment was actually a grand opportunity for him to achieve something meaningful – just like Simpson-Bowles – the opportunity he missed earlier. But instead of seizing the moment, the President chose the easy, expedient thing, to pocket the cheap “victory.”

History will write that Obama’s eight years mark the time when America might have saved itself, but didn’t. We may have survived this recent little cliff, but we’re running straight down the track toward a far bigger one, of economic ruin, with clearly now no hand on the throttle.

And if you want to find the real culprit to blame, dear voter, look in the mirror.

The Underground Railroad – Lessons for Today

I recently attended a presentation by Paul and Mary Liz Stewart about their Underground Railroad History Project. The “railroad” was a network helping escaped slaves get to freedom; the Stewarts have located and restored an Albany building important to it. I want to make a few points.

Although we are familiar with Harriet Tubman and Frederick Douglass as black leaders of the movement, in fact many whites were active too, as shown by the Stewarts’s presentation. Those white citizens took to heart the Declaration of Independence’s words, “all men are created equal,” and viewed blacks as fully human beings, entitled to such equality.

This I find remarkable. Slavery was a widely accepted institution of long standing which, after all, was expressly endorsed by the Bible. Blacks had been taken from what was generally thought to be African savagery, and now mostly existed in a state of degradation. That blacks and whites are the same species, biologically virtually identical, was not scientifically obvious at the time. To the contrary, many scientists seemed obsessed with proving the biological inferiority of non-whites (as Stephen Jay Gould elucidated in The Mismeasure of Man).

For a white person of the mid-1800s to see past all this and recognize the humanity of blacks, indeed their equality, was advanced thinking of a very high order. And yet such views, while not exactly common, were not so rare either, and nor were they confined to an elite intelligentsia. Certainly John Brown, for example, was no member of that class, but was so passionately anti-slavery, and a believer in social equality for blacks, that he gave his life to the cause.

John Brown as portrayed by John Steuart Curry

Brown, in launching an armed insurrection, was an extremist, but even for whites who merely provided aid and comfort for escaped slaves, the risks were serious. Such conduct was a crime under federal fugitive slave laws, punishable by a fine of $1,000 (equivalent to perhaps $20,000 in today’s money) and 6 months in jail. Defying such laws required real courage.

Slavery and racism are fixtures in the catechism of misanthropy, indicting humankind for its sins. And yes, those sins have been real. But here we have the other side of the coin, a testament to “the better angels of our nature.” Even so long ago, people were able to rise above baser thinking, and embrace truly enlightened humanistic ideas. My belief in Mankind is grounded in the fact that we are not forever condemned to act as animals, but have been proven capable of nobility.

The concept underlying fugitive slave laws was that escapees were stealing the property of their owners. Never mind that slaves had all been stolen in the first place from their original and true owners – themselves. Why was it ever legal to sell such stolen “property?” As if going to Africa and grabbing human beings were no different from harvesting cocoanuts. (We even went to war against Britain in part because the Brits were doing exactly the same thing to us – grabbing men off our ships to force them to work in their navy.)

Henry Clay

The draconian fugitive slave law – it even required northern citizens to assist slave catchers! – was part of the Compromise of 1850, the last great effort of a dying Henry Clay (who had similarly engineered the 1820 Missouri Compromise). It was a “grand bargain” to resolve a north-south political crisis over slavery and save the union. The crisis concerned the potential extension of slavery into the vast territories newly acquired from the Mexican War. The fugitive slave law was a big concession to southerners, in exchange for limitations on slavery in the territories.

Daniel Webster

But this was anathema to anti-slavery northerners like Daniel Webster; it seemed they would never agree to a fugitive slave law. However, on the Seventh of March, 1850, Webster rose in the Senate to deliver his long-awaited verdict, and it was a bombshell. Searching his conscience, for the good of the country, Webster endorsed Clay’s compromise. For this Webster paid a heavy political price; maybe even the presidency. But the compromise went through, and the union survived, for another decade at least.

The issues of taxing and spending confronting America today are very serious, but certainly no less serious than the issue of slavery that so bitterly divided the nation in the 1850s. Where is today’s Henry Clay? Where is our Daniel Webster?

In Pursuit of the Great White Whale

As explained in my recent post, the best way to raise tax revenues, mainly from the rich, is to cap deductions, avoiding the politically charged issue of raising tax rates. Republicans seem open to this. But President Obama and the Democrats are not; instead, they seem positively obsessed with raising tax rates. It’s no longer just about revenues, or even merely making the rich pay more; it’s a line in the sand for a top tax rate restored to 39.6%, and not a tittle less. They pursue this as some kind of vendetta, as Ahab pursued his great white whale.

Both sides are blameworthy, pushing narrow partisan interests while convinced of rectitude. But the Democrats now outstrip the GOP in zealotry, in their evident sangfroid approaching the fiscal cliff. They even seem to think going over would be good for them. Here’s why: in the first place, they figure they can pin the blame on Republicans. And secondly they see this as a white whale trap (this is the Patty Murray plan; she’s an extreme liberal Senator from Washington). If nothing is done, all the Bush tax cuts will expire on January 1. Republicans wouldn’t have the votes to restore them for the rich, while Democrats would bring forward legislation to re-reduce tax rates for the non-rich, and defy Republicans to oppose that. Gotcha!

And because they thusly think they have the upper hand, Democrats aren’t being serious at all about spending cuts, even reducing what they’d previously offered Republicans in trade for higher taxes. The cuts on offer now are paltry, and mostly smoke-and-mirrors besides. No wonder Republicans balk. Democrats want them to: it’s “Make my day.”

They feel cocky and empowered because they won the election – “decisively.” How often do we hear that? But a 50-48% win is not what I call “decisive.” The electoral vote was more lopsided, but only because a passel of swing states went by the narrowest of margins. And though they gained a few seats, Democrats failed to capture the House of Representatives. The fact is that the country remains closely divided; the election changed nothing, settled nothing.

The conventional wisdom seems to be that going over the cliff briefly is not catastrophic, because then the parties will scramble up a deal. I’m not so complacent.

Firstly, the mere fact of Washington actually letting this happen would be terrible for the economy, eroding confidence in our political system even more than it was already eroded by the partisan games of the last few years. Remember that the fiscal cliff was created intentionally, to force the parties to compromise. And if they can’t compromise when up against such a deadline, why expect a deal without one? Once over the cliff, a kind of virginity will be lost. If the sky does not fall straight away – but only in slow motion – there will be even less impetus for a “grand bargain.” Furthermore, Democrats will now have actually bagged their white whale – tax rates will rise for the rich – thus leaving no bargaining chips for getting anything done on spending. So nothing substantive will get done.

America is the Pequod. The Democrats will party on deck while the vessel takes on water below.

Call me Ishmael.

Fiscal Cliff Notes

Here’s the deal:

Tax revenues rise. Not rates – revenues. Raising rates is bad because it disincentivizes work, enterprise, and investment, and encourages tax avoidance. But rates needn’t be raised; the money can be gotten by curbing deductions, which are worth over a trillion a year. And instead of fighting a political WWIII over which deductions to kill, the better solution is to cap the dollar amount of deductions any taxpayer can take.

Romney proposed this during the campaign. It would mostly hit the rich, especially the very rich. Now, it’s true that (contrary to “Buffett rule” hogwash) the rich already pay by far the lion’s share of all income taxes; they should not be seen as a bottomless well of cash for redistribution; nor should their wealth be regarded as somehow illegitimate, deserving more taxation punitively. All that said, it’s my judgment (as a fairly rich Republican) that given the country’s fiscal situation, richer people should pay somewhat more.

And capping deductions is a particularly fit way to do that. The mortgage interest deduction, for example, encourages over-large (and multiple) houses, by forcing other taxpayers to subsidize them. The charity deduction likewise makes other taxpayers subsidize the pet causes and vanity of rich people. Capping deductions would curb these undesirable inequities while still allowing the middle class to benefit reasonably from these deductions and others.

The President is probably right that a reasonable deduction cap can’t produce as much added revenue as he advocates. But he wants too much; that should be seen as an opening bid to be bargained down. Other countries that have tackled similar budget imbalances have done it with a heavy preponderance of spending cuts over tax increases, which is better for economic health.

That our problem really lies with spending is obvious because taxes high enough to close the gap would be far too high for the economy to bear. Indeed, you could never actually raise revenues that much, because it’s self-defeating — the more you tax, the less taxpaying economic activity you have.

What to cut? Defense. Yes. A lot. We need to maintain geostrategic muscle, but the truth is that a huge part of our over-bloated defense budget contributes nothing toward our actual security. A great part of it is political patronage, keeping Congressmen sweet. Unfortunately, because whenever billions are at stake, you can’t banish politics, so it will be easier for the Pentagon to cut meat than fat. But we must try.

Social programs: benefits for the poor and disadvantaged should not be cut. I’ll say it again: we are a rich country and we can, and should, take care of the less fortunate. That’s actually only a small part of government’s social spending. It’s the much greater welfare for the affluent that must be cut.

The big pig here is Medicare. Romney also actually said that benefits for wealthier people will have to be trimmed. Yes, bless his heart, he did say it. But for social spending in general, here again you can’t get politics out of it, meaning it’s a lot easier to screw the poor than the better-off, because the latter carry so much more political weight. Yet again we must try. “Means testing” must become the watchword for all these programs – i.e., only the needy should be “entitled.” That’s the only fair way to achieve swingeing reductions; probably the only way at all.

Another point: no phony cuts, or phony pledges of future cuts. Congress is good at this game: legislating draconian cuts in, for example, Medicare reimbursement rates for doctors and hospitals, that (wink, wink) will never be allowed to actually take effect. (That was how Obamacare was seemingly transformed from a huge expense to a money-saver.)

So there’s the deal. The only possible deal; the deal that has to happen. But Obama flubbed it before. I voted against him mainly because I didn’t believe him capable of achieving it now. Let’s hope I was wrong.