Monday, January 28, 2013
Michael Sean Winters has a really good post up about (retired food critic) Frank Bruni's really lousy piece against priests and Cardinal Wuerl's great Washington Post op-ed about dogma and faith. He concludes:
The church is dogmatic, and that is good — even if it means that the church is a sign of contradiction in the world and the object of animus and disdain. It is a positive, attractive feature that what we profess is unchanging and unchangeable — the good news of a love and truth that we are called to share with the world. It is good for Catholics and non-Catholics. Were the church to compromise its creed, if we were to simply go along with today’s secularized culture, not only would the church cease to be the church but the common good would suffer greatly.
I also really liked this reminder:
Catholic hospitals provide millions of dollars’ worth of uncompensated care every year to our poor and vulnerable, and Catholic schools save taxpayers hundreds of millions of dollars annually in per-pupil costs.
I hope for the day when, the next time a school-choice opponent complains about Catholics churches trying to "siphon off" "taxpayers' dollars" to subsidize "sectarian" schools, Cardinal Dolan calls a press release to present a bill to the American people for the hundreds of billions of dollars Catholic schools have saved from the American taxpayer by educating (usually better, and for less, than the government-run schools have done and do) children (of all faiths and socio-economic backgrounds). Remember, the state is not doing us a favor by allowing us to do "government things" like feed the poor, heal the sick, and educate children. We were doing these things first.
In my immediately preceeding post, I suggested that the question of how best to liquidate our large public debt should be addressed at least partly by reference to the debt's provenance. I then claimed that the principal such provenance is the debt-deflation that we have been undergoing since the crash of 2006-09. Finally, I said that I would say a bit more about how best to address our still ongoing debt-deflation in a manner that will restore growth and employment and thereby enable us to liquidate the public debt.
A broad-outlined but still detailed account of how to do this is The Way Forward, which Dan Alpert, Nouriel Roubini and I put out a bit over a year ago. This paper both thoroughly addresses the source of our present predicament, and offers a three-pillared plan to get out of it. Pillar One involves public infrastructure investment, more on which presently. Pillar Two involves mortgage debt write-downs and other home-finance-related measures, also more on which presently. Finally, Pillar Three involves global currency reform, again more on which presently.
I urge all readers who are interested in how best to discharge our duty of macroeconomic stewardship at least to skim this piece, which received a great deal of favorable attention from legislators and others concerned with macroeconomic policy, and indeed fed into subsequent legislative and related work on which this author is still engaged. More on some of that in due course.
As The New York Times, reports here, Justice Sotomayor is "heartbroken" over the closing of Blessed Sacrament School in the Bronx. The school is, of course, one of many hundreds of urban-area Catholic schools that have closed in recent decades. She writes:
“You know how important those eight years were? It’s symbolic of what it means for all our families, like my mother, who were dirt-poor. She watched what happened to my cousins in public school and worried if we went there, we might not get out. So she scrimped and saved. It was a road of opportunity for kids with no other alternative.”
Right on. For more, see N. Garnett & M. Brinig, Catholic Schools and Broken Windows, here.
Our brother Greg is doubtless correct (1) that the public debt must at some point be trimmed, (2) that not to trim it would involve our passing down weighty obligations incurred by ourselves to our political descendants, and (3) that doing that in turn would constitute poor stewardship. Few, if any, would seem to disagree with this chain of observations. Where there is disagreement is on how best to do the job, and over what time horizon.
One thing that it is critical to bear in mind as we consider these two questions is the source of the public debt, for sources of debt typically also are sources of debt-liquidation. President Obama of course inherited the lion's share of the current public debt from the administration that preceeded his -- an administration that told us that 'Reagan showed that deficits don't matter' as it proceeded to slash public revenue and balloon public spending. At least as important, however, is the economy that the President inherited not only from the administration that preceeded his, but also from administrations dating back to the 1970s.
Dating back to the 1970s? Yes. This is particularly important to recognize in view of the frequency with which one encounters observations to the effect that President Clinton's administration put the federal government into surplus and even began paying down the national debt. While those observations concerning the Clinton years are true, they overlook an underlying weakness that was at work during the Clinton years and the earlier Bush, Reagan, and Carter years to boot. This is a weakness that made of the Reagan and Clinton 'prosperity' something of a mirage. It is also that weakness that ultimately brought us the crash we experienced in 2006-09 and, therefore, the growing of the public debt even beyond the unprecedented ballooning that the Bush II administration brought.
The weakness to which I refer is our failure as a nation to keep real incomes among those beneath the top one percent of the national income distribution from growing with productivity. That is in turn partly a function of trade policy, partly a function of education policy, and partly a function of tax policy, among other things. Irrespective of causes, however, the pertinent upshot is that consumer and mortgage debt steadily came to substitute for real income growth among most Americans as a support for growth- and employment-sustaining consumer expenditure. That growing reliance on private debt, in turn, layed the predicate for a classic debt-fueled asset price bubble. Once the credit ran out, of course, the bubble burst. For literally scores of millions of Americans, that meant that variable equity value dropped below fixed debt value. Scores of millions, that is to say, suddenly found themselves financially 'under water,' living in the shadow of debt overhang. The macroeconomy accordingly lurched into Irving Fisher style debt deflation.
The problem with debt deflations is their 'downward-spiraling' dynamic. Debt overhung consumers stop spending. That raises inventories and lowers employment. Lowered employment lowers consumer expenditure yet further, leading to more layoffs, & cet.
This is in turn why public debt always soars during debt deflations. Japan, for example, entered into a debt deflation of its own circa 1992 in the wake of a combined stock and real estate crash of its own much like ours. And Japan is still there - it's 'lost decade' has doubled to two now, and its public debt to GDP ratio is well over twice that of the U.S. right now.
But why has Japan's debt deflation persisted for so long? The reply to that question affords guidance to those who would answer the questions with which I opened above. Japan responded quite timidly to its crash. It acted as many misguided politicians now urge the U.S. to do -- with premature austerity. It's easy to see why austerity would yield the effect that it did: again, in the absence of private consumer expenditure, public expenditure must fill in the void until growth is restored. That's what Japan failed to do on sufficient scale, and it's what even we in the U.S. have failed to do up till now. Our 2009 'stimulus' was anemic and too reliant on tax cuts, which debt-overhung consumers simply hoard during depressions like ours.
Of course, neither Japan nor the U.S. -- nor any other nation, for that matter -- can substitute public expenditure for missing private expenditure indefinitely. Hence the public expenditure must be both strategic and combined with other policy measures that can restore private purchasing power and growth. That means significant public infrastructure spending on the one hand, and large scale private debt -- in the U.S., especially mortgage debt -- write-downs on the other hand. In a few subsequent posts, I'll say more specifically what that means where concrete policy measures are concerned.
For purposes of this post, however, the closing point is this: Poorly targeted and/or premature public austerity measures will be self-defeating. They will simply resume recession and thereby lower public revenues further, worsening the public debt in so doing. That is perhaps the most salient entailment, right now, of the well known macroeconomic 'paradox of thrift.'
In conclusion, then, poorly targeted and/or premature public austerity would itself be the worst abuse of our stewardship in which we could engage right now. That would deprive our political descendants of future wealth and leave them with all the more future debt.
Friday, January 25, 2013
For most of us as Catholics, we probably associate “stewardship” with that time of the year when the priest or parish council ask us to commit to making contributions to the parish for the coming year.
Stewardship is not only about giving money away, but about making wise use of the resources to which we are entrusted. And an essential part of that stewardship is to preserve resources for use by the next generation. As a nation, we are failing that responsibility — and failing miserably.
If nothing is changed — indeed if there is not dramatic change — the next generation will drown beneath a sea of the debt.
Simply put, America faces no greater danger today than the crushing national debt. No greater threat to a secure safety net for all Americans exists than the uncontrolled growth in entitlements, which eventually will crowd out all other discretionary spending and, in any event, is itself unsustainable. No greater obstacle to prosperity for the next generation of Americans is before us than leaving them with the bill for out-of-control federal spending.
But you wouldn’t know it from hearing President Obama’s inaugural speech this week. He could barely spare a word for the deficit, other than to argue against any meaningful spending cuts and apparently pledging his vociferous opposition to any reform of Social Security, Medicare, and Medicaid.
And you wouldn’t know it from President Obama’s concerted actions since the election, as he has steered away from the balanced approach that he promised during the campaign. Yes, President Obama campaigned for higher taxes on higher-income individuals. But he promised to combine tax increases with spending reductions. When the fiscal cliff approached, however, President Obama demanded only tax increases while refusing to agree to any limits on spending.
Immediately following the election, I was optimistic that President Obama would seize this opportunity to move toward meaningful reform of entitlements and to arrest runaway deficits. As I wrote here on Mirror of Justice, I thought that he would want to be remembered as a President who got the nation’s fiscal house in order, rather than the President who bankrupted the country. The President appears determined to prove me wrong.
Commenting on the inaugural address, Peter Wehner at Commentary writes:
He is fully at peace with running trillion dollar deficits as far as the eye can see. He not only won’t lift a finger to avoid America’s coming debt crisis; he will lacerate those who do.
In the end, though, President Obama’s concern for the less fortunate is at war with his insouciance about trillion dollar deficits:
* The greatest opportunity for those of lower-income and the strongest hope for a secure safety net is a growing national economy. The huge national debt is a constant downward pressure on the economy, suppressing growth below what it otherwise would be and leaving more Americans unemployed (and underemployed) and incomes stagnant. A weaker economy also means greater demands on social services with fewer resources available to meet those demands.
* This year, the United States is projected to spend $224 billion of taxpayer money for interest on the national debt. With President Obama’s deficit spending, the interest due will more than double to $524 billion in a decade. That’s more money than the federal government spends on education, transportation, veterans affairs, etc. And that’s money not available to help anyone or strengthen any social welfare program. Think of what we could accomplish today if we could use that money, instead of transferring it to China and other holders of American debt beyond our shores.
* The Obama trillion-dollar deficits are simply not sustainable. Unless entitlements are reformed, and President Obama has signaled retreat from his earlier acknowledgment that such reform is essential, we will reach a point in which the government has no money left to spend on any programs other than Social Security, Medicare, and Medicaid. The current projection is that we’re only about twenty years away from a situation where all federal revenues are consumed by these three programs, as they are further extended by Obamacare.
* When the day of reckoning arrives on the national debt, the poor will be in the most vulnerable position. When the desperate scramble comes over the shrinking revenues available for anything other than entitlements and interest on the national deficit, the poor and disabled and otherwise disadvantaged are likely to end up on the short end.
President Obama hopes to be remembered for enhancing social justice and equality. I have no doubt that he is sincere in that hope. But unless he faces fiscal reality and becomes an energetic advocate for entitlement reform and deficit reduction, he instead will be remembered for his out-of-control spending and doubling the national debt during his time in office. This period in American history will be held up as an object lesson for reckless spending and economic delusion, likely followed by an era of severe economic and fiscal retrenchment that maydepress the American dream for a generation.There is still time for President Obama to show leadership and secure his social justice vision by meaningful entitlement reform and reduction of deficit spending. Based on the President’s words and actions since election day, I am no longer sanguine about the prospects.
In this HuffPo essay, to which Michael Perry linked, Charles Reid is mistaken in several respects. First, he re-presents the frequently advanced -- but no more compelling for being frequently advanced -- argument that, because Justices O'Connor, Kennedy, and Souter declined to overrule Roe in Casey, it is "obvious" that "Republican promises on abortion were cynically motivated by partisan advantage and were not a sincere commitment to the life issues." The suggestion, I take it, is that pro-lifers should not vote for Republicans because Roe will never be overturned.
I suspect it probably won't -- at least not explicitly. That said, the five Justices who have indicated a willingness to uphold reasonable restrictions on abortion were appointed by Republicans, and the four who have indicated a determination to invalidate such restrictions were appointed by Democrats. So, if you think (as you should, if you are pro-life) it's important that (i) our laws move in a pro-life direction and (ii) that those laws survive judicial scrutiny, then you have (Casey notwithstanding) a good reason -- even if not a conclusive one -- to prefer that Republicans, rather than Democrats, nominate and confirm federal judges.
Second, Reid suggests that Cardinal Bernadin's "consistent ethic of life" emphasis provides an "alternative road map for American Catholics," according to which "the premise of the pro-life movement must be about saving lives, not winning elections or even changing laws." Cardinal Bernadin did not think, in fact, that pro-lifers should stop at "saving lives" and disregard the important task of "changing laws." He would have been wrong if he had. True, there are limits -- some imposed by the Court, some imposed by political and cultural realities, some by sound judgment and prudence -- to what laws can do when it comes to creating a culture of, and a consistent ethic of, life. But I am very confident that Cardinal Bernadin would firmly reject the suggestion that pro-lifers should settle for our current, deeply unjust legal regime. Cardinal Bernadin never suggested Catholics should abandon the struggle for legal change; his challenge, instead -- which we should all embrace -- was to broaden that struggle, to other contexts and other ways in which the dignity of the person is threatened or disrespected.
Thursday, January 24, 2013
I've been thinking a little bit about the difference between establishments and disestablishments of religion. Constitutions serve several functions, but for this post, I'm interested in one in particular: to entrench the idea that there is a law above the state's law -- a law that cannot be changed by ordinary legislation. Could one say this about established religions in constitutional states? The argument would be that established religions in constitutional states place the constitutional state above its ordinary law, and they thereby control and restrain (the reach of) ordinary law. Establishments of religion sacralize the state. If the claim works, then as a functional matter, one might think of the Constitution as an establishment of "religion" -- understood as that which is higher than ordinary law. Just to put it intentionally controversially, the Constitution -- and, even more specifically, the First Amendment -- is our establishment. It enshrines limits on the ordinary power of government, and in the case of the Free Exercise Clause, it can even subordinate the ordinary acts of government to higher law. And the First Amendment is an establishment inasmuch as it incorporates certain relationships between the state and religion right into the fabric of the governmental structure -- relationships which it then fixes and removes from the purview of ordinary law. The difference between constitutional states with establishments of religions and those without them is that in the former, God or the gods establish the state, while in the latter, people do. But in both cases, constitutions 'establish' the (for lack of a better term) sacredness of the state and cement its position above ordinary law. And so, from this perspective, the opposite of establishment is not so much disestablishment as tyranny.