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: Bench Memos - National Review Online

Divine Debt Trumps All -- By: Victor Davis Hanson

By Victor Davis Hanson

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In Greek mythology, even Olympian gods and heroes were subject to a higher divine power known loosely as ?fate? -- an allotted moira, or destiny, that could not be changed even by thunderbolt-throwing Zeus.

In modern America, debt -- whether national, state, or trade -- now plays the same overarching role as the ancient Greek notion of fate. And the president, Congress, and the states for all their various agendas are impotent since they must first pay back trillions that have long ago been borrowed and spent.

Politicians in their hubris who believe they can ignore debt or wish it away are sorely disappointed -- as we see now with the plummeting approval ratings of both the administration and Congress.

Take the issue of health-care reform proposals, in which the issue of debt looms large. We are told that more people will be insured, costs will go down, and care will not be rationed. But this rhetoric cannot disguise the reality of taking on even more debt.

To cover more Americans, a broke federal government will have to either borrow more or curtail the level of coverage that the currently insured enjoy. Numbers do not lie, and our government must explain either how a radical expansion in medical care will cut back on existing choice and service or where the additional revenue will come from.

The spiraling budget deficit also now trumps all discussion of tax policy. We are told the government will not raise taxes on 95 percent of Americans. Yet aside from billions for corporate bailouts, new entitlements will go largely to this group and will increase the annual budget shortfall to nearly $2 trillion.

The wealthiest 5 percent of Americans, who currently pay over 40 percent of the aggregate income tax, simply are not numerous enough to provide the necessary additional revenue -- despite having taxes raised to 40 percent of their income, along with proposed Social Security payroll tax increases and health-care surcharge hikes.

Most likely, the administration soon will have to impose a value-added tax that will fall on everyone, or make Americans who now pay no federal income taxes start paying them. We may casually talk of all sorts of new programs and ?stimulus,? but the vast trillion-dollar collective national debt and rising annual deficits will insidiously hamstring almost everything we plan to do.

Debt also will overshadow energy policy and, for now, trump green politics and politicians. Administration officials lecture grandly about wind and solar power to come. But both are still expensive and now constitute less than 5 percent of our energy production. Instead, our electrical power and transportation fuel overwhelmingly come from more pedestrian oil, natural gas, coal, and hydro and nuclear power.

Due to the recession, the United States has been given a rare reprieve, as decreased global consumption has led to increased supplies abroad and a radical -- though temporary -- fall in energy prices. We have a brief window of salvation in which to start developing additional energy inside the United States -- whether nuclear, untapped coal, offshore oil, new natural-gas fields, shale oil, or tar sands -- that could ensure that the country does not go broke when energy prices rise again, and we slowly transition to new renewable sources of power.

Yet the current policy seems to be that the United States can arrogantly ignore the cost of imported energy. We continue to dream of inadequate, expensive solar and wind power, while not expanding traditional domestic sources of energy -- even as we borrow to consume imported oil and natural gas.

President Obama has put forth an ambitious agenda of radical health-care reform, cap-and-trade legislation, new energy proposals, and expanded entitlements. But no matter how brilliantly the president describes his progressive agenda, it can?t escape our fiscal fate: The country is broke and its ability to borrow ever more trillions of dollars is coming to an end.

Asian and European creditors are becoming wary of lending so much at such low interest to such an encumbered debtor. And why shouldn?t they be?

In short, Americans will have to either raise massive taxes, postpone new spending programs, or cut existing expenditures ? and most likely all three at once.

Ultimately, even we Americans must bow before debt, whose unchangeable laws trump even our Olympian president and Congress.

Full post as published by Bench Memos - National Review Online on August 20, 2009 (boomark / email).