It may be a bit of an exaggeration to say that 2017 was the best of times and the worst of times for classical liberalism in the United States but not much of one.
Ray Fair, a fine Yale economist, has the best economic model for predicting the outcome of presidential and congressional elections. The model has the virtue of simplicity, weighting incumbency, length of time a party holds the Presidency, and news about the economy on growth and employment relatively shortly before election. It has not been perfect in predicting each party’s share of the two party vote, but it has been good–good enough to be taken seriously outside the academy. The New York Times in fact devoted a whole interview to him, sadly marred by the seeming inability of the interviewer to understand why, Fair, despite being a Democrat, used his model to predict a Republican victory!
But the relative success of his model makes one doubt how strong is democratic accountability for the economic performance of government. Few, if any economists, would say that the news about growth and unemployment shortly before an election is a good proxy for that party’s economic stewardship. Business cycles are not in the control of the government. And perhaps more importantly, the most important policies a government undertakes likely take longer than a few years to bear fruit. Thus, the tax cutting policies of the Reagan era may be largely responsible for the prosperity of the Clinton years as businesses and people invested more.
The threatened filibuster by the Democrats of Judge Neil Gorsuch seems irrational if its purpose to help create a Supreme Court more friendly to Democratic commitments. Almost everyone expects the response by the Republicans will be the so-called nuclear option by which they use their majority to end the filibuster rule for Supreme Court nominations. The Republicans believe that filibustering a mainstream judge in the first year of a President’s term is illegitimate. Given that in 2013 the Democrats eliminated the filibuster for lower court and executive appointments, they will also regard themselves fully justified in taking a similar action themselves. And the Republicans will be acting within their constitutional rights: as Mike Rappaport and I have shown, the Senate majority must have the authority to change supermajority rules by majority vote.
The elimination of the filibuster leaves the Democrats in a worse position for the rest of President Trump’s term. The most obvious reason is that they then cannot filibuster the next nomination— the one likely to fill the seat of Justice Ginsburg or Justice Kennedy.
In an op-ed in the New York Times, two Harvard political scientist professors, Steven Levitsky and Daniel Ziblatt, have sounded the alarm about democracy in America. It is in danger they say mostly because democratic institutions are no longer backed up by the “guardrails of democracy”—deep norms of “partisan self-restraint and fair play.” Sadly, their analysis of the decline of these norms is itself both partisan and shallow. It is partisan because they note only Republican breaches of such norms, when Democrats have engaged in breaches as well. Its shallowness in turn comes from their partisanship. They blame a particular political party rather changes in the nature of our polity, like the growth in the power of government and decline of federalism.
The partisanship of Levitsky and Ziblatt is striking. They claim that one of the informal norms is that legislative votes about matters of “extraordinary importance,” like impeachments, be bipartisan and Clinton’s impeachment by Republicans was not. But the only previous impeachment of the President—that of Andrew Johnson—was also a party-line vote. The norm that creating new entitlements—also actions of extraordinary importance—should be bipartisan, however, is a much more established one: Social Security, Medicare and Medicaid all had bipartisan support. Yet President Obama enacted the Affordable Care Act without the support of even one moderate Republican such as Senator Susan Collins of Maine.
These Harvard professors decry the failure to vote on Merrick Garland, which they characterize in hyperbolic terms as “stealing” a Supreme Court seat.
From my many friends who are Democrats, I hear a common complaint: the Republican Party is a party of obstruction while the Democratic party is much more accommodating. Of course, the first reaction of most Republican would be to note the many not so accommodating actions of Democrats, from the attempt to filibuster Justice Samuel Alito to the refusal to negotiate any reforms in social security with the newly reelected George W. Bush. But such back and forth is pretty fruitless and may miss a more fundamental point.
It is not at all clear that it is rational for parties to engage in the same amount of obstruction. The rational amount of obstruction depends on how easy it is to repeal the policy being obstructed. If it is easy to repeal the policy, it does not make sense to pay the political price for obstruction, because the policy can be readily ended when the party comes to power. But if the policy is hard to repeal, obstruction becomes a more natural course.
Thus, the real question on the rationality and justification for obstruction is whether the Republican and Democratic parties face the same political terrain for repealing the legislation they oppose. And I do not believe they do, particularly when it comes to the creation or expansion of entitlements.
Is Bernie Sanders or Donald Trump a greater long term threat to the principles of classical liberalism? Trump’s program is antithetical to classical liberalism. He wants to follow protectionist trade policies. He has disclaimed any interest in reforming the burgeoning entitlements that are the principal engines for growing the state. He seems to quite content to praise authoritarian leaders abroad, like Vladimir Putin. He wants to make it easier for public figures to sue private citizens for their criticism. And he is so vulgar and gratuitously offensive that he undermines the culture of self-restraint necessary to the classical liberal order.
Of course, Sanders is worse on many of these axes. He not only wants to preserve all entitlements but add to social security and to create an entirely new entitlement to higher education. He also is a protectionist. He would destroy the private provision of health care. And he would raise tax rates sky high. As for authoritarianism, he seems to have trouble condemning any regime, such as Cuba, so long as he can entertain the false belief that the regime has been good for the social welfare of its citizens.
The Economist reports that in five nations net transfers (private plus public) go from the young to the old rather than the other way around. Some of these nations are deeply social democratic (Germany, Austria, Slovenia). Some are thought to be conservative (Hungary, Japan). But all have in common large social entitlements.
This trend shows show how welfare states can reverse the natural order of things, where the old give more to the young than the young can ever repay. Families exemplify this principle. Socially too, the intergenerational flow of resources is what creates civilization as each generation receives benefits from the previous one.
Now to be sure, not everything that is natural is good. But few people criticize the special solicitude parents feel for their children or the old feel for the young generally. And entitlements to the elderly cannot easily be justified by abstract appeal to the justice of redistribution. It is simply not the case that the elderly as class are poorer than the young.
The social consequences of this unnatural flow are deeply unfortunate.
The budget deal last December was notable for its neglect of any reform to entitlements. The Obama years will likely be remembered for the utter failure to come to grips with our burgeoning unfunded obligations, which remain the greatest threat to our future. But don’t take my word for it. Here is the eloquent economist Caroline Hoxby:
Programs such as Social Security, Medicare and disability have needed reform for many years because they are not fiscally sound. They will predictably impose an increasing burden on the economy. Today’s young Americans will have to be heavily taxed when they are adults to pay for benefits mainly enjoyed by previous generations. This will discourage them from working and upgrading their skills, causing future growth to slow. Most economists have agreed year after year that these programs need attention, yet reforming them always takes a back seat to agonizing about the latest crisis—even when we know that such agonizing cannot help much and that we must let the economy re-equilibrate.
Sadly, reform seems further away than ever, as Republican presidential candidates are largely silent about the issue and Democratic candidates want to add to entitlements by increasing social security benefits. One reason for less serious talk about reform, let alone action, is simple: the baby boomers are either now collecting old-age entitlements or getting ever closer to the day they will do so. Politicians are leery of annoying this massive, aging voting bloc.
This issue highlights a little discussed danger for democracy—its last period problem.
Not much has been said yet about the fact that the man now giving Hillary Clinton a run for her money in the Democratic primaries, Bernie Sanders, is a self-proclaimed socialist with a picture of Eugene Debs hanging in his Senate office in Washington. Even when his socialism is discussed, for example in a recent Politico article by David Greenberg, more time is spent describing the history of American socialism and relatively little explaining how Sanders fits in.