There are a lot of Andrew Jackson quotes rolling around the internet now, mostly because of his opposition to privatized profits and socialized losses in the financial sector, and the government-backed organizations that facilitate this. Intrigued, I came upon a veto message from 1832 that, at its end, provides some general principles beyond the particular issues of his day, one that speaks to the past decade of federal and state legislation in Albany and Washington. The man on the twenty dollar bill sensed the country was going wrong because its institutions were being corrupted by special interests, and were threatened as a result. The veto message was posted by a well known Furman University professor of history, and taken from Messages and Papers of the Presidents, also posted here. In light of recent events, and the diminishment of our collective future by public and private actions over the past decade, it is well worth reading.
“It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.”
Who are the rich and powerful today? The top executives who sit on each other’s boards and agree to pay each other princely sums off the top, even as the companies they lead pay little in dividends and often have little long-term value? Those executives who justify that enormous compensation based on the short run false increases in value of speculative investments that collapse and lead to taxpayer bailouts, paid for the “humble members of society?” Those who get special tax breaks for their firms, or sales tax exemptions for their industry? Yes, among others.
There are those who have called the bailouts of the past year “socialism.” But “socialism” is an attempt to produce more “equality of talents, of education, or of wealth” by taxing away some of the “full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue” from those who have them. Andrew Jackson evidently would not have approved, but what has gone on is something worse. What is evolving now was described to me decades ago as “illiberal state monopoly capitalism.” At the time I was in college and graduate school, and the reference was to the dictatorships of 1970s and 1980s Latin America, were widespread state ownership was associated with the most unequal distributions of income on the planet – and public and private debts that led to a decade or two of falling living standards.
“There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing…Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union.”
It is, however, not just the small number of people most Americans would identify as “the rich” who have sought “titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful.”
The “rich and potent” are also those who get to retire early in life and get paid for decades of leisure, like those in the public employee unions for whom Albany is always granting pension sweeteners, even as the “humble members of society” who pay for them and serve them have little if any retirement to look forward to.
They are this generation of senior citizens, which Albany has exempted from state and local income taxes and Washington has granted unlimited health care at unlimited cost, while not finding the money to provide universal insurance for the “humble members of society” who will almost certainly receive much diminished benefits in the future.
They are those who have their income automatically adjusted upward for inflation (in a country where the currency is being debased and high inflation is a very possible near term outcome), like the teachers outside New York City, public employee pension recipients, and Social Security recipients, even as the minimum wage is not so adjusted, to hold down the cost of the people who serve them.
They are those in older generations who ran up massive federal, state, and local debts because they wanted to get more out of our institutions and contribute less in, leaving younger generations with a diminished future. Including those that have wrecked the future of New York’s mass transportation system and, therefore, its economy.
They are beneficiaries of the out-of-control spending in New York’s school districts outside New York City, which not only provide an education but also a patronage machine and low-work sinecures for more people every year, at the expense of New York City’s children and taxpayers. You can add millions of former Wall Street workers residing in the suburbs to those who will be expecting a school district “job” with health care and pension benefits in the next year.
They are those who have turned the Medicaid program, originally enacted to ensure basic health care for the poor, into a source of domestic servants for middle class seniors, and a source of profit for “non-profit” organizations led by people earning salaries that would shock those who founded the charities of old.
They are the government contractors, who somehow charge hundreds of millions of dollars to merely design public improvements that are borrowed for but never built due to “circumstances beyond our control.” The New York City Partnership is already gearing up to “prioritize” capital improvements by advocating the cancellation of projects that city residents have paid for many times over, or at least those (such as the Second Avenue Subway) that would benefit city residents.
They are members of the political class, who see public office as a permanent sinecure, and seek to eliminate competitive elections wherever possible, allowing them remain in office indefinitely, dispensing favors to the narrow band of players who keep them there, until their relative or designated successor takes their place.
These groups do not consider themselves the “rich and powerful,” and no one (else) dares to make a connection between their “titles, gratuities, and exclusive privileges” and the diminished well being of those who have to pay for them, but compared with the “humbler members of society” and younger generations, they are the rich. And they have not gotten rich through “the gifts of Heaven and the fruits of superior industry, economy, and virtue,” but by working the political system.
They are like the small slaveholders of Andrew Jackson’s day, who lived off the labor of only a few slaves, on land seized from the Indians, rather than owning vast plantations with hundreds of slaves. That’s right, slaves. As an individual, I cannot promise that my children will have to work for nothing in the future in exchange for more benefits for myself today, but that is exactly what the generations in charge have done collectively through government debts. The young will work to pay taxes for nothing, with more diverted to debt service every year.
“It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy.”
A decade ago, I had hoped that even if those who already had extensive “vested” special privileges got to keep them, if no more were granted the natural growth of the economy would allow a gradual reduction in taxes and improvement in public services and benefits for everyone else. To my rising frustration, instead of the “gradual reform in our code of laws and system of political economy,” the privileges of the privileged have been continually expanded. Far from being a little embarrassed by the difference between what they and others receive, they have demanded more and more and more. Without limit.
The pensions of those who already had generous pensions were made richer. The retirement age of those who already got to retire early was decreased.
Special “reform” acts were passed to channel more money to Medicaid, even as income support and social services for the actual poor was slashed.
A prescription drug benefit was added for the seniors who already received extensive government health care benefits under Medicare, paid for with borrowed money, a cost that that could have instead been sufficient to provide universal health care for all those uninsured. Also rising each year, the subsidy for those who have private insurance, via the exclusion of employer-provided insurance from taxable income, a subsidy worth more the more you earn. And the cost of tax-financed health insurance for public employees and retirees.
The STAR program channeled ever more money to school districts that already spent too much, paid for by those living in places where in the past the schools spent too little.
The infrastructure was not expanded, and was only maintained with borrowed money that is running out.
And now, we are bankrupt. It is too late for “gradual reform in our code of laws and system of political economy.” If we “can not at once” impose “justice to interests vested under improvident legislation,” the rest of us will have nothing left, because they have take so much, and deferred so much of the cost, that unless they are forced to give something back, the consequences for the rest of us will be severe.
Yet there is virtually no chance of this happening. Can you imagine the next President and Congress taking back the Medicare prescription drug plan? The New York State legislature taking back the STAR program, and telling school districts in the rest of the state to become more efficient? Or the legislature making null and void all those pension sweeteners previously described as “free,” or forcing the beneficiaries to pay for them, back door, through higher pension contributions from those still working and health insurance contributions from those already retired? Or the legislature making retirement income subject to state and local income taxes? Or taking back the “tax relief” checks and sales tax exemptions, or “Empire Zone” giveaways? Or reducing the level of spending on Medicaid by reducing abuse rather than the number of legitimate beneficiaries? Or deciding that we really aren’t obligated to pay off all those MTA debts, rather than canceling long-promised improvements?
When, after the election, the Governor and State Legislature and Mayor and City Council claim that public service and benefit reductions (mostly for the young), lower pay and benefits (for new workers), and higher tax rates (for those without deals) are necessary due to “circumstances beyond their control,” is there any doubt that these imposed sacrifices will instead be the result of “interests vested under improvident legislation.” At the national level, one commentator after another has already pronounced the promises of candidates McCain and Obama null and void given the bankrupt federal government the Bush administration will leave behind. And as soon as the economy turns around, and long before tax rates, services and benefits could be restored to what they were, is there any doubt that more “improvident legislation” will be passed?
And in the private sector, there is news today that the credit markets are collapsing because no one is willing to lend or invest at any price. Meanwhile, the interest rate on short-term U.S. Treasuries is close to zero, because that is all people are willing to trust, even though inflation is wiping away the value of savings. As it happens we have a lot of savings in short-term U.S. Treasuries, thanks to “the gifts of Heaven and the fruits of superior industry, economy, and virtue” accumulated gradually over a long period of time. Do I shift any of those hard-earned savings to another asset? How can I be sure that those looking to grab my money in exchange for worthless paper won’t promise something else and do just that? Rely on advisor to tell me where to put it? It is the advisors who made the tens of $millions by profiting from bad advice.
Perhaps it doesn’t matter anyway, because that is what is happening through government action. If we come out of the short-term crisis, which people are working hard to achieve and which is likely, it will only be by addition massively to the long-term collective debt that are sinking the country. How high will the share of federal taxes that goes to debt service be after this is over? Unlike the Social Security Trust Fund, these debts are real, and for all the talk of taxpayers getting stuck with the bill, today’s taxpayers have been getting checks, not increases. It is tomorrow’s taxpayers who will be worse off.
“I have now done my duty to my country. If sustained by my fellow-citizens, I shall be grateful and happy; if not, I shall find in the motives which impel me ample grounds for contentment and peace. In the difficulties which surround us and the dangers which threaten our institutions there is cause for neither dismay nor alarm. For relief and deliverance let us firmly rely on that kind Providence which I am sure watches with peculiar care over the destinies of our Republic, and on the intelligence and wisdom of our countrymen. Through His abundant goodness and their patriotic devotion our liberty and Union will be preserved.”
Say your prayers. But since anyone who does their “duty to my country” is merely a mark for those draining money out faster than it can be put in, expect an institutional collapse.