Obamacare, Unemployment, Entitlements & Pursuits – Thoughts for Fourth of July

The biggest news of the past couple of weeks is the Supreme Court Decision on Obamacare. The next, in our opinion, is another weaker than expected Jobs report released on Friday, July 6.  Instead of generating 125,000 or more jobs, as was expected by analysts, the U.S. economy only generated 80,000 jobs. This is the weakest recovery on record according to economist David Rosenberg of Gluskin Sheff.

The real danger for the American people is that today’s long term unemployment could morph into a structural problem in the American economy, a prospect that should chill us all. This prospect is what unifies the two big news events above.

Mort Zuckerman is a sane sensible experienced voice who is also an employer of many. Read what he said on the McLaughlin Report on June 29, 2012:

  • “But I want to mention another mandate which is really important. It’s called employer responsibility. And that means every company with 50 employees of more is going to have to buy a certain kind of insurance That is going to be much more expensive than what they’ve been doing. And that is going to add literally $1.79 per hour to all those employees that they are hiring. And this is going to greatly diminish the number of basically low-level, low-income jobs that are going to be available in our economy. It’s a huge impact.”(emphasis ours)

In other words, Obamacare is going to add to the problem of structural unemployment, unemployment of people who desperately need jobs to survive, to stave off poverty.  Then there is the cost issue according to Mr. Zuckerman:

  • “The cost of this thing is what is not being dealt with. The cost is going to be somewhere well over a trillion dollars. It’s going to chew up all of the available assets that our federal government brings to deal with a lot of other problems….It’s going to destroy state governments. It’s going to destroy the federal government’s ability to do a lot of things… We are going to become Europe by the time this thing gets into a full-blown expenditure program.” 

The Republicans are outraged at one of their own, John Roberts, the Chief Justice of the Supreme Court. They were sure that he with his four conservative colleagues would overturn Obamacare. To their consternation, Chief Justice Roberts elected to uphold the “legitimacy” of the Supreme Court in the eyes of the American people. He also upheld a deeply conservative principle, that the people and the people’s elected representatives make the laws, not 12 unelected people dressed in black robes.

David Brooks, the balanced voice from the New York Times, put it simply on July 2, 2012:

  • People are apparently angry that the court didn’t rid them of a law they detest. But that’s silly. If Americans want to replace this thing, they should do it themselves.
  • Republicans say they trust the people. If that’s true, then they won’t waste another futile breath bashing the court for upholding Obamacare. They’ll explicitly tell the country how they would replace it. Democracy is a contest between alternatives, not a deus ex machina stroke from the lords in black robes. 

This brings us to the main point we made in our political outlook for 2012-2020:

  • …there is a tectonic shift underway in American society. America used to be a society dominated by taxpayers. Since 1773, taxation and political representation have gone hand in hand in America.
  • This America is becoming passe. Today, about 48% of Americans do not pay any income taxes. So about 48% of Americans now take from the American government without contributing to it. Barack Obama is the first American President whose election symbolizes the united efforts of this half of American society. He knows it and that is why his economical policies, right from his inauguration, have been essentially distributive and oriented towards providing government resources to the less advantaged.

As Brooks says, Democracy is indeed a contest between alternatives. But Electrocracy is about how different alternatives fit the needs of the various voting blocks of the electorate. The term “voting block” denotes a section of the electorate that generally votes as a group. The easiest way to form a voting block is to identify a joint need to get an important entitlement from the Government.

This is the biggest force in today’s American politics, in our opinion. The people who don’t pay taxes, the people who need financial help from the Government, the people who believe or are told to believe that such financial payments are their entitlement, will always vote in a block. Today, they represent half the electorate. By 2020, they will represent the absolute majority in the country.

This is why Obamacare passed in 2009 and why Hillarycare failed miserably in 1993. It is a totally different electorate now. This is why we think the Supreme Court would have faced a crisis of legitimacy had Obamacare been thrown out. This is why Judge Roberts found an excuse, a contrivance to uphold Obamacare. We have no doubt that he would have summarily rejected Obamacare in 1994 or if the 2012 electorate had the same composition as the 1994 electorate.

So America’s future depends on maintaining its spirit of self-reliance and its distrust of a powerful, seemingly giving Government. The answer is always the same – Go back and reclaim the heritage left by the Founding Fathers. This was expressed best by CNBC’s Rick Santelli on July 3, 2012 in his comments about the “Pursuit of Happiness” phrase of Thomas Jefferson:

  • …it’s the word pursuit that I want to talk about specifically….if you look for synonyms of pursuit,  you chase after something. The antonym or the opposite is surrender or retreat. This is what I think Thomas Jefferson was getting at. In this country what makes us different we have the right to pursue whatever floats our boat, but we don’t and shouldn’t have any guarantees by anybody that you’re going to catch it. It’s the action of the chase, the ability to be in the game, the ability to do that that brought my grandparents here. Nobody said, listen, if you come here, you can pursue happiness and we’ll write you a guarantee that you’re going to get it.
  • …Ronald Reagan said an issue we need to worry about is reinstitutionalizing our greatness. Do you know what he meant by that? Education – we need to teach kids specific rituals. This is where our greatness is rooted, and I think on the education front we’ve failed a bit.

Mr. Santelli is absolutely correct. Educating young men and women about the core founding principle of pursuit vs. entitlement is an absolute must. Failure will mean creeping Europeanization of America. Success will mean reinstitutionalization of America’s greatness.

Like Mr. Santelli, we are optimists. So we join him in wishing America a Happy Birthday for 2012 and for another 2,000 years to come. 

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