When The Money Runs Out

London was gripped by massive demonstrations over cuts to university funding earlier this week.  Both police and protestors were injured.  Prince Charles’ car was assaulted.  The riots were sparked by the government’s decision to raise maximum university tuition rates, although the top rate still works out to only about $15,000 in American dollars per year.  A disgusted cabbie told Time it was “the sort of thing they do in France.”

He’s right about that.  France was paralyzed by massive strikes and demonstrations in October, brought on by the government’s decision to raise the retirement age from 60 to 62.

After London, we saw a somewhat more restrained set of riots in Rome… once again prompted, in part, by cuts to university funding.  Things got much worse in Greece on Wednesday, as a massive general strike degenerated into violence.  Rioters trashed cars and threw firebombs to protest “austerity measures.”  A post office was set on fire.  Back in May, rioters in Athens killed three people when they burned down a bank.

The Associated Press describes the Greek austerity measures as “deeper pay cuts, salary caps and involuntary staff transfers at state companies.”  The law also “reduces unions’ collective bargaining power in the private sector, allowing employers to substantially cut salaries.”  The deputy leader of Greece’s largest union described the purpose of the strike and protests as putting “pressure on the government” to “take back the latest labor law that will hurt workers’ rights.”

It’s hard to be more broke than Greece is.  A massive international rescue package was necessary to keep the government running at all.  The stress of providing this assistance is causing other European economies to tremble.  Spain’s credit rating is under review, a move said to have “shocked” financial markets in the New York Times.  Ireland just received its own bailout, to the tune of 85 billion euros.  Angry voters are preparing to punish their Prime Minister’s party for “bankrupting the country.”  Portugal is skirting the edge of insolvency, and wrestling with austerity measures that include public-sector wage cuts and raising the retirement age by two years… rather like France.

Margaret Thatcher once observed that “the trouble with socialism is that eventually you run out of other people’s money.”  That moment has arrived, both in Europe and the United States.

We’re a little behind the European curve, but then, we haven’t started implementing “austerity measures” yet.  Far from it – the Democrats just dropped a trillion-dollar omnibus bill in our laps, which doesn’t cut a dime from the outrageous spending that got them pounded in the midterm elections.  The sole form of “fiscal restraint” understood by their party is tax increases.  Well, ninety percent of our deficit is due to spending.  There is no possible way to tax ourselves out of that hole, any more than England, Greece, Italy, Ireland, Spain, or Portugal could.

Claiming that massive deficits can be addressed by tax increases is the last, desperate attempt of cornered socialists to shift responsibility for their failures to faceless class enemies.  It is the stern insistence by government that all of its problems can be laid at the feet of the private sector.  The minimum threshold for membership in the Evil Rich keeps plummeting, which is another way of saying that more of the public is failing to live up to the expectations of the State.

Here is the truth socialists attempt to cover with that illusion: the U.S. national debt is currently $13.8 trillion, while our annual Gross Domestic Product is $14.6 trillion.  That means you would have to seize nearly the entire economic output of the nation to pay off the debt.  The unfunded liabilities of Social Security and Medicare approach the GDP of the entire planet.

The current federal budget deficit is $1.3 trillion dollars.  The top 1% of income earners had a total adjusted gross income of about $1.6 trillion.  It would be necessary to confiscate nearly all of their income to pay off the deficit.  These are the “greedy” folks Democrats claim are the only ones who deserve tax hikes at the moment.  They already pay 38% of all income taxes. 

The Thatcher Moment is a black sun of unsustainable debt, rising across the entire globe.  The Left really is out of other people’s money, all across the Western world.  The lesson we can learn from Europe is the importance of stopping them before we degenerate into a basket case like Greece, where a union boss casually speaks of asserting “worker’s rights” to an empty treasury.  He asserts these “rights” with strikes and riots against a government that is only alive because of intravenous transfusions of cash from other European states.  Some of those donors are beginning to look a little pale and wobbly themselves.

Our path to fiscal sanity will involve doing things like breaking public-sector unions, and laying off the thousands of surplus civil servants President Obama has been hiring like mad for the last few years.  To be frank, the layoffs can’t stop with them.  Vast benefit programs with entrenched constituencies must be cut.  There will be unrest when that happens.  Whether it looks more like Rome, London, or Athens depends entirely on the Republican Party, and how it manages the 112th Congress.  The Democrats have demonstrated themselves completely irrelevant to the process of controlling our national debt before it destroys us, except as an obstacle to be removed.  They even put it in writing.