Decline and Fall of America: The borrowing mania begins
WASHINGTON, August 16, 2015 – In our initial article, we featured an interesting and problematic chart purportedly illustrating the gradual moral equivalency of socialism and capitalism, liberalism and conservatism. The chart concluded that both progressions ended up in the same place.
But the chart erred by missing an important point, namely that today’s “progressive” left is, in fact, actually “regressive.” Today’s wealthy and influential “progressives” and the politicians they own (nearly all Democrats) are actually oligarchs disguised as Marxists and socialists. They clothe their avarice, greed and lust for power in the apparent virtues of “social justice.” In so doing, they have led well-intentioned voters into supporting the capitalist oppression these “social justice warriors” (SJWs) routinely blame on the hapless and gutless Republicans who have few if any seats at the oligarchs’ table.
This radical disconnect from political and economic reality didn’t happen overnight. Instead, it has its contemporary origins back in the controversial administration of Lyndon Baines Johnson. It was Johnson and the Democrats who began the rolling disaster that ultimately unraveled America’s post-World War II economic juggernaut.
Lyndon Johnson and the cornerstone of today’s economic trap
Lyndon Johnson today is still praised and revered by biased historians as the man who forced through Congress the landmark Civil Rights Act of 1965. That’s all well and good, although it papers over his roughly ten-year rule as the Senate’s majority leader during the 1950s when, with the aid of a strong cadre of avowedly racist Southern Democrats, he fought back, again and again, attempts of House and Senate Republicans (you read that right) to pass similar Civil Rights legislation.
Today’s political narrative would have us believe that it was the Democrats who championed this Civil Rights legislation from the very start. But historically, this reading of history is phenomenally untrue and misleading.
Unfortunately, the consistent and relentless proclamation of this myth by the media as well as in biased high school and college textbooks forms the basis for our current American narrative that casts today’s Republicans as historically racist supporters of the rich—which they were not and are not—and today’s Democrats as champions of both equality and heroes of the American worker—which they were not and are not.
This Civil Rights Act-centric rewriting of history also serves as a smokescreen for two extraordinarily negative but key 1960s political and economic moves that festered for decades before bursting into the open in 2007 and beyond. In tandem, they eventually resulted this century in a confused, divided and significantly weakened America. In 2015, the now country seems to possess scant knowledge of its history and heritage and little clue as to how such a great and successful country could have arrived at the sorry impasse that marks the economy and the politics of today.
The two key events to which we refer: the passage of the Hart-Celler immigration act of 1965, and the decision by Lyndon Johnson to simultaneously fund his growing Vietnam War effort as well as his grandiose social welfare program misleadingly called the Great Society.
Hart-Celler and The Great Society: the beginning of the end
The Hart-Celler Act was piggybacked on the pro-civil rights surge of 1965, which in and of itself was largely impelled by the Nation’s mass grief over the assassination of Johnson’s predecessor, President John Fitzgerald Kennedy in 1963.
To get Hart-Celler and the Civil Rights Act passed, Johnson took political advantage of the Nation’s collective grief (and the momentary defensiveness of the South) to ram through these and other significant “progressive” measures through Congress, hoping, in his usual grandiose fashion, to add a new and greater Johnson chapter to Franklin Roosevelt’s still-vaunted “New Deal” politics of the 1930s.
As gradually twisted and turned by the Democrats over the years, Hart-Celler metastasized into today’s immigration crisis which hugely favors the destabilizing mass entrance (legal or illegal) of pro-socialist, third-world immigrants into this country while limiting the ability of the once more-favored, highly educated, often European immigrants to gain entry.
This particular rolling disaster is not the central topic of today’s column. But it is still of great economic importance in understanding how we arrived at today’s daunting political and economic dilemma. We will deal with it in a future column.
More germane to our current topic was Johnson’s bold but ultimately disastrous move to employ massive deficit spending via unprecedented levels of U.S. government borrowing to wage a major war in Vietnam while also funding his dubious and costly Great Society scheme.
As an old Midas Muffler TV commercial once observed about the timing of critical auto repairs: “You can pay me now, or you can pay me later.” For whatever reason, successive U.S. governments and congresses chose to pay later—much later—kicking the can down the road forever in order to protect special interest and the incumbent politicians who depended on special interest donations.
As clearly implied in the Midas commercial, paying a few dollars now to solve a developing problem, while perhaps painful at the time, is generally cheaper and more successful than putting it off until the small problem becomes a big one. Most politicians, however, find it in their best interest to put off the repair, perhaps figuring they’ll be retired or dead when the final bill comes due, leaving the massive cleanup in aisle 6 to their hapless successors.
Four recessions and a Great Recession
Few if any in government or the public could have known it at the time. But Johnson’s fiscal and military recklessness was never to be fully addressed by the Federal government.
Instead, this cancerous growth in Federal government borrowing was papered over repeatedly to create the illusion of ongoing “normalcy”—this in spite of rapidly increasing inflation that ultimately resulted in a pair of brutal recessions that eventually erupted in 1974-76 and again in 1979-81.
These adverse events were likewise dealt with in still Democrat-led Congresses by further borrowing and deficit spending activities. This persisted through the 1980s and 1990s under Presidents of both parties. The result was two additional and severe recessions, the first caused by the Savings & Loan debacle of the late 1980s, and the second caused by the wild “dot.com” stock market disaster that triggered the 1999-2001 crash and burn in the tech sector stocks.
But these four recessions were only the prelude to the final disaster. Led by real estate subprime and undocumented “liar loans,” an overheated U.S. real estate sector exploded into a plague of disclosures, taking down the numerous banks, loan companies and investment houses that financed them with flimsily backed and carelessly subdivided lending instruments.
With frightening speed, the top-heavy Great Society Ponzi Scheme burst out at last into the full-blown financial disaster we currently know as “The Great Recession” of 2007-2010, which, arguably, persists to this day.
Next: In our third and final article, we’ll take a look at how the left’s phony progressivism, as inadvertently outlined on the wrong side of Jesse’s intriguing chart (Part 1), has been steadily downsizing the real opponents of Marxism—America’s vanishing middle class—by turning this country’s increasingly underpaid worker bees and scads of illegal aliens into a vast, permanent and hopeless underclass who will likely vote to maintain a failing system.