Entries from January 2000

Pandering To The Middle Class

David Frum January 24th, 2000 at 12:00 am Comments Off

What
is John McCain up to? Until now, McCain has appealed to voters and wowed the
press by presenting himself as something bolder and better than an ordinary
politician: a man beholden to nobody, a risk-taker, a truth-teller. The tax
plan he unveiled last week, however, is the work of quite a different character:
The plan is a conventional, poll-driven assemblage of special offers to key
constituencies. "It looks like something that would emerge from the Senate
finance committee after three weeks of deal-making," quips Stephen Moore
of the Cato Institute. The McCain campaign may shrug off worries that their
plan lets George W. Bush get to McCain’s right ideologically. Their candidate’s
appeal, after all, is not ideological. But the plan also allows Bush plausibly
to present himself as the more daring, imaginative, and principled candidate –
and that puts the entire rationale of the McCain candidacy at risk.

McCain’s
plan promises to accomplish four grand aims: (1) to shore up the Social
Security system; (2) to increase savings and investment; (3) to keep the budget
in balance by holding the line on spending and closing loopholes; and (4) to
provide middle-income Americans with a measure of tax relief. On all four
counts, though, the plan raises troubling questions about who John McCain
really is and what he really seeks to do.

Start
with Social Security. McCain proposes to save the endangered retirement system
by funneling close to half a trillion dollars in general revenues into the
Social Security trust fund over the next 10 years. In addition, he would permit
Americans to direct about 20 percent of their payroll tax money into a personal
retirement account.

What
McCain and his advisers seem not to recognize is that these two policies are
entirely contradictory. If bulking up the Social Security trust fund is an
intelligent way to cope with the looming retirement of the Baby Boomers, then
his individual retirement account idea makes no sense. If, on the other hand,
the personal retirement idea is a good one, then funneling general revenues
into Social Security is a waste of money.

Here’s
why: The pensions of all of today’s retirees cost a sum approximately equal to
10 percent of America’s payroll. Social Security, however, collects 12.6
percent. The 2.6 percent difference between what’s needed and what’s collected
is paid into the trust fund, which has run a huge surplus since the early
1980s. McCain is now offering to let Americans pay that 2.6 percent into an
IRA. If they accept, then the Social Security surplus will vanish.

Is
that a problem? It would not be a problem if the surplus disappeared. Most
economists agree that the surplus is a fiction, the fiscal equivalent of eating
a huge lunch today to protect yourself against being hungry a week from
Thursday. When the Baby Boomers are retiring in droves in the 2020s and 2030s,
the fact that the U.S. government ran big surpluses in the ’00s will be
remembered as a historical curiosity, but not much more.

Now,
if the surplus is a fiction, then McCain’s plan to permit today’s workers to
keep the excess portion of their payroll tax is not irresponsible. Yet this
would also mean that McCain’s plan to pour the regular budget surplus into the
Social Security trust fund is pointless.

Internal
contradictions plague the McCain camp’s suggestions for stimulating savings as
well. McCain would permit middle-income wage-earners to put up to $ 6,000 a
year in a tax-sheltered savings vehicle, Family Security Accounts. The money
would be taxed when and if it was withdrawn. McCain’s economic advisers hail
the plan as the first step toward a more consumption-based tax system. But if
it’s a consumption-based tax system they want, why is another centerpiece of
their plan a commitment to keep the Internet free of tax forever? The day is
not far off when appliances, cars, and even groceries will be commonly sold
over the Net. A promise to keep it tax-free is a promise to move toward the
abolition of all sales taxes — exactly the opposite of what sincere proponents
of a consumption tax should want to do.

Double
messages can be heard from McCain on the balanced-budget issue too. He scourges
George W. Bush for offering an irresponsibly big tax cut: Bush’s cut is so big,
McCain charges, that it could actually push the federal budget back into
deficit. But McCain’s bona fides as a budget-balancer look increasingly
doubtful. As a senator from libertarian Arizona, McCain had a good record as a
spending hawk. But as he has moved into the national arena, he has begun — as
conservatives mockingly put it — to "grow." Here for example is McCain
thinking aloud about health care with a worshipful Joe Klein in the New
Yorker: "I think we’re just going to
have to do it on a piecemeal basis. Start with health care for children, and
prescription drugs for people who can’t afford them now." Two vast new
entitlement programs are a start towards "it." One has to wonder what
else is included in this ominous little pronoun.

On
the revenue side of the budget, McCain claims to have identified billions of
dollars of corporate loopholes to be closed. Yet, he is ready to fling open a
large loophole all his own: an exemption from income tax on the first $ 56,000
of pay for military personnel on overseas duty. That should have them clinking
their glasses at NATO HQ in Brussels! But for a politician who denounces
pandering, you have to wonder: What is the logic here? McCain rightly draws
attention to the Clinton administration’s neglect of the military. He wants to
inspire Americans to appreciate the dangers braved by their soldiers, sailors,
and airmen. Fair enough. But how does it make things better to say that men who
live underwater on submarines for six months of the year have to pay an income
tax while Marine guards at the Paris embassy do not? McCain justifies this
special favor by complaining that it is unfair that civilians who live abroad
get a tax exemption while military personnel don’t. But of course those
civilians must pay taxes to their host governments while military personnel
don’t. If McCain has his way, troops stationed abroad would pay no taxes at
all. This is pandering at its most Goretesque.

The
biggest question of all is raised by the fourth and last part of McCain’s plan:
his income tax cut. John McCain owes his spectacular political success of the
last few months to the perception that he is the most un-Clinton-like candidate
running. He served in Vietnam, he’s brave, he’s forthright, he’s
unmanipulative. That makes it all the more disturbing that his tax rhetoric
seems to have been photocopied from Bill Clinton’s first presidential campaign.
Clinton defeated Paul Tsongas in 1992 by promising a tax cut for the
"forgotten" middle class. And now here’s McCain repeating the same
trick. Nobody called this courageous then. How did it become a brave move in
the interval?

McCain
is making a blatant appeal to the deepest but also wrongest conviction of
middle-class Americans: that they are being singled out for government
maltreatment while the rich and the poor are cosseted and pampered. When McCain
focuses his tax cut on families earning between $ 40,000 and $ 70,000 –
simultaneously ignoring those earning less (who don’t vote in Republican
primaries) and those earning more (how many of them are there anyway?) — he is
tailoring his cut not to those with the strongest claim, but to those with the
greatest clout. It’s Steve Forbes, in pushing his flat tax, and George W. Bush,
in showing concern for the high marginal rates faced by the poor as they quit
welfare for work, who are taking political risks for their economic
convictions. John McCain, by contrast, is buying the maximum number of votes at
the smallest possible cost.

It
used to be said of Johnny Carson that he was better than his material. John
McCain is widely seen as better than his career. Few even of McCain’s most
ardent supporters (in the party, anyway, if not the press) have a good word to
say for his anti-tobacco crusade and his campaign-finance reform scheme. Now he
has delivered an economic plan that is very nearly as bad. It makes you wonder
whether the McCain campaign has not at long last found its true slogan: VOTE
FOR McCAIN — DESPITE EVERYTHING.

What Makes A Man Of The Century

David Frum January 3rd, 2000 at 12:00 am Comments Off

"He
understood that reality is more than the facts before you; it’s also how you
feel about them, how you react to them, what your attitude is." That was
one of President Clinton’s reasons for choosing Franklin Roosevelt as his
"man of the century," and a mighty revealing reason it is, too. After
all, if the ability to disregard facts is the sign of a great president, then
Clinton ranks somewhere ahead of Lincoln.

If
Clinton’s explanation of his selection raised eyebrows, however, his actual answer
was the ultimate Rhodes-scholarship-interview safe choice. He was hardly going
to say V. I. Lenin, was he? But maybe he should have.

The
world has just lived through a century of almost unmeasurable violence and
destruction. Since 1914, some 200 million people have died violently or as a
result of politically induced famine. That’s 50 percent more people than lived
in FDR’s United States. It’s about as many as the total population of the whole
world at the close of the first millennium.

A
morally alert assessment of the men of our century has to take the terrible
events of our century into account. And measured against those events, FDR has
to be found wanting. Of the three great killers of this century, one (Mao) was
aided by Communist sympathizers within the Roosevelt administration, who tilted
American policy in his favor in 1944-45. Another (Stalin) benefited from
Roosevelt’s almost willful naivete about the Soviet Union. Roosevelt apparently
believed that if only he granted Stalin enough concessions — from control of
Poland to the repatriation of Soviet prisoners of war — he could somehow avert
a postwar confrontation. Instead Roosevelt’s concessions cost millions of lives
and sullied the history of the United States — and the confrontation came
anyway.

Roosevelt’s
record even on the third killer, Hitler, is spotty. Roosevelt understood
Hitler’s danger early, but he hesitated to jeopardize his hopes for an
unprecedented third term by riling isolationist opinion, which was at least as
strong within his own party as it was in the Republican opposition. Roosevelt
had substantial Democratic majorities in both houses of Congress when France
fell in June 1940, but he solemnly denied that he would ever send Americans to
fight Hitler and waited until his reelection was in the bag to propose his
Lend-Lease plan.

Roosevelt’s
accomplishments as president were enormous. He transformed the political
culture of the United States — arguably for the worse, but still no small
task. If his economic policies prolonged and exacerbated the Depression (as
many economists now think), his new federal welfare programs at least averted
social strife. If he postponed America’s entry into World War II for a costly
18 months, his maneuverings did ensure that when war was at last declared, it
was declared almost unanimously. Nevertheless, although Roosevelt rightly ranks
first in importance among American presidents of this century, it is hard to
see how world history would have proceeded very differently if, say, he’d lost
the 1940 election to Wendell Willkie. The United States would still have
entered the war and, once the United States was in, the defeat of Japan and
Germany was well-nigh inevitable.

The
true candidates for man of the century are the men without whom history would
have taken a radically different turn, either for better or worse. This might
seem a philistine criterion. After all, if one were putting together a list of
candidates for the 19th century, one would look at names like Austen,
Beethoven, Goethe, Faraday, Darwin, Marx, Verdi, Monet, Nietzsche, and
Rockefeller. Why not Edison, Freud, Puccini, Picasso, Chaplin, Einstein,
Keynes, Hayek, Solzhenitsyn, or Gates to represent ours? But then, that’s the
kind of century it’s been. With any luck, the next one will belong to the
artists, thinkers, and businessmen once more.

So,
the runners-up, please:

1.
Kaiser Wilhelm II’s grandfather, Wilhelm I, lived to be 91. Had Wilhelm II’s
father enjoyed the same longevity, instead of dying of throat cancer at age 57,
the crisis of 1914 would have landed on the desk of a peace-loving Frederick
III instead of the bellicose and mentally unstable Wilhelm. It seems highly
unlikely that Frederick would have told his Austrian allies to do as they
pleased and then vanished on a month-long holiday cruise. In law, the blame for
an accident attaches to the person with the last clear chance to prevent it
from happening. If the same rule held for history, then Wilhelm II was the
author of World War I.

2.
In the spring of 1917, the repeatedly defeated French army mutinied. Under very
similar circumstances 23 years later, the French capitulated. Had they done so
in April 1917, the First World War would have ended with a German victory
before a single American soldier had entered the field, and Europe from Paris
to Warsaw would have been ruled by a radicalized German autocracy. That the
French stayed in the war was very largely the work of one fierce man: the
newspaper editor, then prime minister, Georges Clemenceau.

3.
Walter Rathenau was the great German-Jewish industrialist who mobilized the
German economy for total war after 1915 and along the way created the first
functioning command economy. Not only did Rathenau prolong the First World War,
but his methods inspired Lenin and became the basis for Soviet economic
planning.

4.
What we call the Russian Revolution was really V. I. Lenin’s coup d’etat. In
the chaos and defeat of 1917, it was Lenin alone among the Russian radicals who
saw an opportunity to seize power. If he had been hit by a tram in Zurich,
Trotsky and company would have dithered the revolutionary moment away, and some
reactionary but harmless general would have seized power. Instead, one
fanatical man created the world’s first totalitarian dictatorship and the first
state at war with its own people and bequeathed it to his disciple, Joseph
Stalin.

5. A
joint nomination: Helmuth von Moltke and Giulio Douhet. One of the great
achievements of European civilization in the 18th and 19th centuries was the
broad acceptance of laws of war. War was to begin with a formal declaration,
civilians were not to be targeted, soldiers who surrendered were to have their
lives spared, and so on. And one of the great relapses into savagery of our
century is that these rules have by and large vanished. A tip of the hat, then,
to the German general who ordered the shooting of Belgian civilians in August
1914 and to the Italian military theorist who as far back as 1921 envisioned
winning wars by the aerial bombing of cities.

6. Suppose
the Bavarian cops had shot a little more accurately on November 9, 1923, when a
mustache-wearing ex-corporal from Linz staged his ludicrous putsch. Would not
everything in our century have been different had Adolf Hitler died on a Munich
sidewalk?

7. A
mediocre man and in many ways a second-rate president, Harry Truman drew a much
harder job than his great predecessor. Roosevelt took the country into war; it
was Truman’s job to create and enforce an enduring peace. It was Truman who
pulled and cajoled a reluctant country into paying the bills to reconstruct
Europe. It was he too who halted the demobilization of 1945-46, and called the
country to 45 wearisome years of confrontation with communism.

8.
Of the 100 million victims of communism counted by the authors of The Black
Book of Communism, Mao Zedong was guilty of
the deaths of more than half. Pol Pot killed a greater percentage of his own
countrymen. Hitler killed more violently and more quickly. Stalin was more
personally cruel. But some recognition must go to the most blood-stained human
being in world history.

9.
Richard Nixon. What?! No Ronald Reagan? Republican loyalists may well wonder.
But Ronald Reagan only became electable in the first place because Richard
Nixon had inadvertently smashed to pieces the statist economic consensus that
governed the democratic world from 1930 until 1975. Ronald Reagan may have told
us that price controls, uncontrolled government spending, and loose monetary
policy were a formula for misery. It was Richard Nixon who proved it.

10.
You don’t have to be a great man to have a great impact. If our terrible
century has had a reasonably happy ending, it occurred very largely because of
a colossal miscalculation by the last of the Soviet general secretaries, Mikhail
Gorbachev. He believed that if he liberalized his rule, he could strengthen his
regime without overthrowing it. He believed that if he relaxed his hostility to
the West, he could collect aid for the modernization of his empire. And he
believed that if he pushed the hard-line rulers of his satellite regimes to one
side, they would be replaced by reformist Communists much like himself. But
precisely because he got it all so wrong, communism collapsed in Eastern Europe
with hardly a fatality. Imagine what might have happened if Russia had been
ruled in 1989 by a man with the acuity to perceive how ferociously he, his
system, and his country were hated by those they ruled.

One
possible criticism of this list of runners-up is that it’s rather heavy with Germans.
But then, how could it not be? Fritz Stern, the German-Jewish emigre historian,
wist-fully recalls in one of his books a day "in April 1979 in West
Berlin. Raymond Aron and I were walking to an exhibit commemorating the
centenary of the births of Einstein, Max von Laue, Otto Hahn, and Lisa Meitner.
We were passing bombed-out squares and half-decrepit mansions, when Aron
suddenly stopped at a crossing, turned to me, and said, ‘It should have been
Germany’s century.’"

Instead
it became America’s. If the rules of the man-of-the-century parlor game
permitted collective winners, the best entry might well be that proposed by the
editors of Newsweek magazine: the
American soldier and taxpayer. Again and again over the past hundred years,
people with evil ambitions have spun their plans on the assumption that the
American republic was too chaotic, too pacifist, or too weak-willed to stop
them. From the Kaiser to the Kremlin, they got the surprise of their lives. But
rules are rules. The man of the century has to be an individual, not 200
million people.

Which
man? Actually, this is one parlor game that isn’t too hard. Because the story
is ending happily, he should have been a force for good — which rules out
Hitler and Lenin. He should have been great in his personal attributes as well
as his accomplishments — which rules out Truman. And he must have been
indispensable: a man but for whom all that came after would have been radically
different — which rules out Gorbachev and John Paul II as well as FDR.

So
who? Who else but Winston L. S. Churchill? If he’d been killed by that car that
struck him on Fifth Avenue in 1931, Britain would almost certainly have cut a
deal with Hitler in May 1940, as John Lukacs compellingly argues in his
excellent new book, Five Days in London.
Even Patrick Buchanan might have been chilled by the result.

President
Clinton explained his choice of Roosevelt by noting that as a patriot he had to
choose an American. Churchill was not only the son of an American mother, but
one of only five honorary citizens of the United States. There must be
something else that disqualified him in Clinton’s eyes, and after reading
Lukacs one can almost guess what it must have been. The crucial moment in
Churchill’s life was the moment when he prevailed upon a terrified British
cabinet to fight on under seemingly hopeless circumstances. Can it possibly be
that Clinton has the self-knowledge to understand that if by some freak of fate
he’d been sitting around that cabinet table, he’d have been one of those who
wanted to cut a deal?