'Fiscal cliff' exposes muddle at the centre of American culture

Dec 31, 2012
Charles Laurence

We tend to forget that the US Constitution was designed to create weak government – it's how Americans like it

NEW YORK - America’s ‘fiscal cliff’ drama is showing the world once again what a very different country this really is.

For a start, the bottom line here is whether the world’s largest economy, drowning in debt, is ready for a dose of austerity of exactly the kind Europeans are now swallowing, encouraged by such instruments of American domination as the World Bank and the IMF. What is good for the goose does not appeal to the gander.

Consider some of the key issues dividing the nation as the politicians play chicken:

Should the rich pay tax? Only in America is the idea given credence that if you are smart enough to get rich you have earned the privilege to avoid paying taxes altogether. The creed of "win at all costs" morfs into "winner takes all", and the idea of giving back by any means other than posing as a saintly philanthropist (from murderous Robber Baron Andrew Carnegie with his libraries to the Bill and Melinda Gates Foundation) is anathema.

It is this philosophy – mind-set might be a better word – that enabled the Republican Party to devote decades to funneling money upwards towards their corporate paymasters, creating record income inequality, while convincing the proletariat that black neighbours and abortion clinics were a bigger threat to their well-being than dwindling pay packets.

Should the middle-class pay tax? President Obama's Democrats may have finally popped the Republican balloon by getting "folks" to agree that while the rich should pay their "fair share", it is vital for the 'middle-class' tax rate to stay where it is, on average around the mid-20 per cent mark. Otherwise, they will be unable to keep buying all their stuff in the consumer binge that sustains the world economy.

Yesterday, the New York Times published a low-key but almost revolutionary editorial in which it suggested that the 'fiscal cliff' could turn out to be a great opportunity to overhaul the entire American way of taxation, and that even the middle-class should pay more. What the paper proposed was immediately recognisable to foreigners: a European mix of progressive income taxes, unearned-income taxes, estate taxes, and – not much short of Marxist subversion in most American eyes – a form of VAT.

No chance.

We tend to forget that the United States Constitution really was designed to create weak government. This is one of those times when it works too well: there is no one to steer, let alone brake, as the cliff edge looms.

But Americans like it that way. They really believe in minimal government and maximum self-reliance, even if in the complex modern world much of their faith is delusion.

Should people sacrifice personal spending power for the welfare of others? Among the grittier short-term consequences of falling over the fiscal cliff will be the end of the federal unemployment payments which support a couple of million of the poor whose state benefits have expired. Among the longer-term consequences, Social Security "entitlement spending" is at the core of the budget debate over how much help the old should get to end their lives in dignity.

Like all tax questions, it goes to the heart of the relationship between government and citizen: many Americans really do believe that the poor have only themselves to blame, and that it is very decent of the non-poor to donate surplus cans of baked beans to the local church soup kitchen.

One way of putting it is that Americans want their cake and to eat it too. They love having a military of shock and awe, but would rather someone else paid for it. They cannot imagine living without highways of amazing efficiency, but deem it someone else's responsibility to fill the pot holes and paint the rusting bridges. They expect to retire in comfort and play 18 holes with pain-free titanium hips, but are appalled at the suggestion that they help pay for their own 'social security', let alone the other guy's.

They want to act out American lives as Rugged Individuals securing their own fortresses and fortunes, while claiming the right to pretend that the theatre in which they perform is someone else’s responsibility and expense.

It is all part of the muddle which is being illuminated by the curious episode of the fiscal cliff.

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