The questions proposed for the Census and 2010 American Community Survey were announced in this report to Congress earlier this year. The Congress and administration are playing games with the Census again, not providing the funding needed to do the job right, so a half-assed job can be funded as an “emergency” and not count as part of the Bush fiscal record. Appropriate since the entire administration has been an “emergency.”

Race, Hispanic Origin, and Ancestry (the latter is not in the Census short form but is in the ACS) are attempts to assign people to social or cultural groups, as determined ahead of time by the government. But what do what do “race,” “Hispanic Origin,” and “Ancestry” really mean?

The Race question is:

“What is Person 1’s race? More than one box may be checked.”

The choices are “White; Black, African Am., or Negro; American Indian or Alaska Native — Print name of enrolled or principal tribe; Asian Indian; Chinese; Filipino; Other Asian — Print race, for example, Hmong, Laotian, Thai, Pakistani, Cambodian, and so on; Japanese Korean Vietnamese Native Hawaiian Guamanian or Chamorro Samoan Other Pacific Islander — Print race, for example, Fijian, Tongan, and so on.”

According to the Bureau “race is key to implementing any number of federal laws and is a critical factor in the basic research behind numerous policies,” including anti-discrimination policies such as Title 20, the Civil Rights Act, the Public Health Service Act, and the Voting Rights Act.

The Hispanic Origin question is:

“Is Person 1 of Hispanic, Latino, or Spanish origin?”

The proposed answers are “No, not of Hispanic, Latino, or Spanish origin; Yes, Mexican, Mexican Am., Chicano; Yes, Puerto Rican; Yes, Cuban; Yes, another Hispanic, Latino, or Spanish origin — Print origin, for example, Argentinean, Colombian, Dominican, Nicaraguan, Salvadoran, Spaniard, and so on.”

According to the Bureau “Hispanic origin is used in numerous programs and is vital in making policy decisions. These data are needed to determine compliance with provisions of antidiscrimination in employment and minority recruitment legislation. Under the Voting Rights Act, data about Hispanic origin are essential to ensure enforcement of bilingual election rules.”

From the ACS, the Ancestry question “What is this person’s ancestry or ethnic origin?”

“(For example: Italian, Jamaican, African Am., Cambodian, Cape Verdean, Norwegian, Dominican, French Canadian, Haitian, Korean, Lebanese, Polish, Nigerian, Mexican, Taiwanese, Ukrainian, and so on.)”

According to the Bureau: “ancestry identifies the ethnic origins of the population. Federal agencies regard this information as essential for fulfilling many important needs. Ancestry is required to enforce provisions under the Civil Rights Act, which prohibits discrimination based upon race, sex, religion, and national origin.”

Note the overlap between the categories. According to the examples the Census Bureau uses to give clues to the respondents, “African Am.” is both a race and an ancestry. So is “Korean.” “Mexican” is both an ancestry and a Hispanic origin. Are these categories really different?

At one time, the term “race” was used to refer to physical features, according to the belief that adapting to different environments people had evolved into the equivalent of different breeds of dog. That’s what White and Black are, referring to skin color. But it was never that neat. In early censuses, people could identify themselves as White or Italian, the latter distinguished by darker skin. Later, when a global distinction between Caucasian, Negroid and Mongoloid races was asserted, Arabs and Asian Indians were grouped with White, and Native Americans were grouped with Chinese. Back then intermarriage was not discussed in polite company, but it further confused things, although in the south there were separate words for various percentages of skin color and in Latin America mixed-race people, far more common, were considered a race unto themselves. It is only in the most recent census in 2000 that people were allowed to check more than one box for their “race,” a much ballyhooed change in the question at the time.

At one time ethnicity was based on tribal groups, which in most of the world have been distinguished by language or dialect -- hence French and Germans. Since those in the same tribe could talk to each other more easily than with those of other tribes, the theory went, they also developed other shared characteristics, such as much, literature, cuisine, and fashion, and were more likely to associate with others in the same tribe. Ethnicity evolved into ancestry some generations after the great wave of European migration, when everyone was American and spoke English, but they had ancestors that came from different places.

What really trashed the “race” idea is the widespread immigration of Latinos and Asians after 1965. Given a choice of “White,” “Black,” or “other” many put down other, regardless of their shade of skin was, considering their ethnic origin to be their cultural group. Earlier, when the “race” question shifted from a choice of White or Non-White to Black or Non-Black, whole groups of people changed sides. The response was the creation of “Hispanic Origin” starting in 1970, so in addition to tabulating White and Black and Hispanic and Non-Hispanic it was possible to divide people into White Non-Hispanic, Black Non-Hispanic and Hispanic. “Asian” was added to the mix, stuffing two-thirds of humanity, with widely different cultures, religions, histories and, yes, physical features into one box based on having ancestors on a continent delineated as such by those on another one.

As it is now, “race” overlaps Hispanic origin which overlaps ancestry in a muddle. Take the debate of whether Barack Obama is “Black.” If “Blacks,” as a social or cultural group, are the descendents of people kidnapped from African into slavery hundreds of years ago, who subsequently lived in legally segregated communities within the United States, the answer is “no.” Based on his physical features, the senator could probably pass as any one of a number of brown-skinned groups of people, from Arab to Asian Indian to Mexican if he wanted to. Perhaps Obama’s “tribe” could best be identified as “Ivy League,” like Bill Clinton, Al Gore, and George W and HW Bush. Is Rock Hackshaw “Black”? Maybe in a crowd of White people, but east of Prospect Park he’s a Caribbean is he not? And in a crowd of Caribbeans he’s a Trinidadian? Maybe Rock would put himself in the “political rebel” tribe. Perhaps he’ll answer the question.

Am I “Italian”? Well, my father’s father wasn’t, obviously, though most of my other ancestors can trace their roots to pre-1890 southern Italy. I make my own tomato sauce and DO NOT put sugar in it. Does that count, even if the only words of Italian I know are the curses my mother and grandmother used to fling at me? Is my wife "Irish" because her favorite band is the Saw Doctors?  How about my kids, given that there is no ancestral overlap between my wife and I? Do you have an ancestry if no more than 3/8 of your ancestors came from any one place?

This “Ivy League” gibe gets to another issue: what isn’t used to assign people to social groups as well as what is. Religion, for example. It has been held that under the establishment clause, religion is none of the state’s business, and the state has no right to even ask about it. And given the consequences for Jews of being identified as such during the Holocaust this is perhaps understandable. In reality, however, religion is one aspect of a person’s characteristics that has seldom been used as a reason for widespread, organized persecution in this country (the Mormons being an exception). Other characteristics that are on the census have been used as a basis of discrimination. In the most famous recent example, the Census Bureau faced enormous pressure to violate its 70-year guarantee of anonymity during World War II, when the government sought help identifying Japanese for internment, and did as little as it could (though as was later revealed more than it probably should have). Of course the counting of Blacks as less than whole persons is right in the original draft of the Constitution. Perhaps religion should be the last thing we worry about counting. This isn’t the Sunnis and the Shia.

If one purpose of the census is political -- redistricting is the reason the census is in the Constitution after all -- then religion certainly seems relevant in New York. Political analysts routinely talk about Mayoral elections in terms of the White Catholic vote (White as opposed to the Hispanic vote) and the Jewish vote. And Jews, in addition to conducting their own attempt at a census, have tried to measure their number by using census data on the number of people of German, Polish, Hungarian, and Russian ancestry in neighborhoods known to have Jews, something putting Ancestry in the lower sample size ACS will frustrate. Of course “Jews” are a muddle all by themselves, a tribe (or group of 12) that also has its own exclusive religion while being split by different languages and country of origin. To the goyim, they’re Jews, but among themselves, they don’t even agree what counts.

How about sexual orientation? Is “gay” a social or cultural group? It certainly seems to be for political purposes, as groups of people who are often have their own organizations and cluster in particular areas. Or some of them do, perhaps those who think of themselves first and foremost as “gay.” There was a big hullabaloo about the fact that the most recent census, and this one, allow the “relationship” question to be answered “unmarried partner.” The idea was that by identifying those of the same sex who had this relationship, at least some of the “gays” could be added up.

What other social and cultural groups could people be put into? What’s your tribe? Yankee? Texan? Redneck? Nerd? Hipster? Hasid? Yuppie? Valley Girl? Yuppie? New Age Vegan? If the idea is to identify people who live and think the same way, who are more likely to associate with each other than those not of their group, and to measure their characteristics or perhaps provide them with collective representation where they are geographically concentrated, are any of these designations less useful that the ones the Bureau has proposed? One might argue that these are categories people can choose to be in, whereas race is an inherent characteristic. DNA mapping, however, has shown it is a characteristic with extremely limited basis, nothing like different breeds of dog at all. Race has historical importance, but history is moving on, and has already turned the question into a mush. Culture? It’s optional.

Who should decide what group a person is in? Historically, discrimination has happened when some else put people in a particular group, not when people assigned a particular identity to themselves. The Census Bureau is asking people to report what groups they themselves are in, not the neighbors -- unless a household repeatedly refuses to answer the census, and the enumerator goes to “last resort” procedures and does ask the neighbors.

The problem is that race, Hispanic origin, and ancestry are attempts to assign people to social or cultural groups, as determined ahead of time by the government. Not by people themselves. The government keeps trying to set up the boxes to check. The people keep identifying themselves as something that isn’t in one of the boxes.

Were it up to me, the question would read as follows:

“For many (but not all) Americans, being part of a social or cultural group is an important part of their identity. The group may be based on physical features (White, Black), the part of the world or country where they or their ancestors came from (Puerto Rican, Italian, Texan), the language they or their ancestors spoke, religious affiliation, lifestyle preferences, sexual orientation, or any other factor. For each person over 18, up to three social or cultural groups may be listed, in order of importance.”

These would be three objections to this question right off the bat, one practical, one political, one analytical.

The practical objection is that the little checked boxes are easier for the Census Bureau to code than words that people write in, especially given the way Americans spell. How can you count how many “Whites” and “Blacks” you have when so many people can’t spell either word? The more responses get spit out by the computer and need to be individually analyzed, the more expensive the census will turn out to be (did I say it was under-funded?) My response is that, luckily enough, it appears that there will be lots of people in need of gainful employment in the first half of 2010, just at the right time. Better census work than employment insurance payouts.

The political objection is that if not all members of a disadvantaged group identify themselves as such, the government will not have the facts required to analyze discrimination and ensure fair representation. What if not all “Blacks” identify themselves as “Black?” Won’t that make “Blacks” seem less important? Won’t that make them easier to abuse, or ignore? What about all those laws cited by the Census Bureau?

There would probably be a lot of huffing and puffing about this if a question such as this were proposed. In reality, however, I don’t think that would be a problem. Group identification, in my view, is a disadvantage of discrimination. Jews were Germans and Poles and Russians before the Holocaust stamped them all as Jews. Blacks had to resort to an identity as such because that is how they were grouped, and identified, by Whites. A Black person in America is more likely to brand themselves “Black” than I am to brand myself “White,” because as a member of a racial majority I have the luxury of thinking of myself as an individual first and foremost rather than a member of any social or cultural group. I would never list my skin tone as something worth mentioning about me.

If the goal is to fight discrimination, I think it’s fair to assume that anyone who feels they have been disadvantaged or discriminated against because others perceive them to be in a group would put that group on the list. Or they could be explicitly instructed to do so. And if any Black people might have been tempted to allow skin color to slip to, say, number three in their list of social or cultural groups, I’m sure the Reverend Al would be there to remind them to put it first. I don’t think the problem is getting people who are Black to say they are Black. I think the problem is getting them to answer the census at all, based on comparative response rates in 2000. Perhaps a little kitchen table talk on the subject of the census, which an open-ended question would stimulate, could be helpful in that regard. If the word gets out, I’ll bet this post gets more comment than the 100 or more I’ve made on topics I consider more important.

The third objection is time series consistency. The Census Bureau has asked the race question since the very first census in 1790 (age wasn’t asked until 1800). So we have a long time series of data on how many Whites and Blacks there have been, a time series that would be theoretically broken by my open-ended question. The census, however, has already broken a significant times series recently, when it shifted from the Standard Industrial Classification System to the North American Industrial Classification system for classifying economic activity. The time-series objection was raised. The federal Office and Management and Budget responded that it didn’t make sense to preserve continuity with the past if as a result the categories no longer made sense and were useful in the present.

So what does make sense and is useful now, for purposes of classifying people into groups to measure their group characteristics and be mindful of when redistricting? Rather than have the Federal Office of Management and Budget decide, I think it’s best to allow people to answer that question themselves.

People certainly have been getting the opposite message, over and over again – from the advertising industry. The message is that all kinds of non-material needs – status, belonging, fulfillment, even sexual gratification – can be attained, and only attained, by the purchase of some good or service. And that embarrassment, humiliation, exclusion, and social failure can only be avoided through such purchases. This isn’t stated in a straightforward way. Rather the message is presented in a series of stories, images and sounds.

And Americans have responded. The material lifestyle of the past two decades, particularly in the growing suburbs where most middle-income and affluent Americans live, has been dominated by the idea that more and bigger is better. The average new home built in 1970 had 1,500 square feet of floor area, compared with nearly 3,000 today. The “Econobox” cars of the 1970s have been replaced by large SUVs. The globalization of trade and production has substantially reduced the cost of many goods, relative to what many Americans earn. As a result, used clothing has become virtually un-sellable in the United States and is typically shipped abroad, while a tidal wave of ever-cheaper stuff has been filling American homes, leading to a growing mini-storage industry. Televisions have grown in size even as motion picture screens have shrunk. The average American is eating a few hundred more calories a day, as portion sizes have expanded.

Projecting this trend forward, one might assume that in 50 years most Americans thought to be in the middle class will drive their own buses, live in 10,000 square foot houses with 10 bathrooms, and own personal warehouses to store stuff that is used, at most, once a year. In social science, however, linear projections are seldom accurate over the long run. In fact, the “more and bigger” trend has gone into reverse several times in American history.

One hundred and twenty years ago, as the industrial revolution threw up a new class of wealthy people and made more and more goods affordable to all but the poor, there was another “more and bigger” burst like that of the past 20 years. In the Victorian era, virtually every square inch of the typically very large homes was full of lots and lots of things. These large houses, however, became white elephants once middle class Americans could no longer afford the domestic help required to clean and maintain them. And once everyone had lots of things, having lots of things was no longer thought to be a lifestyle to aspire to. In reaction, you had the Arts and Crafts idea, with smaller but more meticulously crafted homes (bungalows), and fewer but higher quality and more unique things. The 1915-built rowhouse I live in, in fact, has a few design touches similar to the Arts and Crafts bungalows.

There was another cycle from 1950 to 1985. The burst of wealth and productivity after World War II, the creation of a large scale mortgage market and subsidy, and the development of inexpensive materials like plastics and artificial textiles once again brought more and more space, and more and more stuff, within the means of more and more Americans. In the folklore of the 1950s and early 1960s, before people began fleeing from the cities, one reason they were moving to the suburbs was to obtain a separate bedroom for each child, an off-street parking space for the large family car (with tail fins) and – most importantly – more closets. By 1970, George Carlin pronounced that a house was just a place to put your stuff, and Alvin Toffler (in Future Shock) predicted that people would soon own their own helicopters, and use clothes just once and throw them away, based on a linear extrapolation of the trends of the time.

The energy crisis, the environmental movement, and the deep recession of the 1970s threw that trend into reverse. Older things with more natural materials, “you couldn’t build it today” housing, and smaller spaces once again became more popular. It was, among other things, the beginning of a return to the cities movement that continues, and least among a subset of Americans, to this day. Since I was born in 1961 and was age 12 to 18 from 1973 to 1979, the 1970s were my formative years. This may explain my point of view. Those who became aware of the wider world in the 1990s must have a radically different idea of what life is like; I have a feeling that they don’t know what might hit them.

Today, most Americans perceive that a less-space, less-stuff lifestyle means less affluence and a lower quality of life. But as the arts and crafts era ideas indicate, that isn’t necessarily so. People need to be reminded of this because the “more and bigger” ethic is environmentally damaging, economically wasteful, and incompatible with life in a place where space is at a premium – like New York City. Worse, it not only elevates the material over the social and spiritual, but it also devalues material things themselves – because they aren’t special or meaningful anymore. Americans haven’t just become extreme materialists, they’ve become bad materialists.

The environmental damage of the more-and-bigger ethic is clear. Americans aren’t just filling landfills with things that are bought, little used, and discarded. They are also locking themselves into vehicles that require more gasoline to move, and houses – mostly empty – that require more energy to heat, cool, and light. Since houses and motor vehicles are expensive, these decisions will be costly to reverse, so the demand for energy falls little when the price of energy rises. Clearly, the trend toward more and bigger cannot go on forever without a huge increase in the supply of energy, and supply constraints have already emerged. And even if those constraints were removed, the environmental consequences of using that much energy, not only in the United States but also across the world where people are trying to emerge from poverty, could be dire.

More and more of people’s money has been going to things that may be nice to have but really don’t add much to one’s life. In the language of economics, the “marginal utility” of the additional stuff and space is less than the “marginal cost.” And while some Americans are wealthy enough that their level of spending doesn’t really matter, most are struggling to keep up. The share of income going to savings is way down, and so is the share of income going to charity. People are working longer hours, and are deeper in debt. Clearly there is some kind of psychological compulsion to live in a way that seems, to me, to be economically irrational.

Recently the “more and bigger” trend has become radically more expensive. For the past two decades, the United States has run an enormous trade deficit with the rest of the world. In effect, poor but growing countries such as China have been lending the United States money so its consumers could import -- without exporting as much in return. The result has been an explosion of consumer debt – credit cards, second and third mortgages, leasing cars rather than buying them. Not only are people not saving in order to live the lives they believe they must, but they are going deeper and deeper into debt to keep up. Eventually this whole financial edifice was bound to collapse. And now the collapse is happening. Credit is being restricted to the level of debt that can actually be paid back, and the American standard of living is about to be cut back with it.

Those who read the news have heard any number of stories on how Americans are being forced to reduce their lifestyles to adjust to the higher cost of energy and the decreased availability of loans. According to the Washington Post “Energy and food prices are soaring. The housing market continues to collapse. Government revenue is falling, and taxes are rising. Airlines are jacking up fares and fees while reducing service. Banks are pulling credit lines. Auto companies are cutting production once again. Even investment bankers are losing their jobs. The tendency is to see these as separate developments, each with its own causes and dynamic. Fundamentally, however, they are all part of the same story -- the story of the global economy purging itself of large and unsustainable imbalances that for a time allowed many Americans to think they were richer than they really were.”

“Is all this the end of the world?” this source continued. “For the richest country on the planet, certainly not. But it does represent the end of a decade or more during which Americans were permitted and even encouraged by the rest of the world -- and by their own leaders -- to live way beyond their means. As a result, the United States has gone from being the largest creditor nation to the world's largest debtor. For the first time since the early 1980s, Americans will have to endure several years of uncomfortably slow growth and uncomfortably high inflation as the U.S. economy regains its balance and creates a foundation for more solid and sustainable growth.”

So people are going to be much worse of in a consumption sense for some time. The question is how are they going to feel about it? People have been manipulated into tying their self worth to their spending for so long, the coming economic adjustment may lead to extensive psychological harm. That’s where a new vision is required, one that allows people to decide that much of what is no longer attainable wasn’t worth having after all and, in fact, was something of an embarrassment. If nothing else the next generation needs to be warned to avoid the choices made by those older, and allowed to feel that they have not been denied a decent, comfortable, and rewarding life, a life that they can be proud of.

What is the near term future of America today? One person posted this on The Housing Bubble Blog recently, one of many, many stories like it popping up all over the country.

“The housing crisis hit me closer to home. I learned over the weekend that my parents are headed into foreclosure. They’re only a few days away from the 60 day late mark. My parents don’t have a toxic mortgage or anything but they do live beyond their means. My dad’s almost 62 and he’s been out of a job since Dec. 2007. Like typical boomers they have no savings or retirement plans whatsoever.”

“Somehow my parents went through life and never learned how to save or trim expenses. They have all the bells and whistles. They have two cars, use lots of gas, eat lots of fast food, have the most expensive cable package, live in a 3 bedroom house for 2 people, buy lots and lots of cheap imported trinkets from Wal-Mart; give their grandchildren toys everytime they seen them, tivo, netflix, tru-green lawn service, cell phone, cable internet, internet home phone, and the list goes on and on. If they pared every expenses down to the bare minimum they could ’save’ the house on my mom’s salary but they simply are not prepared to make the sacrifices necessary to do so. And trying to explain this to them makes them vehemently upset.”

“I’m not in a position to help them out financially right now because I use every extra penny I have to pay off my private student loans.” The loans are variable rate, and might explode at any time. “If I wanted to reduce my extra principal payments I could easily cover their mortgage every month but I don’t know if I want to. They’ve got 25 years left on their mortgage. Long term, when they live solely off social security, they won’t be able to afford the mortgage anyway.” The commentor plans to help his parents as best he can once they accept that things have to change.

Others on that blog, and elsewhere, report similar situations with other friends and relatives, maxed out on credit cards, not paying all their bills, unsure how they can live once their credit is cut off, owing far more than their house is worth having borrowed against it multiple times and spent the proceeds. Multiply this situation by millions and you have the Untied States of America.

And the only response thus far has been for the government to promise some of the future earnings of younger Americans to people overseas, borrowing money to send stimulus checks so those no one is willing to lend to anymore can keep spending. And with that money spent, we are back in the same situation we were a few months ago – sinking. Do we keep sending checks to keep the spending going, promising the future income of today’s young Americans as the collateral?

How have Americans, the hardest working and most talented people in the world, come to this? This is a nation Benjamin Franklin, apostle of thrift, would not have recognized. A bankrupt nation full of bankrupt people, economically desperate despite affluence.

Somehow the constant stream of “I want for me now” messages has to be countered. People need to understand that once basic needs are me, upsizing one’s material lifestyle is as likely to lead to misery as to joy. It’s a one-way ratchet, with every new good or service soon taken for granted on the way up, but sorely missed on the way down. And if the way up is funded with borrowed money, the way down is inevitable. Unless someone else is sacrificed so people can go on living in the way they are accustomed, and feel entitled to. The next few years could be a lot nastier than they need to be.

The Democrats, like the Republicans, are less a group of people dedicated to particular principles than a group of interest groups seeking to preserve and expand particular unearned privileges. The President, facing a nationwide election, needs to try to do something for the American people as a whole, but for any individual member of Congress, most of whom are relatively safe in their jobs, keeping special interests happy is generally enough to preserve them in office. The federal government as it stands, therefore, consists of a President trying to govern the country and a Congress looking to cut special deals -- not what the Founding Fathers intended. So what would a cynic expect a Democratic Congress to do without a Republican President to keep it in check?

Something like what the Republican Congress did under Republican President Bush. Let greed run rampant and produce a disaster that turned the majority of Americans, even those predisposed to agree with it, against it.

I fear a million little grants to a million little groups whose actual purpose, regardless of their purported purpose, would be to provide “jobs” for those with connections to elected officials, and support for their re-election. I fear lots of little tax breaks. I fear provisions to ensure ever-richer retirement benefits for public employees, with the federal government taking over the costs when they become overwhelming, followed by the discovery that there somehow isn’t enough money for Social Security and retirement benefits for other Americans. Instead of infrastructure, we’ll get pork. Instead of Progressives, we’ll get lobbyists and Tammany Hall.

There are, I’d imagine, many Democrats looking forward to extorting all kinds of favors and deals from a future fellow Democrat President Obama in exchange for their acquiescence on major national priorities such as energy and health care. After all, the clock will be ticking very rapidly not from the moment of the next President’s inauguration, but from the moment of his election. It is ticking even now. The rot has gone on too long, and the country can’t wait for some sign of progress. New policies have to be in place with the passage of the next federal budget in October, 2009, so the American people (not to mention the lenders abroad who are keeping us afloat) can begin to seem some results by November, 2010. Or else.

And the Congress cannot even be sure that a future Obama (or McCain) Administration will be in a position to prepare an energy and health care proposal by that time. The United States is facing both the equivalent of a heart attack and the equivalent of cancer, both in its economy and its relations with the rest of the world. The President may be tied up with dealing with the heart attack, for a year or more. In 2000 the incoming Bush Administration was warned to forget about whatever it was hoping to achieve, and focus on the imminent threat of an attack on the United States by Al Qaeda. It didn’t. Given the situation in Iraq, in Iran, in North Korea, in Afghanistan, and in Pakistan – plus the possibility at any moment of a financial collapse – I can only imagine what Secretary of State Rice and Secretary of the Treasury Paulson will tell their replacements (that they haven’t told us) during the transition. Bloomberg News projects a similar crisis-driven administration, according to this article. “The U.S. is facing the worst financial crisis since the Depression” it states matter of factly, and neither candidate has “come to grips with the biggest danger that is going to hit the next president in his first few months in office: the crisis in the capital markets.”

Regardless of whatever other crises are occurring, immediate action on energy and health care will be required, because the cancer of America’s failures in these two areas of policy have, over the long term, caused the economic, fiscal and foreign policy heart attacks we are faced with. Dependence on foreign oil has left us vulnerable to economic blackmail and drained away our national wealth, while forcing us into problematic arrangements that have threatened our national security. Over and above the long-term environmental effects of burning fossil fuels.

Our health care financing system, tied to place of employment rather than provided by a combination of basic governmental-funded assurances and individual purchase, is bankrupting state and local governments and older corporations that provide extensive health care benefits, particularly to retirees, while at the same time discouraging people from starting new businesses for our new economy, because they might end up ill and uninsured. I explained the negative economic effects, over and above the inequity in our heath care financing non-system, in this post. A universal health care financing system at the federal level is the most important thing the federal government can do to stimulate the private economy and prevent severe tax increases and public service cuts at the state and local level.

By October, 2009, the Democratic Congress must pass a new energy policy. If they can’t agree on anything else, as I explained here all they really need to do is put a fossil fuel (and particularly oil) tax in place that goes up as the world market price goes down, to ensure that the price to consumers remains high. That would provide businesses and families with the assurance that if they invest in alternatives (including high-cost domestic oil and gas production as well as alternative fuels), and if people pay more for fuel efficient products or change the way they live to conserve, they won’t be bankrupted and made fools of by a temporary oil price decline, as they were in the mid-1980s.

In that case, over and above anything the federal government might do, state and local governments, corporations, entrepreneurs, non-profit organizations and individual people and families would, over a decade or two, solve the energy and environmental problems themselves, without the Congress or Administration dictating to them. Yes imposing a short term cost (even if theoretical, because the cost is already being paid) would require more political courage than coming out in favor of $1 per gallon gasoline, but as Senator Obama’s stance on the gas tax suspension proved most Americans (and in particular the vast majority of younger Americans) are grown up enough to start getting the country out of this mess.

And by October 2009, the Democratic Congress must pass an equitable, universal health care financing system that among other things separates health insurance from place of work, such as the one I described in this post. It wouldn’t even cost much, net, because the government is already paying for most third party health care as I showed here, and without some limits put in health care is going to bankrupt both the public and private sectors of this country, unless oil imports or the consumer debt disaster do it first.

Are universal health care and a new energy policy in the Democratic Platform? Is that platform a joke? The very meaning of the Democratic Party is on the line, and if they win they’d better deliver. It is almost worth seeing the Democrats sweep the federal government, and the state government in Albany, for that reason alone. If they win I want 60 hours of work per week until these absolute national needs are delivered. Otherwise, it would be a third consecutive failure of the Democratic Congress, with plenty of its members participating in all three. Remember, this is an election for Congress and the state legislature, not just President. And there is another one in 2010.

Let’s start with Social Security. As I wrote in more detail here, twenty-five years ago those running the federal government made my generation and those after a promise: pay a vastly higher regressive payroll tax throughout your lives and accept a later retirement age, and Social Security will be there to keep you out of poverty in your later years. With all the extra payroll taxes since collected over and above those required to pay benefits (plus interest), the rest of the federal government owed Social Security nearly $1.9 trillion dollars as of FY 2006. But in reality, however, all the additional money collected in the past was spent in the past, and substituted for personal income taxes that were cut in the past. To pay Social Security that $1.9 trillion back, the rest of the federal government will have to force younger generations to pay a second time -- in higher taxes and/or lower spending on other things, or it will have to cut Social Security benefits. Not only that, but during the past 25 years the federal government borrowed even more money on top the funds that should have been set aside for retirement benefits but wasn’t, and we will have to pay that back too.

How about health care? As I showed here, although the majority of Americans finance their health care through private insurance plans, the federal state and local governments are in reality paying for three-quarters of all third party health care expenditures in the United States, either directly (Medicare, Medicaid, the VA system) or indirectly (private insurance paid for by taxpayers on behalf of public employees, and tax breaks such as the exclusion of employer-paid health insurance from taxable income). Total direct and indirect government spending on health care soars ever year, but benefits fewer and fewer people. In fact, the government cost of health care in the United States, as a share of GDP, is higher than the total cost of health care in other developed countries, countries where they government covers the basics for all, leaving people to pay for luxury-class and high-tech care on their own. Here the government provides or subsidizes luxury and high tech care for some, and provides nothing for others, others who nonetheless pay taxes that fund health care.

Each year additional spending and benefits, including the recently enacted prescription drug benefit, buys more health care at and higher and higher prices for beneficiaries inside the charmed circle, particularly public employees and today’s senior citizens. Those in younger generations, meanwhile, are increasingly uninsured, or forced to pay for health insurance on their own. And this isn’t just a choice to remain uninsured while they are young and healthy, as some claim, it is a generational shift in what people will receive throughout their lives. Just as earlier generations granted generous defined-benefit pensions for themselves, and offset the cost by giving my generation less-generous 401K plans (increasingly with no employer contribution at all), so younger generations are increasingly less likely to receive employer-financed health insurance, even when they get older and really need it. Many large businesses, for example, get around the requirement that in order to receive the income tax exemption all employees must receive employer-financed health insurance by taking on younger workers as “freelancers” and “independent contractors” rather than employees. That is one reason self-employment is surging as a share of total employment in this country.

Based on the current trend, there is no reason for me to believe my teen-aged children will receive employer-financed health insurance once they complete their education. Soaring federal, state and local debts mean that today’s twenty-somethings are not only less likely to be insured today, but they will also be less likely to receive government support for their health care needs later, when they get older and health problems begin to accumulate. My own generation may not even benefit from government-funded or subsidized health care when we need it most. As the United States heads toward bankruptcy, I tell my generational peers all we’ll get is medical marijuana followed by legal assisted suicide. And that’s if the Democrats are in power. If the Republicans are in, we won’t even get that.

And those debts are soaring. When George W. Bush proposed his tax cuts in 2001, he promised surpluses as far as the eye could see. Now, with those tax cuts enacted, his administration admits there will be deficits as far as the eye can see, even when the economy has recovered. In fact, the federal deficit has been reported to be at record levels in dollars this year, and that’s with all those additional payroll taxes workers are forced to pay being spent today, rather than set aside for their Social Security. And government bailouts of the financial industry, to offset the debt-driven consumer spending boom of the past eight years, will add billions -- perhaps trillions -- more to that debt. If those who save, who are mostly outside the United States, become unwilling -- for whatever reason -- to keep lending more and more money, interest rates will soar and the economy will collapse.

Speaking of taxes, as a result of a long series of senior citizen tax breaks, many enacted in the past when senior citizens were worse off (on average) than working people and younger generations rather than better off, those over 65 pay vastly lower taxes than younger people even when they have exactly the same income. As shown in this analysis, where I live a hypothetical young couple with a child, earning $100,000, with no savings or health insurance or pension, and living in a rented one-bedroom apartment, would have paid $22,214, or 22.2% of their income, in federal taxes in 2007, while a retired, senior-citizen couple who owned their home, had a pension, and benefited from Medicare, would have paid $11,791 on the same $100,000 income, or 11.8% of it. The young couple would have paid $10,926 in state and local income taxes and (indirectly as part of their rent) property taxes, or 10.9% of their income. The senior citizen couple would have paid just $2,378, or 2.4% of their identical income, in state and local income and property taxes, one quarter of what the younger couple would have paid. That is $33,140 in taxes for the young couple and $14,169 in taxes for the senior citizen couple on the very same cash income, even though the senior citizen couple in this example has far more wealth and non-cash benefits. Will today’s young people be similarly advantaged when they become senior citizens themselves? Almost certainly not.

In addition to the on-the-books federal, state and local debts, and the fact that the extra Social Security taxes have already been spent, there is another enormous debt that has been hidden -- the rich pensions (after early retirement) and extensive retiree health benefits that today’s politicians have promised public employees -- including themselves -- but have not paid for. All of the cost of the retiree health care, and much of the cost of the pensions, has been deferred, allowing older generations to enjoy more spending (on themselves) and lower taxes (on themselves), with younger generations facing the reverse when the bill comes due.

As I explained here, in older places (such as New York City) where the retirement crisis hit long ago, the result has been a cycle of richer pension and retiree benefits for public employees with seniority every time the financial markets boomed, described as “free” since investment returns would purportedly pay for it all. This has been followed, multiple times, by higher taxes, reduced public services, and lower pay and benefits for newly hired public employees every time the financial markets bust, due to “circumstances beyond our control.” The result has been a series of union contracts providing enriched pay and benefits for those cashing in and moving out, and lower and lower pay and benefits for the increasingly less motivated and qualified people providing degrading public services in the future. And those disadvantaged new hires are nonetheless forced to pay dues to the unions who sold them out, dues that in part help fund the political activities of the incumbent politicians.

Suburban and Sunbelt communities haven’t yet faced the public employee retirement crisis New York and other older cities have, and thus have lower taxes and in some cases better public services. The reason is that newly-developing places have relatively few public employee retirees (reflecting their past as rural areas with few people) and lots of new taxpayers, keeping the cost of retirement benefits low relative to the growing tax base. Once a community is fully developed, however, the tax base and population stop rising rapidly and the number of retired government workers soars. That’s when newer and younger residents of those communities find out that the pensions and health care benefits of the newly retired weren’t paid for in the past, when they were working. The cost was deferred, and will require huge tax increases and public service reductions to pay. Much of suburban and Sunbelt America faces the kind of fiscal crisis New York and other older cities faced in the 1970s, unless a new national health care system picks up the cost of the retirees. Whether the cost is federal or state and local, however, tomorrow’s taxpayers will be forced to pay for public services provided by public employees yesterday, a hidden debt over and above the financial ones.

The decline of our infrastructure is another hidden debt. The suburban and Sunbelt infrastructure that was put in place in the 1950s and 1960s has suffered from inadequate maintenance, and now requires rehabilitation or replacement -- just as the urban infrastructure did when it fell apart in the 1970s. One might argue that our oil dependent transportation system is functionally obsolete and requires at least partial replacement with something else. With federal, state, and local governments already deep in debt, however, there is no money for this.

Even in places where the infrastructure fell apart sooner and has been repaired, the generations now in charge have been unwilling to pay to repair it, and have borrowed the money instead. New York City’s public transportation system, despite the highest ridership in 50 years, is facing a financial disaster, physical deterioration on a massive scale, and the postponement (actually cancellation) of long-promised improvements, as I showed in detail here. The reason is that within a few years half its revenues will be going to the past -- to debt service, pension contributions, and retiree health care -- not to transportation. The transit systems of Boston and Chicago are even more bankrupt, in the former case because of money borrowed to maintain the system as revenues were diverted to the “big dig,” in the latter case because of lucrative but un-funded pensions. The New Jersey transportation trust fund will use nearly all of its future revenues to pay past debts. The next President will inherit a bankrupt highway trust fund.

This, however, is not the greatest failure of the past 35 years. Following the 1973 Arab Oil boycott and subsequent energy crisis and economic meltdown, it was clear to the generations now in charge that energy was the greatest challenge they faced, as former President Carter explained in 1977 in the speech described in this essay. The environmental concerns related to global warming are merely an addition to the existing economic and national security imperatives. For 35 years, however, these generations have been unwilling to make any sacrifices for the sake of our economic, security and environmental future. Beginning in the mid-1980s, as the price of fossil fuels fell, they took the easy way out and stopped conserving and investing in alternatives. They had their cheap energy party, and left us with the situation we are in today. We an increasingly impoverished nation of global energy beggars, at risk of being cut off at any moment, either for political reasons or because the Chinese, Arabs and Russians realize we’ll never be able to pay off all the money we are borrowing to buy imported oil, and stop lending us more.

There are some who argue that government policies that enrich older generations are fair, because over time people become richer. By transferring wealth from younger generations to older, by running up debts, deferring costs, and not investing in the infrastructure, they argue, such policies are therefore “equitable,” transfers from rich to poor.

It is true that in their personal lives many of today’s young people expect to live a lifestyle immediately that it took older generations decades to achieve. But it is no longer true that younger generations are and will be better off that older generations were at the same age. The data shows that those in the second half of the baby boom, who came of age in the 1970s stagflation era rather than in the 1960s, were worse off in their 20s than earlier generations had been at that age, and worse off in their 30s than earlier generations had been at that age, etc. Those coming after have been worse off still. Much of the difference will not be apparent until the “stagflation” generation and those after reach old age -- without pensions, retiree health care, or perhaps even Medicare. Rather that cut the cash pay young workers could see, businesses first cut the future pay they didn’t know enough to appreciate. As a result the poverty rate for senior citizens, which has been lower than for working people in recent decades following the expansion of senior benefits in the 1960s and 1970s, is set to soar.

People in their 20s today, moreover, are also paid less in cash (adjusted for inflation) than those who came before, as a demographic analyst showed in this analysis. In inflation adjusted dollars, average annual earnings for U.S. workers in their 20s fell from $32,192 in 1970 to $28,250 in 1990 (when I was 29) to $26,995 in 2005. Even for twenty-somethings who are college graduates, the averages were $42,834 in 1970, $39,040 in 1990, and $35,653 in 2005. So what can be expected for my own children, who are in their mid-teens?

In recent decades, in fact, only two kinds of people have been getting richer – top executives and today senior citizens, particularly retired public employees. Everyone else is getting poorer. And it isn’t because of international trade or technology or other factors economists talk about, it is because of power. The executives sit on each other’s boards and vote each other higher pay, even when the corporations they oversee lose money. State and local officials enrich pensions for public employee union members with seniority in exchange for political support, and then cut the pay and benefits of new hires when money is tight, and those new hires are forced to pay union dues even so. Social Security is adjusted upward for inflation, but the minimum wage is not.

Times sure have changed. In the 1950s and 1960s, everything was for the children and the young, as their parents left their grandparents behind in declining urban and rural communities and moved to the suburbs and the Sunbelt. The old, who had worked and sacrificed, were neglected and forgotten. Today things are just as inequitable, but in the opposite direction. And many of those who were on the lucky side as children and young parents are on the winning side yet again. Everything is still for themselves.

At every point in their lives the generations born between 1930 and 1955 – the so-called “Silent Generation” and the first half of the baby boom – have been better off economically than their predecessors, while those born later, who came of age in the mid-1970s and after, have been worse off. No wonder the estate tax has become such a hot issue. The “Greatest Generation,” those who are now dying off, worked, fought and sacrificed to build a better world for its children. Now, some members of the “Richest Generations” are desperate to provide a future for their children, and only their own children, in a diminished world. A world they are diminishing at this very moment through the actions of their elected representatives, almost all of who are of the same generation as themselves. 

This is the legacy of today's politicians.  And until they start admitting it, expect it to continue to get worse.

To address those competing demands we have two competing political parties and, in theory, two competing philosophies. Democrats and liberals, it might be assumed, are in favor in greater demands on individuals for contributions to society – by everyone, greater restrictions on organizational behavior – on everyone, and more public services provided and guarantees made by society to each individual – to everyone. Republicans and conservatives, it might be assumed, are in favor in smaller demands for contributions to society – by everyone, greater restrictions on individual behavior – on everyone, and fewer public services and guarantees made by society to each individual – to everyone. One might expect that these two points of view would end up compromised in the middle – with everyone required to make a moderate contribution, required to accept moderate restrictions, and entitled to expect moderate services and guarantees, with the actual extent of these depending on the results of the last election.

That is not, however, the way the compromises seem to work. To keep the cost of government down to a level Republicans and their influential backers will accept, Democrats often agree to very little in the way of services and guarantees for some, while insisting on extensive services and guarantees for others, others who matter more. To keep the amount of services and guarantees high enough for Democrats and their influential backers to accept, Republicans often agree to high taxes on some, while pursuing extensive tax breaks and exemptions for others, others who matter more. Often, in fact, those nominally in one political party are on the other side, with Republicans pursuing additional funding for some, and Democrats handing out tax breaks and exemptions to others. Inequity increases in a fiscal cycle, with the benefits handed out in booms (when those not benefiting are less likely to realize they’ve been robbed because they aren’t immediately hit with the cost), and general service and benefit reductions and tax rate increases imposed in busts (as an “inevitable” result of “circumstances beyond our control.”) The boom time deals are seldom if ever taken back, no matter how tough times get.

The possibility that governments would get into the business of dispensing special favors has always been a concern, and at a more enlightened point in our country’s history something was done about it. Consider Article 3, Section 17 of the New York State Constitution, which prohibits “granting to any person, association, firm or corporation an exemption of real or personal property.” It also forbids “granting any person, association or individual any exclusive privilege, immunity, or franchise whatever.” Then there is Article 16, Section 4 which states “there shall be no discrimination in the rates and method of taxation between such corporations and other corporations exercising substantially similar functions and engaged in substantially similar businesses within the state.” The state constitution also prohibits exempting public employees from taxes, and foisting debts on later generations without a referendum. All these provisions were presumably put in for a reason, but apparently lack the all-important “and we’re not kidding” clause, because here in New York, they are routinely ignored.

At the federal level, inequality has been rising, and hypocrisy increasing, since the 1994, 1996, and 2000 elections. In 1994, the Republican Party took Congress after portraying “big government” as a sinkhole of special favors for the undeserving poor, minorities, immigrants, and those living in older central cities. The Democratic Party responded by agreeing to substantial reductions in government funding for these very groups, whether deserving or not, as a strategic move to preserve funding for those who really matter to the Democratic party – the elderly and producers of public services, either in government or in government-funded health, housing and social service non-profits, and the senior citizen voters they felt the need to compete for. Traditional liberals – who wanted more government spending, protections and actual services for everyone – were outraged, but the Democrats knew that the losers were unlikely to turn to the Republicans, who despise them. “Liberals,” in effect, agreed to less public money and services for some people, to preserve more public money and perks for, well, themselves.

Flush with success, traditional “small government” conservatives then started talking about reducing public services, benefits protections and guarantees – for everyone, including middle-income people living in the suburbs and the Sunbelt, and the elderly. They took aim at defense pork, farm subsidies, and high Medicare reimbursements, among other things. It turns out, however, that virtually no one thinks of government money for themselves as wasteful “big government” spending. For swing voters in the suburbs, and many “conservative” voters in the Sunbelt, tax revenues collected elsewhere and spent on themselves is “effective” government. The G.O.P. lost the 1996 federal election, with the blame cast on “extreme” conservatives who were, for the most part, defeated or silenced. It spent the next four years assuring suburban and Sunbelt American that they were in favor of small government for other people, not for them. The “Republican revolution,” it turns out, was limited to cutting spending for the benefit of the poor, minorities, immigrants, and those living in older central cities, and then increasing it for others by a greater amount. It worked. In 1999, 32 states, most in the South and West, received more in federal spending than they paid in federal taxes. President Bush won 24 of those states in 2000.

President Bush has since presided over an explosion of federal spending and a reduction in federal taxes, with the biggest fiscal decisions providing more benefits to those who already had extensive benefits. The income tax, which affects the wealthy and retired, was cut, but the payroll tax, which hits low, moderate, and middle-income workers hard, was not. A prescription drug benefit was added to Medicare, for senior citizens who already benefit from extensive federal health care guarantees, but nothing was done for the rising share of young people (who pay taxes to fund this) and yet are entitled to no government support for health care at all. A few conservative commentators were outraged by rising pork barrel spending, but most were happy with “compassionate conservatism.” That is being compassionate toward our people, and conservative toward them.

And the end of this process, inequality in taxation and public services has increased even further. Things aren’t much better when one moves from the sphere of taxation and public services and benefits to the sphere of criminal justice, after a more than a decade of “law and order” crackdowns on street crime balanced by an unchallenged explosion of white collar crime.

With these compromises and deceptions, what is left of ideologies? What you are left with is two hypocrisies, with contradictory positions and rationalizations buried under shrill rhetoric and appeals to tribal loyalty. The divide that matters today is not between liberals and conservatives (to the extent that these two terms have any real meaning), Republicans and Democrats. It is between those any “persons, associations or individuals” who seek and receive “any exclusive privilege, immunity, or franchise whatever,” and everyone else. The former are represented by the Democratic and Republican parties. The latter are, for the most part, not represented at all. In public policy, at all levels of government, the truth is that the real decisions are not about “what.” They are about “who.”

Even among those who think about public policy as something other than a lobbyist, there is far less interest in, and discussion of, what is best for everyone. What appears to have happened to American thought involves the two different concepts of the word “freedom” that emerged in the 1960s and 1970s, one good and the other (for lack of a better word) evil. The good “freedom” might be called freedom of identity, or of lifestyle. For a brief period after World War II, many Americans believed that if you didn’t look like, act like, think like, and live like everyone else, then you shouldn’t be accepted. Think of the children’s TV show “Rudolph the Red Nose Reindeer,” in which Rudolph and his companions become outcasts at the North Pole simply because Rudolph’s nose glows, and his friend is an elf that wanted to be a dentist instead of make toys. The idea of America as a land of social conformity is mostly gone, and the old conflicts associated with it irrelevant, but some politicians still try to stay elected by manipulating 35-year-old resentments, with tribal appeals to groups of people who feel aggrieved. Sometimes it still works, because the country is being run by and for those who were already adults 35 years ago, and haven’t had an open mind since.

The evil idea of freedom is freedom from responsibility, which has both a liberal and a conservative version, depending on the responsibilities one does not want to meet. Liberal Democrats have sought to attract votes by telling people that they do not have personal responsibilities to earn their own living, and to take care of their own children. To knowledgeable critics, their excuse for irresponsibility has been “social realism,” the assertion that (for example) single parenthood or spending every dime one has and going into debt is the way people live today (because they are free to live that way), and thus policy “programs” must be designed to make this work. And they have cultivated a sense of entitlement to assistance, causing the poor and others who merely feel needy to feel anger at anyone who dares to make demands on them.

Conservative Republicans have sought to attract votes by telling people that they do not have social obligations to their communities, to the less well off, to the rest of the world, and to the future, particularly with regard to taxes and debt, but also with regard to energy and the environment. To knowledgeable critics, their excuse for irresponsibility has been “economic realism,” the assertion that the affluent are self interested and mobile, and if you make demands on them for the benefit of others, or for the benefit of the future, they will take their assets and go elsewhere, leaving you worse off than before. They also cultivate a sense of entitlement, telling the affluent that their position of privilege is the result of their own moral superiority, not social advantages, and that they do not owe anything to anyone.

Democrats appeal to the hostile, irresponsible poor. Republicans appeal to the self-righteous, irresponsible rich. And both try to appeal to the irresponsible, overspending, deep in debt people in the middle. While seeking to spend lots of money, generally on those who already receive lots of government funding, Democrats only dare to propose higher taxes on the “rich.” And while Republicans are always looking to cut taxes, particularly for the better off, they have only been willing to cut spending on the poor. The compromise is to go deeper and deeper into debt, at the federal, state, and local level, while deferring costs and advancing revenues.

What has happened is, in effect, a reversal of the “Progressive” movement of a century ago. Lots of people like to wear the “progressive” label, particularly among Democrats, but have no idea what it means. In reality there were Republican and Democratic progressives, liberal and conservative progressives. All agreed the government had to do at least some things. The liberal and Democratic progressives wanted government to be more fair and efficient so it could do more; the Republican and conservative progressives also wanted fairness and efficiency so government could cost less. But both opposed special deals and favors, and both opposed structures and practices that provided producers of public services and with unearned privileges at the expense of consumers of public services. Both had ideas, though different ideas, of what was best for everyone, and so did most Republicans and Democrats for many years afterward. Franklin D. Roosevelt and Ronald Reagan both believed themselves to have such universal ideals. Both the Goldwater and the McGovern solutions are better than what we have now. No, ideologues are not the problem, at least not ideologues with open minds who are willing to compromise.

In the face of this, I have come to take a simplifying view of policy and politics at all levels of government. I now believe that the burdens of government, financial and otherwise, should be limited to those burdens that the government is willing to impose equally on everyone, or at least on everyone in equal circumstances. I believe that government protections and guarantees should be limited to those that the government is willing to provide equally to everyone, or at least to everyone in equal circumstances. I believe that public services should be limited to those the government is willing to provide equally to everyone, or at least to everyone in equal circumstances, and to those that people are required to pay for, or to make sacrifices in exchange for. I believe that the only circumstances that should be used to differentiate people in order to allocate burdens and benefits are those that are clear, simple, irrefutable, nearly impossible to fake, and do not rely in any way on judgment. I believe that restrictions on personal and business conduct should be limited to those that the government is willing to enforce equally against everyone, no matter how affluent and influential they are, no matter how well paid their attorney is.

Given this standard of equality, it is likely that readers who consider themselves to be “liberals” or “conservatives” will think of me as being on the other side. That is certainly the case among those who know me personally. In some cases, I believe that achieving “equal protection” would require eliminating government services, protections, and guarantees that are not available to everyone, and eliminating business regulations and criminal laws that are not uniformly enforced. In other cases, I believe that achieving “equal protection” would require expanding government services, protections, and guarantees that are not available to everyone until everyone is covered, and increasing the scope and enforcement of business regulations and criminal laws until every violation is aggressively pursued and prosecuted. I am so offended by the rising tide of unequal treatment that in some cases I am prepared to go either the “liberal” or “conservative” route to equal treatment. I may not be in favor of increasing or decreasing the size of government, therefore, but I am in favor of decreasing its scope in order to universalize its application.

More and more, our federal, state and local governments seem to act as if every problem in society is caused by, and can be remedied by, some change in public policy that either adds, eliminates, or modifies a public program or tax. This leads to a complicated series of small initiatives that drain resources away from the basic services that ensure basic needs. Each of these initiatives, grants, programs, and regulations, though irrelevant to most people, generates publicity, which elected officials can use to get re-elected. Each also generates an interest group, highly motivated to participate in the political process and highly focused on its continued existence. The more limited the scope of government, the more likely it is to have the resources to accomplish those things that it must do, not just for those who know how to work the system, but for everyone. Everyone should expect less from the government, but they should actually get what they expect, and to the same extent as everyone else.

How about those who believe that life is rat race, and who want to come out ahead by being the biggest rat? Perhaps that is tolerable, though not laudable, in personal and business relationships, since these are optional and voluntary. The government is neither, so having it become a playing field of competitive advantage seeking and victimization is simply not acceptable. Is it inevitable?

There is, however, a reason to believe that present trends might not continue. None of the candidates for President saw this situation -- all for some, nothing for others who pay for it, and ever more spending -- as acceptable. All promised to put a stop to it. And the leading candidate for President, Barak Obama, is not a member of the generations that have set up a very good deal for themselves and passed the check to those coming after, so he might have a different perspective. Health care, moreover, is a federal issue, and in much of the rest of the country the United States remains a democracy, so it is possible that at some point the national policies that work to the disadvantage of a growing majority will reverse. Congress, however, represents those on the winning side of current arrangements, and takes their donations, so institutional collapse for the majority remains the most likely course, as those with good deals hold onto and expand them no matter what. What might be expected is a repeat of the Medicare prescription drug benefit -- more funding for more services for those receive a great deal of funding and services already -- combined with a concession that the next President’s “hands are tied” by the exploding budget deficit.

Clearly the U.S. health care industry is not going to disappear. What may be expected is that at some point (perhaps already passed) its cost will have become so great that it just cannot absorb additional resources. Perhaps the trigger will be a massive financial crisis, when those who save (generally outside the United States) are not longer willing to lend money to the federal government that Americans cannot afford to pay back. At that point, the only way those currently entitled to whatever additional health care may come along, at whatever cost, can maintain that entitlement is for money to be saved on the less entitled. For some to have all, with someone else footing the bill, more and more have to have less and less. So what can those not in on the deal, other than high taxes to pay for those who are in on the deal, expect to do for health care twenty years from now?

For education, I suggested that in the future the best option remaining available for middle and working class families might be assisted home schooling – pay taxes for luxury class schools for those who matter, and then teach your own kid at home, perhaps in cooperation with other parents, probably with the assistance of a tutor. For health, the likely result is self-health care, supported by the internet.

Most people, in fact, provide health care to themselves and their loved ones, relying on the health care industry to do testing, provide advice and check on progress. When one is injured or ill, the health care industry diagnoses the problem and recommends a treatment. Subsequent visits check the results and recommend modifications. Today’s young people, lacking access to health insurance and if unable to afford physicians on their own, are likely to rely on the internet and home testing kits – or perhaps tests administered for a more modest fee in pharmacies – to figure out what is wrong with them. Physicians currently retain a monopoly on the availability of restricted drugs, but as both health care and drugs become more expensive many Americans, like those in poor countries, are likely to rely on bootleg and black market pharmaceuticals. Self care chemotherapy for cancer based on a web-assisted self-diagnosis? For many of tomorrow’s Americans, the alternative might be no care at all.

Where the health care industry does provide direct care is surgery. Here the response to decreasing insurance is likely to be an expansion of the already booming medical tourism industry. According to a recent article in The Economist: “over 45m Americans are uninsured, and many millions more are severely underinsured. Such people may find it cheaper to fly abroad and pay for an operation out of their own pockets than to find the money for deductibles or ‘co-payments’ charged for the same procedure at home. Arnold Milstein of Mercer, a consultancy, calls them America’s ‘medical refugees.’” In addition to foreign surgery, we may have home surgery, and home childbirth by assisted practitioners who are paid in cash and do not give their names to avoid getting sued.

So while some Americans receive the finest and most advanced high-tech care at home, health care that the world’s wealthy travel here to receive, other Americans will either have to travel to poor countries or go on an unregulated black market to receive run of the mill health care, paying out of their own pocket. Obviously, I recommend that young people do all they can to remain healthy as long as possible, as they are unlikely to be able to obtain the care older generations take for granted.

And what about the unhealthy, those with serious debilitating or deadly congenital or acquired conditions? Self-help via the internet, home test kits, bootleg drugs, and trips to Thailand for a surgery or two are unlikely to meet even their most basic needs. The life expectancy and quality of life of people with many conditions has improved in recent decades. For non-wealthy people on the outside of the formal government subsidized health care finance system, that trend may reverse.

I do not predict this nightmare will occur because taxes fall and less public money is spent on health care. Indeed, those without any government health insurance or subsidies will probably have to pay increased taxes for past (financed by debt) and future benefits for those with extensive and increasing health insurance or subsidies. This prediction is based on an extrapolation of current trends forward. America’s institutions are being hollowed out from the inside by self-dealing and excess privilege. Health care will be no exception.

For an amusing discussion of a post-collapse environment, read this. The author under-appreciates the flexibility of capitalism, and in particular we are unlikely to have millions of abandoned homes alongside millions of homeless -- the homes will be recycled at lower and lower prices until they are filled. Yet some of the insights are worth a look.  Particularly in parts of the economy dominated by public policy, such as health care, education, and transportation.

In the 1987 to 1992 recession we had a crime wave driven by the crack epidemic; 9/11 turned what would have been a mild recession here into a deeper one. In addition, New Yorkers were much more dependent on finance for employment twenty years ago than today, before office automation and information technology wiped out hundreds of thousands of “pink collar” middle class office jobs, leaving a smaller number of massively paid professionals. Today “Wall Street professionals are trying new careers, and fetching smaller salaries, amid the elimination of 76,670 investment jobs in the Americas following the global credit crunch that started a year ago,” the article continued. Some are starting small businesses, or relocating to other countries, or going back to other regions, or teaching. These folks aren’t going to starve. Most of them will probably become very successful, or at least very happy, doing something else. Meanwhile, far more jobs are being lost elsewhere in the country. That’s where the real economic hardship will be.

Former Wall Streeters earning less money, however, will pay less in city and state income taxes even if, like Jessica Walter, the City of New York takes advantage of their new status as a person that does not matter (in a younger generation and self-employed) by hitting them with an unincorporated business tax and taxing them twice. “Traders and bankers who leave finance can expect to earn a fraction of what they used to make. Compensation for employees on Wall Street averaged $399,360 in 2007, compared with $62,390 for New York City jobs outside the securities industry,” Bloomberg News reported.

And Wall Streeters who retain their jobs are also less likely to be paid like princes in the future than in the past. “Half the people working in debt sales, trading or research in New York at the beginning of 2007 will have been fired by the end of this year or won't get a bonus,” according to Bloomberg News. Wall Street bonuses had purportedly been based on profits, but the subsequent losses show those profits were not real. Additional major financial institutions may either fold or be forced to be bailed out; shareholders may lose most or all of their investments; New York’s plutocrats may be faced with pissed off owners or pissed off taxpayers or both questioning their pay. They’ll be well paid in the future, no doubt, but perhaps no more than similarly bright, hard working and creative people in other industries.

Then there are the profits themselves. Remarks by Mayor Bloomberg confirmed something I had suspected -- that the massive losses by financial firms can be written off against future profits, reducing the corporate income against which corporate income taxes are levied in the future until they are offset. “Financial companies worldwide have reported writedowns and credit losses of more than $500 billion since the start of 2007. Some Wall Street firms may pay little or no New York City or state taxes for years, Mayor Michael Bloomberg said this week. Some companies are seeking refunds from the city on taxes they paid ahead of time, saying losses have cut their tax liability to zero.”

And they will have less future gains to offset against those losses, because the next crisis in finance is not just losses from the past but finding something to make money on in the future. It may not be as easy to fleece people once again, which is where a lot of those “profits” came from. Other profits, and high salaries, were the result of sky-high productivity, with more and more money coursing through fewer and fewer hands, who needed only to take a few off the top to become enormously wealthy. Except that some of that productivity wasn’t real either. Some of those middle-class office jobs, now going, consisted of “non-revenue” work like assessing counter party risk, verifying the incomes of mortgage applicants, making sure the construction funded by a construction loan was actually taking place. Non-revenue, but as it turns out perhaps necessary. The twenty year trend of fewer and fewer people in finance making more and more money may reverse, and those some of this analytical grunt work is being outsourced to India, not all of it will be. More people means lower profits.

And how about the investment losses individual New Yorkers are suffering? Well investment losses work the same way as corporate losses -- they can be offset against future gains -- and to an extent wages -- until they are cancelled out, reducing future taxes owed. So expect New Yorkers, even wealthy New Yorkers, to pay little or no capital gains taxes for two or three years after this one.

New York also benefited from an unsustainable real estate boom, driven by low interest rates and speculation, that inflated tax revenues. Buildings and complexes that were held by the same owner for decades were flipped two or three times, with the city, state and MTA each taking a cut in real estate transfer taxes with each change of hands. It is certain that commercial real estate investment sales will fall back to normal levels; in other parts of the country it has fallen to just about zero as no one is willing to invest in commercial mortgage backed securities anymore. The MTA, in particular, could have a large share of its tax base wiped out.

Virtually all of this reduction in tax revenues has yet to occur. In fact, because Senator Obama is threatening to increase federal taxes on capital gains, lots of wealthy people are selling their winning investments and taking those gains now at lower rates, temporarily increasing city and state income tax revenues this year -- and leaving the losses for next year. And this year’s personal income tax revenue is based on Wall Street bonuses paid this January, which were based on Wall Street profits in 2007, back when there were profits. Next January there will be fewer such bonuses, which the state will find out in mid-April when quarterly tax revenues come in. This time text year revenues will be falling off the table.

New York City, New York State, and the MTA had a temporary tax revenue windfall that is not likely to recur for a decade. In fact, for the next three or four years tax revenues are likely to be far lower than they would be normally. It would have been terrible if our elected officials had taken that windfall and blown it all, leaving us with no reserves going into this difficult period.

In fact, they have done something worse. Convincing themselves that the windfall level of revenues would continue (or just pretending, more like it), they have already handed out tomorrow’s money to their supporters. Teachers will retire at 55 instead of 62. Taxes were lowered and money was borrowed. Spending soared not only in categories and places where it was low (like NYC schools) but also in categories and places where it was high (like Medicaid and schools in the rest of the state). MTA fares were held below the rate of inflation. Toll booths were removed in the suburbs. STAR checks were sent. Revenues were sucked out of the future, and costs deferred, to pay for it all.

Faced with a crisis, some will no doubt call of New York City and New York State to “do more with less” the way businesses supposedly do. That is nonsense. In recessions, businesses do less with less. Their revenues fall because demand for their goods and services fall, and the workers who are laid off would otherwise have had nothing to do. Moreover, the least valuable workers are those who are let go in well-run non-unionized companies. And, faced with an extreme situation, private companies renegotiate their debts, pensions, and retiree health benefits, often going through Chapter 11 if needed. Businesses don’t pay for the past when they don’t have enough money for the present and future.

In the public sector, in contrast, when tax revenues fall, the demand for public services, benefits and spending goes up. People suffering recession-induced economic hardship switch from parochial schools to private; those who have their cars repossessed switch to mass transit; those who lose health insurance end up on Medicaid or in public hospital emergency rooms; those who can’t afford a vacation take the kids to the local beach or pool or take out books at the public library; those without income end up on unemployment and public assistance. Housing busts bring arson, job market downturns bring crime.

And public spending that provides zero public services and benefits has the first claim on whatever tax dollars are left. Debts are paid first, and the cost of debt service could soar with higher interest rates, which have been unusually low for a decade. Retired public employees do not have their pensions reduced, are not asked to contribute to the cost of their health insurance, and are not asked to pay state and local income taxes. The mandatory cost of public employee pensions could soar even higher as the pension funds admit investment losses. And goldbricking public employees in seniority sinecures are neither laid off nor made to start working again. Put a “teacher” who succeeded in getting out of the classroom back in, and they can respond by simply not teaching. All the political posts are on top of that. So a five percent reduction in revenues would cause a ten percent reduction in the number of actual workers the city and transit system could afford to employ, leading to a twenty percent reduction in the work they do.

And as for higher taxes, the “tax the wealthy” fraud being put out there is a joke. It isn’t wealth that is being taxed, it is income, and the taxable income of the wealthy is going way, way down. The result will be a massive tax increase on the income of everyone from top to bottom, described as the “inevitable” consequence of “circumstances beyond our control” but in reality an offset to all the money those who matter politically have sucked off the top, and no one would even dare to suggest they give back. All while wage income continues to fall relative to inflation, and not just for ex-Wall Streeters. “Shared sacrifice?” There is no such thing in New York. As the Russian proverb puts it, “the shortage will be distributed among the peasants.”

New Yorkers are less economically dependent on the financial sector that ever before, but the budgets of the City and State of New York and the MTA face disaster without an unsustainable financial boom continuing indefinitely. No wonder those who talk about the coming crisis were not believed back then, when it could have been averted, or even now, when it is inevitable and already happening in other parts of the country. New Yorkers are much less likely than in past recessions to be hurt by the economy. But they are much more likely to be hurt by their governments, as a result of all the debts the generations and cabals in change have run up handing out favors to themselves.