PrintNovember 19, 2010
Lucifer Is Loose in the Land
It was the devil himself who said that the "future is not what it used to be." Lucifer, played by Robert DeNiro, was disguised as Louis Cyphre (get it?) in the edgy and disturbing film Angel Heart, starring Mickey Rourke before he lost his looks. This was 1987, before the election of Barack Obama and the beginning of the end of America as we knew it. Today, the future isn't just what it used to be; it's now a menacing and gloomy reality that a new Congress may not be able to alter.
The key change in the construct is the end of home ownership as the "American Dream," a goal agreed upon culturally, politically, and most importantly, economically. And the dream was backed by a government program that actually worked. Loans were secured through Fannie Mae and Freddie Mac, and Congress obliged by allowing interest deductions for home mortgages. The result was increasing prosperity as Americans were able to create a secure investment to fall back on in troubled times. Home ownership became the largest asset in the portfolio of the majority of Americans -- and home-building generated the hottest sector in the economy, calling upon millions of small business subcontractors that expanded job creation and stimulated the consumer sector.
But the devil didn't like that. He set about dismantling the dream relying on his favorite alchemy -- greed and corruption. Enticed by ever-rising home prices, executives across the spectrum, including federal housing lenders, banks, and Wall Street investment firms, fell under a spell that led them to believe that bubbles never burst. And homeowners were deceived too, leveraging their key asset to the hilt.
The bubble burst, of course, causing high-end homes to become millstones around the necks of owners and the economy to collapse. As to the future, many young people aren't so interested in home ownership. The young are seeing older citizens lose their security as homes become financial anchors, foreclosures quicken, and the economy stalls. Without the home sector, an economy centered around families and small businesses is giving way to government command economy principles and the rise of an elite ruling class confident that it knows what's best for the rest of us. The dignity, wealth, and self-esteem of the vast middle class are fading away.
Erskine Bowles, about to step down as president of the University of North Carolina system of schools, can now spend more time working with former U.S. Senator Alan Simpson, his co-chairman of the White House Deficit Reduction Commission. Their recent suggestions to confront the problem include cutting military spending, extending and trimming Social Security payments, reducing Medicare benefits, and removing the tax deduction for mortgage interest on homes valued above $500,000. Strapped with tyrannical local property taxes at the same time homes decrease in value across the board, owners would be forced to give up their tax deduction, the only bright spot in an otherwise grim economy.
The proposal to cut military spending is an old chestnut from the files of the liberal left since the 1950s. The idea comes over today like suggesting that government workers use fewer paper clips. Military spending has remained 20% or less of the federal budget for decades. And Defense Secretary Robert Gates, a holdover from the much-missed George W. Bush administration, has been streamlining military spending for several years.
To throw this out today as a budget-saving salve is more political than practical, and the idea does not take into account how defense spending stimulates the economy (via civilian contractors and the jobs created), contributes to the economies of states who host military bases, produces technological innovations that assure our security, and serves as the major contributor to the civilian technological sector. Cuts also negatively affect morale at a time when citizens are nervous about terrorism and the nations that give terrorists safe harbor.
Trimming Social Security and reducing Medicare are additional blows to the benighted Baby Boomers, who have seen their financial security undermined through reduced home values. After home ownership, a monthly check in old age really is all that is left as a safety net in a disastrous economy. And it was the Boomers who made the contributions so their parents could enjoy a more secure retirement. While reducing spending is required, Bowles and Simpson have erred. Staring them right in the face is the solution Americans desire: cut federal government salaries across the board.
Only two days before the suggested cutbacks were announced, Bowles and I exchanged e-mails on the task ahead. He wrote, "[T]here are too many federal employees and contractors. ... no State employee (in NC) has had a raise in the last three years while federal pay has gone up 3% in two of those years - 2% one year - and is scheduled to go up again in January of 2011."
Federal employees are allegedly paid 30% more than their counterparts in the private sector. While the economy of Washington, D.C. and its environs is booming, the rest of the country is suffering. What's wrong with this picture? Ask Louis Cyphre.
Bernie Reeves is editor and publisher of Raleigh Metro Magazine.
Bernie Reeves is editor and publisher of Raleigh Metro Magazine.
