It's been obvious for months that Democrats are looking an an annus horribilis next year. Their politics of privilege, their society of subsidy, their legalized looting has elected generations of Democrats to power. But now it looks like it is collapsing, all at once.
Because the government has run out of other peoples' money.
Democrats have pressed every policy button they know, but it doesn't look like anything will change the economy for November 2012. And why should it? Why should business expand and hire when a gigantic tax cliff is coming in 2013, as the Wall Street Journal reminds us.
Democrats are in the same position as the Republicans in 1931. For decades the Republicans had seduced the working man with the protective tariff, telling him that the tariff protected his wages from low-wage Europe. But, of course, when the Progressive era Federal Reserve finance system screwed up in 1929-32 the working man got hammered. And he returned the compliment by hammering the GOP and handing over the keys of the kingdom to the Democrats.
Now the Democrats are facing a similar fate. For years they have promised the average working man that their Social Security, their Medicare, their unemployment and workers compensation benefits would be a solid safety net under the vicissitudes of life. Now those promises are proving to be empty. It's not just that Social Security and Medicare are broke. The problem is that all these benefits hit the economy as taxes on jobs, the payroll taxes that mostly get paid by employers and that make them hesitate before hiring.
Yeah! We'll make sure those stingy employers pay for your benefits! That's what Democrats have told the workers. And it's all a lie. The workers would have done better by saving their own money and buying their own insurance. Because you know what? If they had, then all that money their employer paid in taxes would be their own money, saved in bank accounts and mutual funds and life and disability insurance.
Well, after the special elections on Tuesday, all Democrats now know they are in trouble. Unfortunately for them the US is out of smoke and mirrors. We'll have to get out of trouble the hard way, with work and saving, and cuts to wasteful government programs. There is no other way.