"You May All Go to Hell, and I Will Go to Texas"

The End of an Era, Part 3

This article is continued from a previous edition of The Tracinski Letter.

We can take some comfort in the fact that it is often in time of gravest extremity that the best minds have originated and advocated the ideas we need. In 1991, it was a financial crisis in India that allowed leaders like Manmohan Singh to push through free-market reforms that led to decades of rapid growth and modernization, a process that is not yet over. Or to take an example that is closer to home (in more than one respect), out of the Great Depression and the New Deal emerged a new generation of intellectuals on the right—chief among them Ayn Rand—who revitalized the defense of free markets, capitalism, and constitutionalism and laid the foundations for a better era.

This is a reminder, in times of crisis, not to despair but to fall back on our reserves of strength. So it remains to catalog those reserves and see how we can make the most of them.

This first place to look is at one of those electoral maps that shows results county-by-county, like these, which show the usual pattern. America is a sea of red, representing counties where the majority voted for the Republican candidate, dotted with islands and archipelagoes of blue. The only reason Obama won the election is that those islands represent densely populated cities dominated by the political left.

Yet if you looked at that map alone, you would think that the political right represented an irresistible majority. You would think the same thing looking at a map of results for the House of Representatives. Final counts aren't in yet on all of the races, so the best I can give you is the final projection from the New York Times, which is pretty close to the actual result. In the House, the right is an irresistible majority.

This has led some on the right to promote the idea of changing the Electoral College so that states don't give all of their electoral votes to the state-wide winner but award them one at a time to the winner in each House district. A few states, like Maine, already do this. So in Virginia, for example, instead of getting all 13 Electoral College votes, Obama would have gotten maybe four votes, with the other nine going to Romney. Of course, after every election, it seems that the losing side has some idea for a big election reform that would have produced a different result, and this proposal suffers from a number of insurmountable problems, not least of which is that it is designed to produce a result totally opposite from the national popular vote.

But as a kind of thought experiment, it indicates how wide and deep a constituency there still is for smaller government.

Nor will this remain a mere thought experiment. Government is divided into different branches, and Congress is divided into different houses, for a reason. Each side in the political debate is always striving to gain an irresistible majority, but in the American system irresistible majorities are vanishingly rare. Every majority is resistible, and the divisions of power in our system are designed to aid that resistance.

A test of resistance is about to come, in the form of negotiations over the "fiscal cliff." When President Obama and House Republicans failed to come up with a long-term agreement over the debt ceiling and the Bush-era tax rates, they kicked the can down the road until the end of the year, when a new election would presumably resolve the issue. Yet the election resolved nothing, leaving the balance of power between the president and House Republicans unchanged. But the default position, if there is no new deal, is that tax rates will go up for everyone on the first of the year, while automatic spending cuts will hit both domestic and military spending.

President Obama has opened negotiations by claiming a mandate for raising taxes on the rich. Senate Minority Leader Mitch McConnell responds that "we Republicans in the House and Senate think we have a voter mandate not to raise taxes." Paul Ryan agrees, and his agreement is more important, because as chairman of the House Budget Committee he is actually going to write whatever agreement comes out of the negotiations. Asked whether voters gave Obama a mandate to raise taxes, Ryan replies, "I don't think so, because they also reelected the House Republicans." He's right. The House was filled with Tea Party radicals in 2010, and they hardly lost a seat this year. They are justified in thinking that their constituents are happy with what they've been doing and want them to keep on doing it.

I should also add that Republican have less to lose now. They aren't afraid that a blow-up in these negotiations will damage the prospects for their presidential candidate, because the next presidential election is four years away. And this year's results make them fairly confident that their own constituents won't punish them in the next congressional election two years from now. So they have every incentive to stand fast.

As for the Senate—well, a friend of mine paraphrases Ninotchka: there will be fewer but better Republicans. The Tea Party Caucus in the Senate has grown, while the seats Republicans lost were held by moderate compromisers like Dick Lugar and Scott Brown.

This is the big silver lining of last Tuesday's election. With the notable exception of Utah's Mia Love (and possibly Florida's Allen West), there was no Republican who lost this year who I'm pining over as a great missed opportunity. The only semi-exception is Paul Ryan, but because he wasn't at the top of the presidential ticket and remains in Congress, his time as a national standard-bearer for the party will boost his career rather than ending it.

The division of power between and within the branches of the federal government is one bulwark against tyrannical federal power. The division of power between the federal government and state governments is another.

This is where that county-by-county electoral map is relevant again. In that sea of red, representing all of the places that rejected President Obama's direction for the country, there were not enough votes to tip the presidential election—but there are enough votes to dominate state and local governments, which have significant power to block and counteract the policies of the federal government.

Consider, for example, the impact of Obama's proposed income tax hike, which would increase the top marginal rate for high earners from 35% to 39.6%. That's a 4.6% increase, but it's smaller than the savings a high earner could achieve by moving from California, where the top state income tax rate is 10.55%, to Texas, which has no income tax, or from New York, with its top rate of 8.97%, to Florida, which also has no income tax. (Find where your own states falls here.)

The effect of Obama's re-election is to move us on a medium-term path to a European-style welfare state, in which high taxes and restrictive regulations lead to permanent economic stagnation. While I think there is still hope in the long term to turn ourselves around from this course, like many of my readers I am at an age where the medium term really matters. If the Obama Era lasts for only a decade, that is a significant portion of our prime productive years. It is disheartening to face the prospect of a "new normal" of diminished opportunities, where we will have to hope that we can beat the odds and rise above stagnation. Our personal challenge is to figure out how to live a decent, prosperous life in a European welfare state.

If I were to ask my readers how to do this, I know there are some of you who can reply from personal experience. But then again, I know what most of you actually did about it: you moved to the United States. Our problem now is more difficult: how to live in a stagnant European-style welfare state when there is no United States to move to.

Yet there will still be areas of greater freedom and many pockets of vitality, growth, and progress. In America, this is supposed to be ubiquitous. Now it will be constricted. But it will still exist, and we can seek it out. So instead of moving from Europe to the United States, we may end up moving from high-tax, high-regulation "blue states" to low-tax, low-regulation "red states."

A sneering, obtuse article at a mainstream left-leaning publication asks, "What is the conservative equivalent of 'moving to Canada'?" It is a reference to the perennial leftist threat, every time they lose an election, to move to their imagined socialist utopia to the north. The author and the commenters on this article are too busy making snarky suggestions like moving to Somalia (because, you see, it has no government), and they miss the real answer to the question. The right's equivalent is the message I suggested to a reader who is considering leaving California now that Democrats control the state and the wealth of everyone in it. I told him to leave behind the same message once left by Davy Crockett: "You may all go to hell, and I will go to Texas."

Now, I'm not saying everyone has to or ought to move, or that you have to go to Texas. (Central Virginia is pretty nice, too.) There can be other compensations for living in a high-tax state, and there are some jobs and professions that may be difficult to do outside of New York or Los Angeles. But the point is that the division of power between the federal government and the states is doing its job, providing bulwarks for liberty against the trend on the national level.

Thus, while President Obama heads into his second term, Republican governors continue to dominate on the state level.

"Republicans now control 30 governorships for the first time in more than a decade. The victory in North Carolina was particularly sweet for Republicans. But on a more fundamental level, the right has swamped the country with conservative reform-minded governors, and this success is not geographically constrained: such conservatives are at the helm in New Jersey, Wisconsin, Louisiana, New Mexico, and even Michigan....

"Many on the right are thinking about the promising future of these governors in terms of a 2016 presidential run. But it's also important for conservatives to keep reforming the states' approaches to economic and education policy to help insulate them from the worst of the Obama economy's doldrums and the consequences of the left's decision to completely give up on education reform."

Moreover, this year's election saw an increase in states where the same party controls both the governorship and the legislature.

Democrats or Republicans now have sole control of the governorship and both legislative chambers in 37 state capitals around the country.... Democrats now control all three bases of power—the governorship and both houses of the state legislature—in 14 states and Republicans in 23, with only 12 states sharing power....

[A]fter last week's vote, the GOP for the first time since 1872 now controls the Arkansas House and Senate. Just 20 years ago, Republicans didn't have a majority in a single legislative house in the states of the old Confederacy—now they control all 11.

There has been some wild talk about how the bitter ideological conflict of the Obama Era will lead to a civil war or attempts at secession. But the civil war and the secession are already occurring in a (thankfully) more civilized form, as the country divides into regional blocs on the issue of limited versus unlimited government.

All of this has a direct impact on one of the main conflicts of the Obama Era: the implementation of Obamacare. Because of the lawless way in which this law is written, it doesn't just go into effect. It has to be implemented through the creation of thousands of pages of new federal regulations—but also through the active participation of the states.

So far, only about 15 states and the District of Columbia have created the framework for [health insurance] exchanges through legislation or executive orders; three others have committed to running exchanges in partnership with the federal government. A number of Republican governors, including those in Arizona, Idaho, New Jersey, Virginia, and Tennessee, had said they would decide after the election, giving themselves only a 10-day window before the deadline.

Naturally, some of these states will attempt to resist that implementation.

By upholding the mandate as a constitutional exercise of Congress's taxing power in June, the US Supreme Court maintained the provision that helped hold the law together. But if the mandate is the cement, the law's expansion of Medicaid and establishment of subsidized health insurance exchanges is the house itself. It's these two provisions that will be responsible for $1.7 trillion of spending over the next decade, according to the Congressional Budget Office. Together, they are expected to provide insurance to 30 million Americans and create the infrastructure that liberals hope to use to transition the nation, over time, into a fully government-run, or single payer, health care system. With the election over and Obama reelected, repealing the law is not going to happen over the next four years. So 30 Republican governors will have to make a decision about whether they want to help the federal government implement Obamacare, or keep the onus on the Obama administration.

One of the silver linings of the Supreme Court decision is that it gave states the ability to opt out of the Medicaid expansion. Medicaid is one of the programs that is crushing state budgets and if implemented as intended, Obamacare will add 18 million beneficiaries to the program's rolls. Though the federal government lures states with a honey pot in the short term, covering all of the expansion through 2016, by 2020 the states will be asked to kick in 10 percent of the cost, amounting to billions of dollars of spending imposed on states nationwide each year. It would be to the long-term benefit of governors to opt of the expansion.

All of these measures will add up to make a difference. Many of us have been warning that the United States is headed in the direction of Greece, but perhaps that's not the most accurate analogy. Greece is a small homogenous country, not a large and diverse union. A better analogy would be to the European Union in general. And if we're going to go the way of Europe, then it's a good idea to make sure that when the crisis hits, you're living in Germany and not Greece. And by Greece, of course, I mean "California."

But the purpose of these measures is not just to survive through the Obama Era. It is to marshal our resources—economic, cultural, and intellectual—to bring about a return to a better era.

I have referred to that county-by-county map of the election results as a source of good news. But let's look at the bad news: those entrenched islands of blue. Somehow, we have lost the cities—the beating hearts of American capitalism—to an anti-capitalist ideology. This seems to me to be an unnatural state of affairs Certainly, it was not always so. Check out this 100-year history of election maps to see how recent a phenomenon it is. The famous quote from Pauline Kael about how she didn't know anyone who voted for Nixon in 1972 could not possibly have been true, because in that year's landslide, Nixon won New York City. Reagan won it, too, in 1984. But since 2000, the cities and coasts have been owned by advocates of big government.

To revive the cause of freedom in America, we are going to have to re-take those islands of blue. To do that, we are going to have to storm the commanding heights of the culture: the media, popular culture, and higher education. These platforms have become more dominated by the left in recent decades, even as the rest of the culture has shifted to the right. There is evidence that the left-leaning mainstream's monopoly is crumbling in all of these areas; the Internet is already transforming media and higher education. But this election is a reminder of how powerful the old system still is. Obama's whole re-election strategy—avoiding scrutiny of his own record while assassinating his opponent's character—depended on it.

But as I have argued elsewhere, ideas don't just propagate top-down. They also come from the bottom up, from the values people actually practice and experience in their lives. To make the storming of the culture's heights possible, we have to rely on the concrete achievements of science, technology, innovation, and capitalism "on the ground." The Obama Era will be bad news on this score. For many more people, the ordinary experience of life will be stagnation, hopelessness, and dependency.

But the real America character, the American legacy of achievement, innovation, and self-reliance has not somehow magically disappeared. Bear in mind that even during the Great Depression, technological and economic progress continue, and the industrial economy that sprang back to life after the end of World War II was far more advanced than the one that crashed in 1929, despite the intervening years of collapse, stagnation, and war. The Obama Era will not be worse than the Great Depression in this regard. It will be better.

For about a year now, I have been gathering a whole series of stories on the technological and industrial revolutions that are building quietly in the background. I was saving them up for a new series of articles after the election, which I had hoped to publish in a happier context. But this series is even more needed now. Some of these innovations will be slowed down or stifled by the tax and regulatory burden of the Obama Era, but many of today's innovators will find a way to break through, and they will transform our world—and us.

Up to November 6, I would have described myself as pessimistic in the short term, optimistic in the medium term, and very optimistic about the long term. Now I am pessimistic in both the short and medium terms. We're not going to get out of this any time soon. But I am still optimistic over the long term, and I will be providing plenty of reasons why you should be, too. Stay tuned.

In Rudyard Kipling's poem "If," there is a line that I didn't understand when I was young, but which has meant more to me as I have gotten older and seen more of life. The line is: "If you can meet with Triumph and Disaster/And treat those two impostors just the same." Kipling understood that there was no such thing as a permanent victory and no such thing as an unrecoverable defeat.

Yes, this is the end of an era, but this new era, too, will end, and we can start planning and working now for what will come next.

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