Wealth and Ethics in American Fiscal Policy

In a struggle between wealth and ethics, practically speaking the former tends overwhelmingly to win hands down, even if the form of government is at least nominally a representative democracy, but in fact an oligarchy or plutocracy. The influence of the moneyed interest both in the E.U. and U.S. is likely much stronger than most of the respective citizenries know. When the poorest of the poor are to be made worse off financially by cuts in certain government programs while defense contractor companies stand to get more, which tends to mean higher bonuses for executives (and campaign contributions for elected representatives), the skew toward the gilded and away from the most vulnerable economically can be viewed as an x-ray of sorts indicative of rule by wealth rather than by the People. U.S. President Trump’s fiscal budget enacted in 2025 is a case in point by which the questionable morality of the plutocracy or oligopoly form of government can be gleaned.

Plato laid out the following as alternative forms of government, from the best to the worst:

1.       The Ideal State (kallipolis): everyone is doing their respective jobs well; philosophers with knowledge of the good are in charge of making decisions pertaining to public policy.

2.       Timocracy: (e.g., Sparta): people who love honor, social status, and competition are in control. In other words, a military. 

3.       Oligarchy: producers (or suppliers) of goods and services (i.e., business executives and or companies) are in control. That is business runs the government.

4.       Democracy: the “mob” is in control. Direct democracy. Such “mob rule” is volatile, with enacted policies swinging back and forth. This does not include representative democracy, which is better, but not as good as having a philosopher king rule because reason should control the passions in a mind and a city.

5.       Tyranny: a tyrant is in control. This is the worst form of government, for obvious reasons, as an autocrat faces no worldly constraint in unleashing suffering and death on a population. In 2023 through at least 2025, the Israeli government was a tyranny in Gaza.

The three highest Hindu castes fit the three highest Platonic forms of government, with Brahmins, who are ideally priests (or philosophers), soldiers/generals, and merchants in descending order in Hindu society. The “mob” in Plato’s scheme corresponds to the laborers in the caste system. That business managers (including CEOs) running (and thus controlling) government are higher than direct democracy may sound strange to modern ears in the West, even in the E.U., in which Greece is a state unless the difference between well-paid modern elected representatives and a mob of mostly uneducated (i.e., unprofessional) laborers in ancient Athens is grasped. Even in modern representative democracies, complete with terms of office to buffer the momentary passions of the people—passions that can contradict a people’s long-term best interests (i.e., the public good)—corporate interests likely view themselves as superior and thus legitimately at the helm in what is known as a plutocracy, or rule by wealth. The moneyed interests could cite Plato’s hierarchy of government-types without bothering to point out that Plato had mob-rule rather than the U.S. Senate in mind as democracy. We need not pit the reasoning, albeit skewed by self-interest, of CEOs on public policy against what a disorganized mob might come up with as the public good (over partial interests), but we might want to consider whether corporations and individual CEOs should have so much monetary sway with elected representatives and their appointees that a representative democracy is de facto a plutocracy serving the relatively narrow interests of capital. The pecuniary interests of American defense-contractor companies in manufacturing and selling weapons, planes, and tanks to the U.S. Government for use in Israel as it pummeled 2 million residents of Gaza in 2024 and 2025 were not necessarily in the best interests of the United States, which might have been more accurately represented and instituted by the American electorates than business political-action-committees helping representatives get re-elected. Not that any member of Congress cares about that, of course.

Or take the “Big Beautiful Bill” passed by the Republican lawmakers in both chambers of Congress and signed by President Trump in 2025. The projected economic impacts on the different economic tiers of Americans supports Adam Smith’s fear that company managements and government officials would work together at the expense of workers and even competitive markets themselves. On August 11, 2025, the Congressional Budget Office made public its estimates “that the 10% poorest Americans will lose roughly $1,200 a year as they experience restrictions on government programs like Medicaid and food assistance, while the richest 10% of Americans will see their income increase by $13, 600 from tax cuts. Overall , American households will see more income from the tax cuts in the legislation, including middle income households, but the largest benefit will go to the top 10% of earners.”[1] Such a distributional impact could be expected in a plutocracy, even in the form of a hijacked representative democracy. Very poor disabled Americans living on Social Security (SSI) of less than $1,000 a month already faced reductions if they negotiate a good deal on rent, or a friend or relative helps out with utilities or rent. That the U.S. Defense Department budget was increased, with corporate defense contractors set to reap additional profits as a result, illustrates the questionable ethics in taking from the poorest of the poor, who cannot work, and giving more to wealthy corporations (with higher bonuses, everything else equal, going to executives). Additionally, just for added fun, roughly “2.4 million people won’t be eligible for the Supplemental Nutrition Assistance Program [i.e., food stamps] under new work requirements” for poor Americans who have not been declared disabled by the Social Security Administration.[2] Food has thusly been declared not to be an unconditional human right. As the work requirement applied to Medicaid, the government program that funds healthcare for the very poor, access to medical services—and thus good health—was also declared to not qualify as an unconditional human right.

In short, the American social contract between the federal government and its people was changed in ways that stood to make many of the poorest Americans poorer while defense contractors could make even more money from that government. The new social contract reflected a plutocracy or oligarchy in the guise of a representative democracy. Although arguably superior to mob rule, such a trajectory for representative democracy may trouble a good many people, financially or otherwise perhaps in conscience. A person need only read John Rawl’s Theory of Justice to realize that a plutocracy gearing public policy to the narrow interests of a part rather than the whole of a society is diametrically opposed, or antipodal, to a system of government and economy in which the poorest of the poor are looked to first such that they can survive and lead decent, albeit not wealthy, lives before other, increasingly better off tiers are taken into account. In a school yard, only a bully goes after the kids with the least to eat for lunch so to enrich himself and his buddies.

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1. Stephen Groves, “Trump’s Tax Law Will Mostly Benefit the Rich, While Leaving Poorer Americans with Less, CBO Says,” The Associated Press, August 11, 2025.
2. Ibid.

The U.S. Government’s Debt: Federalism Unbalanced

On May 5, 2025, the debt of the U.S. Government stood at $36.21 trillion, $28.9 trillion being held by the public and $7.31 trillion being intragovernmental. That total is $1.66 trillion more than the total federal public debt on May 5, 2024. Projected interest payments of $952 billion in fiscal year 2025 would be 8 percent higher than the interest payments made in 2024. By comparison, the U.S. budget for national defense in fiscal year 2025 totaled $892.6 billion. Whether going to investors of treasury bonds or defense contractors and other corporations, the combined $1.85 trillion for fiscal 2025 represents a transfer payment to the wealthy from American taxpayers rich, middle-class, and poor. Meanwhile, Republican lawmakers in the U.S. House of Representatives passed a bill in May, 2025 that would subject Medicaid and food assistance to significantly less money and subject the States with having to spend more on the administration of those programs. Principles of political ideology reside just below the surface. My task here is to flush them out and relate them to each other, rather than to impose my own ideology.

Fresh out of the Trump Administration, billionaire Elon Musk called the tax and spending bill a “disgusting abomination.”[1] Presumably this condemnation has to do with the “multi-trillion tax breaks” and the raising of the debt ceiling an additional $4 trillion, but the CEO of SpaceX would hardly object to the increase for defense.[2] Musk wrote that the “outrageous, pork-filled” bill would “massively increase the already gigantic budget deficit to $2.5 trillion” in spite of the cuts to healthcare and food for the poor that Musk supported.[3] U.S. Sen. Rand Paul promised to vote against the bill unless the debt ceiling would not be raised.

As of early June, 2025, who could say whether Republican opposition in the U.S. Senate would actually materialize beyond the rhetoric designed to give an impression of objection to voters back home. The Republican lawmakers in the House had quickly closed ranks to pass the House bill. Behind the numbers are values and ideological principles that can be difficult to see. Cutting federal programs that help the poor with subsistence living, such as with food and healthcare, can be said to imply a lack of compassion, especially if defense contractors would be getting more business from the federal government, but two political principles are also in play.

One is the belief that the role of government should not include providing even the basics to people; charities and families should supply basic needs to the poor. Overlaid with that principle is one concerning American federalism, wherein the federal government was originally intended to have very limited powers, and one way of limiting them was to make regulating interstate commerce and providing a common defense primary, with other domains of power being handled by the States. This principle is in accord with the differences between States in an empire-scale federal union of states because the state governments can more tightly match social programs with the political ideology of a majority of the voters in a state than can be done by Congress.

These two principles—the first being more general and the second more particular to the American federal philosophy—are not fully consistent, for according to the federal principle, Congress should take care that the state governments are not crowded out in taxing more so as to take on more in domestic programs—domestic being here within a given state. Whereas the view that the proper roles of government do not include making goods and services available to citizens applies to the States too, the principle of federalism favors expanding the taxing and spending abilities of the States according to how much of an entitlement-providing responsibility each state government wants, as per the relevant political ideology of the majority of the citizens of a state.

Re-balancing American federalism so the States regain some of authority that they once had should include managing the transition especially concerning programs relied on by the poor because they are vulnerable to suffering and even dying by slipping between the cracks. Relatedly, because in at least some of the several States, the majority of people believe that government should supply the poor with necessities, the more general political principle that government itself should not supply goods and services to individual citizens should give way to the second, federal principle. Put another way, were Congress to vote to restrict government itself, then more expansive ideologies in at least some States would be choked off. The general government principle should be decided therefore on the state level rather than by Congress.

Taking a page from the E.U., the U.S. member-states could conceivably be given more responsibility in funding defense beyond just militias, which are armies that the U.S. President can borrow. Not that the head of state of California should step over the federal president on defense policy as Macron of the E.U. state of France did in trying to head the E.U.’s defense policy against Russia in 2025. The defense budget of the U.S. Government could be reduced and the states could do more without the latter superseding the former. Together with transferring more non-interstate-commerce domestic programs to the states, the federal deficits could be reduced. President Reagan failed to rebalance American federalism because he favored the more general restrictive-government-role principle and thus did not facilitate states making up for federal cuts in domestic spending. To be sure, the state governments would have done so to various extents, given their distinct political climates.

Restoring power to the member-states heeds the fact that over a continent and beyond, one size (of public policy) does not fit all (States). Curtailing both federal defense and domestic spending while reducing federal taxation by less than the combined cuts but enough that state taxing abilities would no longer be crowded out from expanding to meet the incoming transfer of programs would put the federal government on the road to fiscal responsibility—meaning being able at some point to pay off its debt—while giving the state governments back more of the authority they had when the federal system was designed and put into operation. The horrendous fiscal imbalance of the U.S. (federal) Government can be interpreted as pointing, in effect, to how imbalanced the federal system itself has become. No one at the U.S. Constitutional Convention envisioned the federal level as handling everything of substance while the state governments become like municipal governments, so it should be no surprise that such a lack of fit would be reflected in a massive fiscal imbalance on the federal level.

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1. Bernd Debusmann, “Musk Calls Trump’s Tax Bill a ‘Disgusting Abomination’,” BBC.com, June 3, 2025.
2. Ibid.
3. Ibid.

On the United Technologies-Raytheon Merger: The Macro Level of Analysis

In analyzing a merger, incorporating the macro context is vital. For very large mergers, for instance, public policy concerns inevitably surface even if they are typically ignored not only in merger analyses, but also by in societal and even governmental public discourse. Analysis at this level takes a societal standpoint, including on the relationship of business and government. This does not diminish the salience of firm-level analysis, for even how the respective organizational cultures would mesh is very important to a functional merged company. This is even true regarding the respective business-ethics climates, for it is not a given that a healthy organizational culture dominates an unethical one.

In June, 2019, United Technologies “doubled down on the aerospace market with an all-stock deal to merge with defense contractor Raytheon Co., after UTC executives early chose to exit from the escalator and air-conditioning businesses.”[1] The anticipated combined company, “valued at more than $100 billion after planned spinoffs, would be the world’s second-largest aerospace-and-defense company by sales behind Boeing.”[2] The annual revenue for 2019 would be $74 billion. UTC’s CEO at the time estimated a billion dollars in cost-savings. Additionally, spending on research could be increased.

On the macro scale, the merger would intensify the consolidation in the aerospace and defense industry. Better terms from supplies and the Pentagon had been putting pressure on contractors “to cut costs and invest more of their own money in new technologies, such as space systems and cyber security.”[3] Consolidation has a major drawback, however, in that competition and thus trade can be stifled. Society, through its government, rather than consolidated industries must resolve anti-trust problems, and this is difficult when those industries have significant power over legislative bodies and regulatory agencies. Hence, for example, anti-trust law had not been applied to the five largest American banks even after their complicity in the financial crisis of 2008. In fact, the bankers were able to use government funds to pay themselves bonuses!  So the question can legitimately be raised whether anti-trust law even can be enforced when the consolidated company or industry is not in favor.

If very large consolidated companies can rebuff regulatory attempts to constrain or limit those companies, then even very unethical managements can enjoy perches of power that are worrisome from a societal standpoint. In the late 1990’s, for example, Hughes Aircraft merged with Raytheon Missile Systems. In 2002, dioxane, a carcinogenic chemical that Hughes Aircraft/Raytheon had been using as a solvent, was discovered in the ground water under South Tucson, Arizona. Previously, Hughes had used cancer-causing trichloroethylene since 1981, and several local residents had won settlements on that chemical from Hughes.[4] Perhaps Raytheon’s management fail to use adequate oversight over Hughes, especially given that company’s track record, or was the purchasing company tacitly involved. Something to ponder for a company on the cusp of growing substantially through another merger in 2019, for an environmentally callous group to be so big would indeed be a big deal.

At the company level, a board of directors subservient to management or even a sordid corporate culture, such as that of Enron, can be enough to thwart efforts to clean up from unethical conduct. Wells Fargo, for instance, faced an entrenched corporate culture in “efforts” to stop charging customers for unordered products. Plutocracy, or the rule of wealth, at a governmental level means that such companies can not only continue acting unethically but also extract monopoly or oligarchic rents. In the case of the defense industry, the increasing power of the major contractors can even result in pressure on lawmakers to go to war when diplomacy would have been a better route. Indeed, a government’s spending can become loop-sided in favor of defense because the major contractors are powerful enough to demand it because it is good business. Hence U.S. President Lyndon Johnson kept the Vietnam conflict going in large part because he was getting kick-backs from certain contractors. In short, from being able to evade anti-trust enforcement to being able to pressure or pay off presidents in favor of military engagements, consolidated defense contractors can be said to have too much power. 

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[1] Cara Lombardo and Doug Cameron, “Merger to Create Aerospace Giant,” The New York Times, June 10, 2019.

[2] Ibid.

[3] Ibid.

[4] Tony Davis, “South-side Tucsonans Mobilize for Another Water-Pollution Struggle,” Arizona Daily Star, April 16, 2017.

Leadership by Elected Representatives: Transcending the Politics of Slashing Vulnerable Federal Programs and Avoiding Tax Increases

On January 20, 2011, months before the Republicans would use leverage of a baleful debt-ceiling-default to extract additional cuts, the Republican Study Committee (RSC)—a group of fiscally conservative members of the U.S. House of Representatives—announced a plan by which $2.5 trillion could be cut from the U.S. Government's spending over ten years. According to The New York Times, the proposed cuts “would exclude the military, and would not touch the big entitlement programs, Medicare and Social Security. As a result, [their] effect on the entire array of government programs, among them education, domestic security, transportation, law enforcement and medical research, would be nothing short of drastic." The leaders of the RSC claimed that the cuts were “appropriate and necessary, given the government’s $14 trillion debt and annual deficits at their highest levels since the years just after World War II." The RSC "proposed generally reducing agency budgets to their levels in 2006 — the last time Congressional Republicans controlled the budget process — and then freezing them, with no annual inflation adjustments.” The RSC also recommended “slashing the federal workforce by 15 percent and canceling pay raises for five years, for a total of $2.29 trillion in savings.” Finally, the proposal included “an additional $330 billion in cuts to specific programs, including Amtrak, foreign aid and even the Washington subway system" (Source #1).

Analysis:

Back in July 2009, The New York Times reported that most Americans continued to want "the federal government to focus on reducing the budget deficit rather than spending money to stimulate the national economy" (Source #2). Nevertheless, Congress and the President went ahead in 2010 with extending the Bush tax cuts, which were expected to add an expected $850 billion to the deficits of 2011 and 2012. The President had proposed to extend the tax cuts for the lower and middle classes, which would be more apt to spend rather than save the difference and thus stimulate the economy then in a weak, jobless recovery. The congressional Republican leadership demanded that the tax cuts be continued for the wealthy as well, even though the latter could afford to pay more in tax and would be less apt to spend than save the money from the cuts. If the proposed spending cuts were “necessary” given the sizes of the deficits and debt, it would seem that the tax cuts—even those likely to be spent and thus stimulating—would have been a luxury the U.S. Government could ill-afford. That is to say, the deficits and debt could play second fiddle to stimulating the economy, only to be the reasons for “necessary and appropriate cuts.”

Besides dovetailing with the Republican goal of less government—particularly at the federal level—the combination of tax cuts and budget cuts sends mixed signals as to the importance of the U.S. Governments deficits and accumulated debt. Within the proposed spending cuts alone, cutting in some areas while leaving others—notably defense—completely untouched sends similarly schizophrenic signals regarding the seriousness of the deficits and debt. If the financial affairs are perilous, the U.S. Government could ill-afford protecting defense contractors and other sacred cows.

To be sure, Americans polled overwhelmingly said that they prefer cutting government spending to paying higher taxes, according to The New York Times (Source #3). The RSC's proposal was in line with this finding. Also, the proposal was in line with the poll's finding that nearly two-thirds of Americans do not want Medicare or Social Security benefits cut even to reduce deficits. At the same time, unlike the RSC’s proposal, the poll indicated that Americans by a wide margin preferred cutting the Pentagon's budget to cutting benefits in Medicare and Social Security; the RSC proposal treats all three areas the same (leaving them all off the chopping block).

However, those who are led by polls cannot lead, for leading involves moving the polled rather than being moved by them. Furthermore, the citizenry may not have fully aware of how serious deficits of over $1 trillion and a debt of over $14 trillion are to the viability of the United States. The seriousness of the deficits and debt require tax increases and spending cuts (including sacred cows) even if the general populous is not much bothered by the threat.

Representatives have to use judgment to know when to be agents reflecting the will of the people who sent them and when to lead constituents who sent them but would view the indebtedness as more precarious had they studied the matter more fully. In other words, elected representatives sometimes need to be critical of what their constituents think is in their true interest and that of the United States as a viable system. As faithful agents, representatives must look in such cases to the best interest of their district and to the United States as a viable concern. Going beyond polls, leaders are oriented to protecting the led even from themselves.

Sources:

1.      David M. Herszenhorn, “G.O.P. Bloc Presses Leaders to Slash Even More,” The New York Times, January 20, 2011.

2.      Dalia Sussman, “New Poll: Bring Down Debt, Don’t Spend More,” The New York Times, July 29, 2009.

3.      Jackie Calmes and Dallia Sussman, "Poll Finds a Willingness to Cut Spending, Just not Medicare or Social Security," The New York Times, January 21, 2011, p. A11.

Military Sacred Cows: A Matter of Contrived Camulflage

"The most significant threat to our national security is our debt."

Micheal Mullen, Jount Chiefs of Staff Chairman, August, 2010.

The defense budget in 2010--$664 billion (not counting the Iraq and Afghanistan wars)--equalled that of the rest of the world combined.  One dollar of every five spent by the U.S. Government was for defense. The amount spent represents 80% growth since 2000. Why?  One reason: the big weapon systems oriented to fighting other empires (e.g., Russia and China). For example, $600 million for the littoral combat ship and $13 billion for amphibious landing vehicles (whose purpose has even been questioned by Sec. of Defense William Gates).  It would seem that the military contractors--the military industrial complex, moreover--are firmly entrenched and in control. That is to say, the defense spending is indicative of the influence of big business over government in the United States.  That this influence goes unhampered may tell us something about the leanings of our societal norms.

The House Republicans' "Pledge to America" formulated in 2010 promises to exempt the military from any cost-cutting that might be entailed in reducing deficit spending. Even so, Sen. Tom Coburn wrote, "Taking defense spending off the table is indefensible. We need to protect our nation, not the Pentagon's sacred cows."  This statement is significant because it gets at the problem of the debt and the influence of big business in government.  That is to say, it kills two birds with one stone.  Indeed, these two birds may well be the achilles heel of the United States as a viable entity or going concern.  The fatal flaw may well be within, rather than from an external threat.  This is the meaning of Micheal Mullen's statement above. To be sure, Republicans believe that defense is government's core function. Along with regulating interstate commerce, this is particularly true of the federal government.  It is less true, I would argue, of the state governments.  So the plank can be viewed as primarily federalist rather than in terms of limited government itself.  The probably-unfixable $14 tillion US Government debt and the consolidation of public governance in the U.S. into the federal government at the expense of federalism (and the checks therein) are related; both are indications of a basic inbalance that is unsustainable. In the face of this state of affairs, it is telling that the question in late 2010 was who should continue to get a tax.

Source: Michael Crowley, "The Sacred Cows," Time, December 13, 2010, pp. 55-58.