Blackburn: We lived rich, but now the bills are due

WEST PALM BEACH, Fla. — Someone from another country looking around Palm Beach County, Fla. might think that we are all wealthy. It isn't only that we wreck mansions to build bigger ones on the barrier islands. Ordinary neighborhoods sport $300,000 and $400,000 homes. Streets are clogged with private autos the size of school buses.

Once upon a time, before the wise guys decided that banking rules of thumb are for fuddy-duddies, a median home price over $300,000 would suggest median incomes above $120,000 on the rule of 21/2 times income for a house. Median incomes never were near half of $120,000 and in fact have fallen in the past few years relative to inflation.

But we decided to live rich. We also decided that the only problem was high taxes. We relegated the old $300 TV set to the laundry room, for instance, and replaced it with a $3,000 set. We called friends on cellphones that also take pictures and play movies and music.

The emblematic event of George W. Bush's tenure will turn out to be not the invasion of Iraq, which is eating up money we borrow from China in lieu of taxes. It will be seen as the president's response to 9/11. Go to the mall; increase and multiply your purchases, he said. And so, while other people's children died for us in Iraq, we did.

Now, the bills are coming in.

In the eighth year of his reign, Mr. Bush discovered what Democrats used to know in their bones: High gas prices are "like a tax on working people." If he had studied my accounts, he would have seen the equivalence to a tax hike in property insurance, up more than 400 percent over 10 years. That's up more than gasoline, more even than the increase in health insurance.

Anyone watching the aftermath of Hurricane Andrew in 1992 or the struggling stab at a national energy policy - which amounts to spoiling the North Slope of Alaska for a few drops in the oil barrel - could see it coming. We preferred not to look. "Let the good times roll" might as well be the second line of the national anthem.

The Legislature made a run at Florida's insurance costs and got a thumb in the eye from the private insurance companies. But in January, the Legislature let us give ourselves a tax cut by constitutional amendment. The Taxation and Budget Reform Commission, which is supposed to act like an adult every 20 years, is piling on.

We voted ourselves property-tax reductions on houses any old banker could have told us we couldn't afford in the first place, and we may add to those reductions. Like a tax increase, insurance, health care or gasoline will eat up the supposed savings from the cuts faster than we can bank them.

The solution is not to raise taxes in this recession that dare not speak its name. The solution, for which it is too late, is to have lived within our means in the past. That is something that sound tax policy could have helped us to do. But it's hard to have sound tax policy when majority opinion considers taxes as a plague to be opposed. So, we have tax policies that hide the real cost of things, from mansions to pollution.

Although he benefited from that, Mr. Bush didn't start it. The tipping point may have been 30 years ago. California is the contiguous state that was first to go past $4 a gallon for gas, and it is not coincidental that California is where the great tax revolt started in 1978.

Great civilizations leave great ruins. While we partied at Rainbow's End, we created ours. We drive across them, house our wounded veterans in them and send our children to them five days a week. Problem is, we still have to live here.

We can't do now what we should have done. But we can stop doing what we did instead and learn to live with deferred gratification. We can stop trying to keep ahead of the Joneses and help the Joneses keep up. We can teach our children (while the schools spin their wheels with FCATs) that, to Americanize Charles Dickens: "Income $1,000, expenditure $950, result happiness. Income $1,000, expenditure $1,050, result misery."

Even the Chinese will thank us for that. And we can inform ourselves enough about how things work to know when not to applaud politicians who promise more of the same only better.

Or we can keep thinking the way we have been thinking and let the results pick us off one at a time.

Tom Blackburn writes for The Palm Beach Post.