Tuesday, June 3, 2008

The Platform, Part Three

Controlling spending is the hardest part of fiscal policy, because everybody’s got their hand out, and everybody’s got a case to make. The number of worthy causes that could benefit from a pile of somebody else’s money is infinite, and people are coming up with new ideas all the time. It’s hard to say no when somebody points out a problem that could use an infusion of money, and Congressmen don’t like to disappoint people any more than you do. So we keep getting new spending programs. And once a program is up and running, it’s even harder to get rid of it. Cancel a program and people lose jobs. Even if a program is a boondoggle, a total waste of money, it’s hard to kill it. There are always people passionately defending it. Usually the argument includes a line like, “This program represents a mere (insert small percentage here) of federal spending, which is nothing compared to what we spend on defense.” The problem is that there are hundreds and hundreds of these worthy programs that cost only a small percentage of federal spending. If you don’t find a way to limit them, they add up.

Meanwhile, everyone’s got an idea about what should be cut—somebody else’s pet program. Some things are no-brainers to anyone with a sincere commitment to good policy, like abolishing farm subsidies and corporate welfare programs. There’s no mystery about what the rotten programs are: the Cato Institute publishes a useful guide to corporate welfare. The information is out there for all of us to see. You’d think you could get everybody behind abolishing corporate welfare; if ever there was an issue ripe for bi-partisanship, this is it. Democrats don’t like corporations and Republicans like the free market, or so they say. But even the most egregious federal giveaways are defended by their beneficiaries the way a drunk defends his last half-pint. And legislators stick up for each other because they’re all implicated—vote for my program and I’ll vote for yours. What’s needed is for taxpayers to raise a stink, loudly and consistently. This means you—e-mail your representatives today.

Everyone’s against earmarks — the pork legislators slip into the budget—and they’re scandalous, of course, but they represent only a small fraction of the budget. The truth is that there’s no magic bullet. There’s no simple answer to controlling spending, no single item or category that can be easily slashed to bring down the deficit and make room for the things you think the government should be spending money on. Unfortunately, limiting spending means, sooner or later, attacking the really big items in the budget: defense and entitlements.

The biggest entitlement is Social Security, and it’s going to bust us if we don’t reform it. If we don’t privatize it, at least partially, we’re going to have to means-test it. There’s no reason well-off people should be receiving a Social Security check each month, even if they have been paying into the system all their working lives. They’ll say they’re entitled to that money, and of course according to the terms the program was set up on, they’re right. But besides total privatization there’s no way to reform Social Security without some injustice somewhere. It’s unjust right now because it’s a regressive tax. And people at the lowest economic levels tend to die before they receive the benefits they have paid into the system. It’s a bad deal for them, compared with what they could make with private accounts (which would be inheritable). There is simply no way to make Social Security fair for everyone; that’s trying to square a circle. Either you privatize it or you admit that it’s a redistributive program. And if you admit the latter, you still have to deal with the funding problems, either by cutting benefits or raising taxes. Anything else is dreaming. You have to recognize limits and stand up to the howls of protest that any meaningful reform will bring. Take your pick—but don’t tell me that continuing the program in its current form is an option. Social Security is going to have to be curtailed, somehow, or we’ll go broke.

As for defense, it accounts for roughly a quarter of federal spending, and it would be nice if we could hack it down to size. Yes, it is a huge burden, particularly with two wars going on, one of them arguably unnecessary. I’d love to see defense spending come down, and I’m not especially a pacifist. Disengagement from foreign entanglements would be a significant part of my foreign policy as President, and that would eventually allow us to cut defense spending significantly. But even if we stay out of needless wars, there’s a limit to how much we ought to slash defense spending. National defense is one of the legitimate functions of the national government, and it’s expensive. The people who have those bumper stickers saying how nice it will be when the Air Force has to hold a bake sale are living in a dream world. Even if we weren’t leaking blood and treasure in Iraq, even if we could get the Koreans and the Japanese and the Europeans to assume the full costs of their national defense, we’d still need a relatively large defense establishment, because part of what keeps the peace is deterrence.

But isn’t it perverse to spend so much on war when so many people here at home don’t have access to decent health care? Why can’t we slash defense spending to pay for health care? Well, some would say that paying for health care is a legitimate function of national government, some would say it’s not. Me, I tend to the latter point of view. Health care is consumed by individuals and can be paid for by individuals with the help of insurance. There is a government role in providing a safety net for people who are unable for whatever reason to obtain insurance, but that’s a far cry from having the government directly run a large slice of the economy. Meanwhile, military action by its nature requires centralized decision-making and the coercive coordination of vast enterprises. It’s an inherently collective enterprise, which makes it a great candidate for government control (as well as a significant danger to prosperity and good government—definitely a handle-with-care proposition). So I’d say we’ll always need to spend more tax money on defense than on health care, but I recognize that people can disagree with me in good faith.

This is the debate we should be having. What are the legitimate functions of government, anyway? But instead of debating the underlying issues, we just keep trying to pay for everything, and the costs keep ratcheting up. What we really need is a mechanism to cap federal spending and force politicians to have the hard debates and make the hard decisions each year.

So I propose some kind of legal mechanism to cap federal spending each year. I’m not sure a balanced budget amendment to the Constitution is the way to do it—the Constitution is hard to amend, and for a good reason. The Constitution ought to be concerned with the basic structure of government, not with policy questions like spending and taxation. For a policy question like limiting spending, legislation is the answer. And if we voters (and taxpayers) make enough noise, we ought to be able to shame our legislators into a bi-partisan commitment to fiscal responsibility. A good start might be to stump for the Cato Institute’s measure to cap federal spending, which would cap both discretionary and entitlement spending and would limit spending increases to an indicator such as the sum of population growth plus inflation. This would force legislators to make the tough choices each year.

There are always going to be political fights over limited resources, because needs are literally unlimited. And when you get past the most outrageous layers of largesse, the choices get harder. Reasonable people can differ. But we should never lose sight of the fact that the money the government spends is not free—it comes from you and me. And so the central plank in my platform for controlling federal spending is a cap mechanism that would force the people in Congress to do their job, which is to have a serious debate about what our priorities are and get rid of the things that don’t further those priorities.

Next time: Foreign Policy

Sam Reaves


1 comment:

Anonymous said...

Sam, I'm a cop from the S.W. Burbs. Hope to see you followup with more Dooley novels. Look forward to your new book coming out in Nov.