Sunday, July 10, 2011

Bridging the Great Budget Divide, Part I

A recent tweet said, “Democrats think the budget is a negotiation; Republicans think it is an intervention.” That might be the most apt description for the philosophical divide at the heart of the budget fights on the federal and state levels across the country.

Dating at least back to the days of FDR and accelerated under Lyndon B. Johnson, the dominant school of thought in American politics has been that government entities are legitimate partners that should be included in most, if not every, area of life with the goal of improving people’s lives. The enforcement authority and funding power of government have been used for everything from rewarding or punishing individual personal behaviors to buying global friends to changing entire industries. The term “public-private partnership” was coined primarily to make the use of taxpayer dollars and government involvement in private projects more palatable to those who wanted to curtail the size and cost of government. And although the ‘partnership’ of government into virtually every social and charitable area of our American lives is strongly favored by Democrats (the so-called ‘war on poverty’, the easy negotiating of labor contracts between members of government bodies and the public employee unions that donate to their campaigns), so-called ‘pro-business’ Republicans have been no less culpable in their promotion of government partnership in commercial development projects and private industry R&D. Both sides have used Americans’ hard earned tax money to finance foreign forays of all kinds, often with unintended and dubious results. For many with both Ds and Rs behind their names, tax dollars were simply an unending stream of capital to be horse traded for each other’s priorities.

We are now reaping what we have sown. We are so far in debt at the federal level that people in high places actually talk about the United States federal government becoming insolvent. We have such significant structural liabilities from accumulated commitments in labor contracts and entitlement programs that we are in danger of suffocating from the weight of our own taxpayer-funded generosity. Our position in global affairs grows more tenuous by the day, as more allied nations question our ability to keep up with the promises we have made to them and the leverage of often unfriendly creditor nations increases every time we borrow more money.

Our situation has brought a different kind of fiscal sensibility to the forefront of national and state politics. A more sophisticated philosophy with a fundamentally different budgeting premise, it recognizes we can’t keep doing what we’ve been doing and expect different results. The idea of using last year’s budget numbers as the starting point and horse-trading from there to get a passable and signable budget is a stale concept that does not fit these modern sensibilities; it's tantamount to redecorating the train as it speeds toward a derailment. “Public-private partnership” is a four letter word. New sensibilities are less “pro-business” and more “free market”. The idea of negotiating dollar allocations to different government agencies is viewed as a complete waste of time until the deeper problem of examining and testing the proper scope and role of government in today’s dynamics is thoroughly addressed - and remedied.

The modern fiscal philosophy does not ask, “What has government been doing?” or even, “What does or can government do well?” These questions are not relevant to modern budget discussions. The primary question that must be asked and answered is, “What functions are mandated of government by the Constitution?” Those functions enumerated by either federal or state constitution as governmental responsibilities are the primary (for many, the only) reasons for government to exist at all; every activity beyond that scope should be left to the private and charitable sectors. This new sensibility does not believe there should be no safety net; rather, it demands that we the people be the direct, primary safety net instead of abdicating our social responsibility for our fellow man to a government bureaucracy.

That is the true divide in American politics today. It’s not about the numbers. It’s not about the percentage of the top marginal tax rate. Until our body politic resolves the question of the proper role of government in our modern times, we will not bridge the divide. Having an honest and respectful conversation about that role may be the best recession therapy this country can get.


  1. I keep coming back to the pure arithmetic of the situation: that our total debt obligations and "unfunded liabilities" (aka promises) total some $100 Trillion dollars. If we were required to set aside money to pay those obligations as the government requires of private corporations, we would need a 100% federal tax rate for at least 8 years! This isn't "debt our grandchildren must pay" because it simply CANNOT be paid! Ever! We must back away from our promises and for Pete's sake stop adding to it!

  2. Is it the role of government, or is it the underlying values that should be put on the table first? I fear if the value aspects are not squared up, not necessarily to be agreed upon, but to be understood, the role of government discussion is likely to end up fairly fruitless due to errant assumptions on both sides.

    Then again, value discussions could end up as nearly polarized as the budget, and likewise go nowhere.

    I do agree with you, that starting at the top level is not the answer... far too many errant assumptions end up biting both sides of the equation.