Time to Pay the Piper


With the Washington Republicans once more pushing for tax cuts (which is about as unexpected as Democrats pushing for increased social program spending), we once again – or should I say “perennially” –  face the issue of increased budget deficits, gross overspending, and arguments over what is the right course for our nation’s economy.

Far be it from me to sit this one out.

Like any good armchair economist, politician, and red-blooded American who stands and/or takes a knee for the National Anthem (whichever you consider to be more patriotic), of course I’m certain I know what’s the right direction for our country, and I can sum it all up in a nifty catch phrase:

Somebody’s gotta take it in the shorts.

The problem as I see it is that we have lost sight of the idea of sacrifice in this country. Everyone looks to the government and sees one of two things: either a giant vampire sucking away all their hard-earned money, or a giant moneybag they can reach in and get whatever they want out. Ironically most people see the same thing at the same time. Frederick Bastiat put it best: “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.” Nobody wants to pay, but everybody wants to play.

And that’s how we got where we are today: everybody wants the government to pay for roads, schools, police, military, healthcare (well, maybe not everybody…), social security, you name it. And everybody thinks their taxes are too high. Nobody wants to pay in, but everybody wants a payout. That’s what’s scientifically referred to as an unsustainable system, and sooner or later:

Somebody’s gotta take it in the shorts.

So here’s my proposal. I don’t expect it will make anyone happy, which in politics is usually a good sign. The first thing the Republicans (and the libertarians too; don’t think I’m letting you guys off the hook) need to do is give up the idea of “small government”. The United States has over 326 million people. It’s the third most populous nation in the world behind only China and India. We’re the third largest country in the world in land mass, ahead of even Australia, and they’re a fucking continent. The point I’m trying to convey here is that there will be no “small” government for our nation.

But we can have a smart government. Annnnnnd here’s where I start pissing off the Democrats and all the lefties.

We need to start being realistic about our needs and our priorities. I’m not saying we can’t have a “wish list” for national priorities, but they need to be just that: priorities. What comes first? What do we have to have, what do we want to have, and what are luxuries that are nice to have but can be jettisoned at the first sign of a downturn? How much government involvement is required at any given level, and how much is too much? Where can we afford to pull back and accept that, while we would prefer to have it, we just can’t afford it?

And this is part of what I mean by “sacrifice”. There are things we want but we can’t afford. In our everyday lives if we can’t afford things we want, we have to learn to do without. If we go around racking up huge amounts of debt, we eventually run out of people willing to loan us money. So instead we prioritize, we pay for the things we need, and we find a way to make do.

Now that I’ve antagonized the politicians, let me take a moment to antagonize the tax payers. Because the fact is regardless of how we set our priorities, we will never be able to cut back enough to support the lavish lifestyle Americans still desire at the bargain-basement prices they demand. Or, to put it another way:

Somebody’s gotta take it in the shorts. (Are you starting to see a pattern here?)

For starters, everyone needs to accept not just no tax cuts, but higher taxes. Yes, you heard me right. I’m asking Americans to suck it up and start paying higher taxes. “But Bob,” I hear you cry through your American Exceptionalism rage, “you claim to be a libertarian! By definition you should be opposed to taxation on principle!” Well, one, I don’t claim to be a doctrinaire libertarian these days, two, even if I was being a libertarian seems to mean being contrarian by definition, and three, I actually do believe I can be a libertarian AND support higher taxes.

Here’s why: a core tenet of libertarianism is personal responsibility, as well as a belief in the free market. As in “you get what you pay for and you pay for what you get.” And the simple fact is Americans have been getting a lot of stuff without actually paying for it for a long time now. Want proof? Here you go: http://www.usdebtclock.org/. The U.S. Debt is currently over twenty trillion dollars. That’s trillion with a T. That’s the debt, not the deficit. The deficit, for those of you who listen to politicians toss around the term so loosely, is how much we keep borrowing because we can’t be bothered to actually come up with enough money to actually cover the amount we spend as a nation each year.

Let’s put that in more simplistic terms, shall we? Imagine you owe $10,000 on your credit cards. Every month you borrow another $1,000 to cover your extravagant lifestyle. Your friends and family stage an intervention with you to try to reign in your spending and get you on the right path, and you promise to only borrow $500 dollars a month. You’ve cut your deficit spending in half! Aren’t you being fiscally responsible!

This is what politicians are talking about when they make a big deal about not increasing the deficit. They don’t want to borrow even more money every year just to cover the spending they themselves have already approved. And why do they keep approving it? Because they want to get re-elected. Because they know that if they make the tough choices they will get voted out by… us. We’re the problem.

So here’s what I’m calling for: We need to suck it up. We need to accept that it’s time to pay the piper. We need to accept that we can’t have it all. Tax the rich? Yes. But also tax the middle class, and the poor. Tax everyone, because everyone is part of the problem, and we all have to be part of the solution.

Everybody’s gotta take it in the shorts.

Here are a few proposals to consider for ways that everyone can take a hit:

  • Raise taxes across the board. Yes, it’s unpopular, but people need to start deciding what they truly value and if you want it, pay for it.
  • Get rid of the mortgage deduction. It’s already being baked into the price of houses anyway.
  • Raise the eligibility age on Social Security and Medicare. As life expectancy and health outcomes improve into later age ranges, societal expectations toward the elderly need to change.
  • Eliminate deductions for charitable donations. Yeah, I know this is a non-starter, but so is everything else on the list. The fact is the government should not be in the business of social policy. The government should be in the business of providing services and collecting money for those services. Either people want to support charities or they don’t; if they do they should do so because they believe in that cause, not because they want a tax break.
  • Speaking of social policy, let’s get rid of any and all subsidies for businesses. I realize this is more budget that tax policy, but considering many elements of the tax code involve businesses getting tax write-offs for a variety of reasons, it qualifies on both counts. A tax deduction is a subsidy as much as a direct cash payment is, and if a business can’t survive without that kind of support, we need to reconsider how we do business.
  • Finally, here’s one that’s going to hurt me personally, but like I said, everybody’s gotta take it in the shorts. Let’s get rid of the tax deduction for student loan interest. We can have a conversation about a better way to do higher education in this country, but for the time being we still have a huge bill to pay, and the better educated you are the better chance there is you have a job making enough money that you can kick in toward that bill.

Are there more deductions, loopholes, and giveaways we can live without? Yes there are. Are these the ones that need to go first, or at all? Maybe not. But the conversation needs to start somewhere. And “get your hands off my government money!” isn’t the right place to start it. A better place to start would be the words of one of our former presidents: “my fellow Americans: ask not what your country can do for you — ask what you can do for your country.”

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Walk Away From the Deal


When I was younger, one of my favorite hobbies (when I could be bothered to roll out of bed early enough) was to go to garage sales, yard sales, and flea markets. I loved these things. I was the man for whom everyone else’s junk was a veritable treasure. To this day I have trouble driving past one without pulling over just to see what they might have for sale, even though I never carry cash anymore and my wife would kill me for bringing home anything anyway.

My biggest weakness at these things was my inability to walk away. As soon as I started to negotiate something, regardless of what it was, I was going to buy it. I think just about every seller figured that out and took ruthless advantage of it, because I bought a lot of stuff for way more than I should have (or maybe I just have a lot of pent up buyer’s remorse.) I’ve learned since that the secret to doing well in any sort of negotiation is being willing to walk away, and not just as a tactic, but really meaning it. At some point you have to be able to say, “there is no way I am going to get what I want here, and I am wasting my time by negotiating any further, so I’m going to walk away.” Not only does this work as a powerful tool to get the result you want, it also saves you from buying things you don’t want or need at prices you can’t afford.

I mention all this because I want the guys and gals in Congress to understand that I get it. I really do. It’s hard to walk away from a deal, especially when you’ve been working on it for weeks, months, maybe even years. It’s even worse when the problem isn’t you, or the guy you finally got to come around, or even the other 48 obstinate but well-intentioned folks you had to get on board, but this one last obstructionist jerk who is standing in the way simply because he can’t see how what you’re proposing is so very right for all of America. And there’s so much at stake! It’s not just re-election (although that’s in there somewhere, right?), and it’s not just that there’s a little something in there for your home district or state (but the folks back home do stand to gain a little something, I mean why shouldn’t they), it’s that this is what’s right for the people!

The problem is that a deal isn’t unilateral, and sometimes it doesn’t happen at all. And even if I set aside all of my cynicism for a moment, hard as that is to do, and assume that all parties involved are honestly doing what they believe is best for their constituents and for the American people as a whole, that only makes things worse, not better. Because sometimes what one guy believes is best is completely and totally at odds with what another guy believes, and there is no compromise, there is no middle ground, there is no resolution to be had, and that’s the sad reality of it. I would actually almost prefer a cold political operator of old, who has his eyes on the prize, willing to cut back room deals to make sure everybody gets a little piece of the action and walks away with something they want rather than these wild eyed zealots on both sides who refuse to compromise on anything because they know, THEY KNOW they are right, and history, or better yet the next election cycle, will prove it.

But the observant reader will note that I said “I almost prefer”. There’s a reason for that. While these tin pot tyrants and modern day Neros fiddle away, the rest of us are finally getting a look at what politics really is, and more importantly I hope that the wider class of Americans are starting to get a sense of the real cost of government. Not just in terms of dollars, but in terms of choices. Because the truth is there are no free rides. For every up there’s a down, for every plus there’s a minus. Even if you’re okay with taxing the rich into oblivion to pay for everything, sooner or later you have to admit it won’t work, because there’s just not enough to go around. Even if you’re fine with gutting every social program in existence, sooner or later you have to accept the consequences of those choices. And the longer our so-called leaders give in to the temptation to go back and forth over their unlikely “deals” and never-happen “compromises” that do nothing but make for good TV, the more we end up paying for things we don’t need and can’t afford. The can gets kicked down the road for another year, the problem gets pushed for another election cycle, and nothing ever really changes.

Do us a favor, oh elected high and mighty. Take a real stand for a change. Take a stand against your own party, your own interests, your own re-election. Take a stand against everything that’s been tried before, and maybe even consider, I dunno, reading some of those endless policy papers you guys always ask for and always say would be “too costly” or are “too impractical.” Offer a new idea instead of a tweak, a rehash, a change at the margin.

And the next time someone, on either side of the aisle, offers you the same old thing in a new wrapper, walk away from the deal.

Other posts you might like:

To Purchase a Little Temporary Safety
We Don’t Need No Stinking Incentives!
What’s Bad for the Goose


Pork It Up


(To the tune of “Tik Tok” by Kesha)

 

Wake up in the morning feeling like Maynard-Keynes,

I’m out the door, I got my glasses, I’m gonna make some Gs.

Before I leave stuff my pockets with plenty of Bens,

‘Cause in this city that’s the only way to make you some friends.

I’m calling Senators on the Hill, Hill,

Marking up a big bill, bill,

Trying to get my fill, fill.

Drop-dropping donations everywhere, where

Gotta use lots of care, care-

FEC’s starting to stare…

Don’t stop, pork it up, chairman blow my budget up,

Tonight I’mma fight to get you to subsidize!

Tit for tat government is where the real power’s at!

Oh-oh-oh-oh, oh-oh-oh!

Ain’t got no values in the world, but got PAC money to spare.

They care to claim about folks back home but they’re already here.

Now the politicians line up ‘cause it’s close to an election

But we kick ‘em to the curb unless they bring home the bacon.

I’m talking everybody getting new roads, roads,

Public television shows, shows,

Plus new portable phones, phones!

Now, now we’ll spend until the money runs out,

Or the voters come and shut us down, voters come and shut us down,

Voters shut us down, voters shut us do-

Higher tariffs! Subsidies! Smaller government? Please!

That ain’t right, I’mma fight against laws for sunlight!

Don’t stop, pork it up, chairman blow my budget up!

Oh-oh-oh-oh, oh-oh-oh!

D’s and R’s-

You build me up, you tear me down,

You got me spinning around, yeah you got me.

You build me up, you tear me down,

You got me spinning around, yeah you got me.

D’s and R’s-

You build me up, you tear me down,

You got me spinning around, yeah you got me.

You build me up, you tear me down,

You got me spinning around, yeah you got me.

With my hands up

Put your hands up!

Put your hands up!

Put your hands up!

No the debt don’t start ‘til I walk in.

Don’t stop, pork it up, chairman blow my budget up,

Tonight I’mma fight to get you to subsidize!

Tit for tat government is where the real power’s at!

Oh-oh-oh-oh, oh-oh-oh!

Higher tariffs! Subsidies! Smaller government? Please!

That ain’t right, I’mma fight against laws for sunlight!

Don’t stop, pork it up, chairman blow my budget up!

Oh-oh-oh-oh, oh-oh-oh!

 


The Fiscal Fix


Once again, a brief interlude from My Not So Humble Wife.

After weeks of foreboding speculation about the impending fiscal cliff, the New Year came and went with no evidence of the sky actually falling. This might be due to the fact that our decisive and ever diligent Congress and Senate solved the fiscal crisis on New Year’s Eve by kicking the deadline out until March. A brilliant piece of legislative procrastination.

Now we’re in for more endless argument over what combination of  1) spending cuts and 2) tax increases should be enacted to reduce our roughly $16 trillion federal deficit. But there is a third option that I’ve never heard mentioned. Do you know how the government handles budgets? If not, this will astound you.

Throughout all government agencies, the military, and governmental run programs each department is generally given an annual budget amount to play with for the year. Here’s the problem: at the end of the year if the department didn’t spend all their money, they won’t be able to get a budget increase in the next fiscal year.

Let me say that again,  if they don’t spend all the money they asked for last year they won’t get more money in their budget for the next year.

This means there is no incentive whatsoever for any government funded agency to save money. In fact, starting around October, government agencies that have a budget surplus rush out to ditch any remaining cash. Under our current budgeting system, they pretty much have to or they risk being underfunded in the next fiscal year.  Excess spending of this nature may be relatively small potatoes for any one agency or department but all together it’s a significant amount.

What to Do With Extra Budget Money at the End of the Fiscal Year?

Deficit spending

Photo Credit: USBacklash.org at http://usbacklash.org

I’ll admit with no hesitation that I’m not an expert on finance or government spending. However, I think that a different budget process that incentivized saving over spending might reasonably be developed. One idea would be to place more emphasis on accurate estimations. Suppose there are two possible budget proposal review processes, one for those groups whose spent close to what they were budgeted for the prior year and one for those groups whose budget wasn’t accurate for actual spending.

For example, the newly proposed budget for groups whose spending was within say, 5%  of their budget from the prior year could be on a fast-tracked approval process. Those groups whose spending differed (either over or under) by more than 5% would face a review that required additional justification. To avoid having departments just spend money until they were within the 5% range, you could allow money to be designated as savings without any penalty and which would then just be applied to the next year’s budget. This would provide incentive for departments not to overspend and would remove the current undesirable incentive of spending additional funds wastefully.

This one example could make the difference between funding or not funding a critical program and there are probably other systemic issues that could be addressed as well. So I hope that as we continue to debate how to balance the national checkbook we look for savings within the systems as well as at cut and tax remedies.