Shutting Down Politics

So we have a solution at last to the latest installment of the ongoing fiscal crisis (#thanksfornothing), which involves yet another passing of the very large buck down the road to some near-term future date when it’s likely something equally ineffectual will be done, mostly because the same teams will be running the same plays (kind of like watching the Jacksonville Jaguars take on the Denver Broncos every Sunday for a year. What? I can be topical.) The real questions at this point should be “how did we get into this mess in the first place?” and more importantly, “how do we prevent these ^(#_*%!$& from doing it again?”

As for how we got here, I’m not going to take a partisan stance. As I’ve said before, a plague on both your houses (of Congress). But there is one answer that applies equally to both parties, one that has been coming for a long time, and it is a word that gets hurled at both equally (usually by the other side): gerrymandering. As long as one party has control of a state when redistricting time comes along, they rig the elections – excuse me, draw the districts so very carefully that there is no way they can lose. This creates a scenario in which the extreme elements of either party are more likely to win out and “compromise” becomes a dirtier word than “moderate”. It’s been more apparent among Republicans than Democrats in the last few years because they’ve been more successful with this strategy in the latest round of redistricting, as well as the fact that the only powerbase they have is in opposition to the sitting President, so of course they push back, but both sides do it.

So what’s the answer? I would suggest a third party organization that is not directly connected to the process gets to make the districts, perhaps the folks behind the United States Elections Project. Or maybe a panel composed of a representative from each party currently eligible to produce a candidate for that state, with ties being broken by the current governor. The current “winner takes all” strategy masquerading as “politics neutral” is clearly broken and needs to be done away with to be replaced by something that more accurately represents the needs of the constituency; perhaps actually injecting some real politik into the process at the beginning rather than the end will help to break down the borders and create détente, if not civility.

Another option (and one that I favor even more) is to get the money out of the hands of politicians. Now I know I have argued before that money equals speech, and I’m not backing away from that. But note what I said: get the money out of the hands of politicians. They have chosen to be public officials (even the candidates), which means different (and stricter) rules should apply to them. Also they pander to the most extreme causes because those are the people most likely to donate to them, not just to vote. If we capped the amount of money they can spend in an election, suddenly the incentive isn’t there for them to be so fast on the trigger with the votes. There’s also a world of other organizations and individuals who are free to spend all the money they want (or should be) in support of the candidates they like, so long as they don’t coordinate directly with those candidates. The more moderate candidates will have a broader base of support, both from individuals and organizations, and are at least more likely to have a better chance of getting some second-hand support.

This would also free the current office-holders up from the constant “campaign treadmill” where they win an election and then start the donor circuit just to pay for the next campaign. Maybe then they’ll have enough time to sort out all the problems that still plague us. Or maybe they’ll just spend more time arguing with each other. Either way, it’s something new, which is one step up from the current broken system.


No Secrets Allowed

It’s been all over the news, and it keeps popping up. It certainly seems to be President Obama’s latest headache, and I would argue for good reason: it seems the NSA, despite agency head Gen. Keith Alexander’s protests to the contrary, has been spying on the American people. Oopsie. At the risk of sounding like one of those crazy, far-out there civil libertarians, I have to ask, did anybody not see this coming, for sheer irony if nothing else?

This follows so closely on the heels of other revelations of domestic spying by our own government that even the New York Times has started to call out the Obama administration. While it’s nice to see that there’s something besides the Justice Department seizing phone records that can ruffle the media, it’s almost gilding the lily at this point. If things follow their usual pattern, there will be an outcry, perhaps even a Congressional investigation which will bog down in cheap political point scoring, and both Republicans and Democrats will focus on getting the upper hand in the next election. It almost feels like déjà vu all over again.

Now it’s well known among magicians that the worst thing you can do in front of an audience is to make a big deal about how unremarkable an object is. “Just an average, every day, perfectly normal handkerchief, nothing unusual or exceptional about it.” This draws suspicion, makes people wonder what’s going on here, there must be something hinkey. This goes to President Obama’s insistence that “Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems. Some of these same voices also do their best to gum up the works. They’ll warn that tyranny always lurking just around the corner. You should reject these voices.” (I have to believe he’s regretting that particular turn of phrase right about now, considering how often it’s been thrown back at him by now.)

The problem is with each new revelation those voices that warn of tyranny sound just a little more like they might be on to something, and I think it’s important to focus on another part of that passage as well: “voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems.” Note that’s not one specific administration, one particular party, or one named ideology. The current problems began under the Bush administration, or (arguably) even further back. Government writ large, as an entity, is what the warning cry is against. It is Leviathan the voices cry against, the absolute power that Lord Acton warned corrupts absolutely.

The primary purpose of power, before any other, is to aggregate unto itself more power. That power does not then exist simply to exist – it exists to be used. The more people demand security the more security theater we’ll get, but in addition the more (quietly, behind the scenes, when we’re not looking) we’re going to get the things we didn’t want. Will they ultimately make us safer? Marginally, perhaps. But at what cost?

And if anyone ever says “security at any cost”, think very long and hard about the Faustian bargain they’re proposing. There are times in our recent history (for example the 1950s and the McCarthy hearings as well as the Japanese internment during WWII) when we have pursued “security at any cost”, and it is all too easy to see that we are headed down that road again. With very little effort any person of imagination can conjure scenarios of costs that vastly outweigh the benefits that might accrue, even if we were willing to set aside the cherished institutions and beliefs of our country.

Even those without imagination can conjure a vision of what “security at any cost” would look like, and what the down payment would be. All they have to do is watch the news.

We Don’t Need No Stinking Incentives!

Two news stories caught my attention recently, both for revealing the federal government’s (and particularly the executive branch) shocking ability to ignore one of the basic laws of economics and psychology (and maybe sociology, but I never studied much of that). Pretty much both of these fields agree, to a greater or lesser extent and for various reasons, that people will respond to incentives. In psychology they call it things like “positive and negative reinforcement”, but apparently in the government they call it “ignore the consequences and just do things you want because the ends always justify the means”.

The first of these stories was a report by the Washington Post that President Obama is leaning on banks to “make home loans to people with weaker credit” (direct quote from headline there). According to the Obama administration, lenders should “use more subjective judgment in determining whether to offer a loan”. Personally I find that a little disconcerting, since according to that same article “since the financial crisis in 2008, the government has shaped most of the housing market, insuring between 80 percent and 90 percent of all new loans, according to the industry publication Inside Mortgage Finance.”

Hey, what’s the key phrase in that last sentence? Was it “financial crisis in 2008”? Why yes, yes it was. I seem to vaguely recall that one. It was triggered by something… let me think… oh, that’s right, a housing bubble driven in large part by risky borrowing, which has been attributed by some (including me) in large part to government policies pushing for more home ownership and led to a bail out of Fannie May and Freddie Mac. But they’re cool now, right? Let’s go back to the Washington Post for confirmation: “the government has shaped most of the housing market, insuring between 80 percent and 90 percent of all new loans…primarily through the Federal Housing Administration, which is part of the executive branch, and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac.” Oh. But that’s not a problem, is it? “If borrowers with FHA loans default on their payments, taxpayers are on the line” – and we’ve already bailed out Fannie and Freddy once before in recent memory.

So what we have here is a political agenda that completely ignores not just economic law and historical trends but recent memory in favor of “doing the right thing” and wishful thinking. Because that’s never caused us any problems before. Here’s a thought: maybe the banks are being overcautious, but they have reason to be. Or maybe they’re being just as cautious as they should be, given that the market hasn’t sufficiently recovered yet. I honestly don’t know. And lest I be accused of being a demagogue, let me point out that I’m arguing against my own interests here. As I’ve noted before, I’d be much better off if the banks started giving out easy money again, because then my wife and I could buy a house (we passed on the last round of insanity). However that’s in the short term, and in the long term it would just be inviting disaster.

But never let it be said I’m not an equal opportunity hater. The other story that got my attention was an indictment of three dozen Atlanta educators for cheating in standardized tests. While the indictment only goes back to 2005, I seriously doubt someone said “Hey, George Bush wouldn’t like this, but I’m sure President Obama would have no problem with it!” More importantly, President Obama wasn’t responsible for the landmark legislation that is the proximate cause for the cheating scandal: No Child Left Behind and the high-stakes testing it engendered.

It’s not just high-stakes for the kids; these teachers apparently had everything on the line, from bonuses to their jobs. Who did they hire as their motivational speaker, Alec Baldwin? I’m in no way condoning what they did, because the people who really got punished are the students. Either they didn’t get the education they were promised or they will always be haunted with the uncertainty of whether they really earned that grade.

But it comes back to incentives, and another phrase from economics, “unintended consequences”. Nobody intended for people to cheat, certainly not teachers and administrators. But the incentives were lined up for them to do just that, just as the incentives are lined up for the common complaint (which I most often hear from teachers) of having to “teach to the test”. Once again we have a case of a political agenda that completely ignores economic laws and (proven after the fact for years) reality in favor of “doing the right thing” and wishful thinking, only in this case we have a clear case of it biting us in the ass right in front of us that is bizarrely reminiscent of a Hollywood movie plot. Unfortunately in this case the underlying problem hasn’t been resolved; we’ve removed the symptom but not the cause.

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: at

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.