Friday, February 19, 2010

Contract for the American Dream, part 2: The Nightmare Begins

In part 1, I argued that during the period most closely linked with "The American Dream," (the 1950s), government action was key to the broad-based prosperity of that era. This was in response to Jason Chaffetz' statement called The Contract for the American Dream, which calls for taking the wrecking ball to vast swaths of government.

In part 2, I'd like to take a closer look at some of the problems he lays out in his contract, and the -- and here I really, really have to use quotation marks -- "solutions" he proposes for them.

The American dream wasn't built on higher taxes, Czars, "Cash for Clunkers," or corporate bailouts. And it wasn’t built on a limitless government credit card.

Wow, there is a lot to unpack in that bizarre statement. As I mentioned in part 1, our current taxes are actually fairly low by historical standards, especially for the wealthiest Americans. I can't find a coherent explanation of why I should be outraged over "czars", much less why I should be outraged over Obama's czars and not the dozens that Bush had. Cash for Clunkers was actually a pretty reasonable program.

But the last point, about the limitless government credit card, makes no sense from a historical standard. Let me just quickly point out that, in the aforelinked chart, Republican presidents have overseen the vast majority of the increase in debt to GDP. But the more important point is, looking at it from a historical context, we've been far worse off. America has always had an unlimited credit card. We charged World War II to it, so it's not exactly easy to max it out.

I'll agree that the national debt is a very real problem, and we have to have a long term strategy for getting it down to zero. But most Republicans didn't utter a peep back when they were the ones holding the credit card, then started screaming their fool heads off when they had to turn it over to The Kenyan Crusader. And even with the existential debt crisis, Chaffetz still believes that it is in America's most vital national interest to continue spending nearly as much as the entire rest of the world on national defense. So it's hard to believe that he's serious about tackling the debt problem, rather than using it as an excuse to jettison the chunks of the government that don't fit his ideological whims.

Rather, the best hope for the United States of America is to return to the core principles of fiscal discipline, limited government, accountability, and a strong national defense.

Adherence to these core principles will result in more jobs, more opportunity, more freedom, and consequently a better quality of life now and for future generations.

Since limiting the size and scope of government is supposed to create all these bounties for a country's citizens, I have a challenge for the good representative. Imagine that you have to leave the Socialist United States for parts unknown, and you cannot take any significant wealth with you. That is, you have to live in some other country, as one of the lower or middle class.

Now, make a list of the ten countries you could see yourself spending the rest of your life in. Now cross-reference that list with this one, showing government expenditures as a percentage of GDP. With the possible exceptions of Hong Kong and Singapore, every country you would think of as "industrialized" or as "having a health care system I would willingly subject my dog to" spends a higher fraction of their national wealth on government services. Brazil might be fun to live in for a few years, but not for reasons that have anything to do with "jobs, opportunities, and freedom."

Of course, plenty of hellholes on the list also have high shares of government spending. But consider this: France and Moldova[1] have about the same share of government spending, and France is clearly the better place to live. The Republican assumption that government spending has a powerful negative effect on the quality of life of its country is really hard to justify.

We pay approximately $600 million per day in interest payments.

That does sound like a really big number. Probably because it is. But a bit of perspective is called for. The national GDP is about $13 trillion dollars. $600M a day comes out to about $200 billion dollars, or about 1.5% of the national budget. We have a debt problem, not a debt crisis. The Republicans want it to be a crisis so that they can unravel the social safety net, as Chaffetz' statement of principles makes abundantly clear.

Imagine a federal government that treats the national treasure with respect and responsibility by living within its means-where every American pays a fair share.

Yeah, that does sound good. Unfortunately, as we delve into the specifics of his proposals, we find that "every American pays a fair share" means "tax cuts for the rich," while "living within its means" translates to "tax cuts for the rich, then balance the budget on the backs of the poor."

The specifics begin.... NOW!

  • Reduce total federal payroll and workforce by 10%, except for military. This action will force all federal departments to identify and eliminate waste.

That's your plan for getting the economy back on track and getting people back to work? Throw 400,000 workers out of their jobs, and jack up unemployment another half percent? It has a certain audacity to it, I'll grant you that.

He's half right. If everyone loses 10% of their workforce, federal programs will have to eliminate something. But that's the problem with the whole notion of equating "small government" to "good government." If the government is so inherently corrupt that cutting its budget can only be a good thing, then the processes by which the government decides to cut back its services in response to that pressure is going to be corrupt as well.

I'm saying that the two premises are contradictory. "Cutting their budgets will make them more efficient" assumes that the government bodies in question are able to see where their money is being wasted and that they are motivated to deliver the best services they can. "Cutting their budgets has to be a good thing" assumes that the same bodies are hopelessly incompetent and corrupt, with no interest in delivering those same services.

Of course, the whole idea that a smaller budget and staff leads to a more efficient workplace is a crock. Let me offer an anecdote from my workplace. When I first got hired on, my goal was to set up an online order system. It should have taken a few months. If I'd been able to spend all my time on it, it probably would have. But most of my time was actually spent doing the day-to-day business of the organization, because the place was hectic, because we didn't have online ordering, so it actually took well over a year.

Had there been more "waste" in the budget, in the form of people to handle a larger share of the office work, I would have been able to "waste" more of my time doing something that would only pay off in the long run. This isn't to knock my employer, but to illustrate that not every organization can be made more efficient by giving it a 10% haircut.[2] Some government programs need to be cut, sure. But others are already dangerously underfunded.

By proposing a 10% across the board cut, Chaffetz is feeding the overarching Republican narrative: the government serves no important purpose, so decimating[3] its workforce without regard for the work they do couldn't cause any damage, right?

If you are one of the millions of people who keep our borders secure, our food supply and workplaces safe, our laws enforced, our skies Osama-free, our radio transmissions clear, and our youth productively engaged, you should be deeply offended by this proposal. Because you choose to put your time and talents to use in the service of your country, you are a leech in the eyes of the Republican party.

  • Support a balanced budget amendment.

  • Require 2/3 majority vote for any tax increase.

Yeah, because it worked so well for California.

  • Cut non-defense discretionary spending by inflation minus 3% across the board.

Another brilliant across-the-board cut. I don't want to fall into the nasty habit of comparing the government budget to a household budget, but in this case, I'll make an exception. If a family were sitting down to their bills and seeing a 3% shortfall, they would not respond by spending 3% less on food, 3% less on clothing, 3% less on swimming lessons, 3% less on cable, 3% less on their mortgage, etc. They would cut from their budget in proportion to the value the spending was bringing to them. One family might cut the entire cable bill. Another might stop spending money on clothes, but plan to increase their vacation budget.

Across-the-board cuts make about as much sense as having a CEO fire twenty people at random, and nobody who seriously proposes such a course of action can claim to have any respect for the work the employees are doing.

  • Impose a moratorium on all appropriations earmarks until the process is reformed legislatively. Work to maximize openness and transparency with filters, to ensure only expenditures with a federal nexus, and prohibit allocations to for-profit companies.

I've never understood Chaffetz' obsession with earmarks. They come out to something like 2% of the federal budget, so even banning them outright isn't going to get our financial house in order. They do seem to make people cynical about government[4], so I agree that they should be reformed. But anyone who says earmark reform is a key issue is grandstanding.

  • Reduce the capital gains rate to 10%. This will lead to increased receipts to the federal treasury and will also increase investment in the USA.

This is nothing but a tax cut for the rich. Fewer than one in seven taxpayers pay any capital gains at all, and the wealthiest 3% of the population (minimum income: $200,000/year) paid 83% of all capital gains [source]. It is already the case that money earned by sitting on your ass and watching other people turn your money into more money is taxed at a far lower rate than money earned by busting your ass to turn other peoples money into more money.

Now the Republican signatories to this travesty want to make it even more lucrative to play the sort of financial roulette that busted our economy in the first place. Remember this when you vote in November.

Oh, and one last thing: Tax. Cuts. Don't. Increase. Revenues.

  • Engage in entitlement reform.

If this were being said by a Democrat, it would have very different implications. It would mean ferreting out actual waste, fraud, and abuse. It would mean cutting costs, including making the sort of long-term investments that would lead to cost savings down the road. It would mean slowing the growth of Medicare by emphasizing preventative care and building programs that would find out which treatments were most cost-effective. It would mean, well, doing the sort of things that are in the health care reform bill.

From the mouth of Jason Chaffetz, it means pay for the aforementioned tax cuts for the wealthy by cutting off assistance to the poor.

Remember, the Republicans have no serious plans for containing the cost of health care. Their plan boils down to, "Keep the government out of it, and let the free market do its magic." Which is what we've been doing lo these last hundred years, and to ill effect.

Wow. All that, and I'm still only through the first set of bullet points. I suppose a part 3 will have to be written. Representative Chaffetz, if you could refrain from saying stupid things, it would save me a lot of time, and drastically improve my quality of life.


[1] Moldova has been cited in happiness-related studies as the single most depressing place on Earth.

[2] Except the military. We must always except the military.

[3] Literally.

[4] Which if anything is good for Republicans.

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