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Sunday, December 2, 2012

The “Fiscal Cliff”

Some Politicians are very adept at inventing phrases to describe particular issues or situations, especially when they prefer not to deal directly with those issues.   Unfortunately, those phrases often do more to hide the real issues than they do to describe them.  Take the phrase “fiscal cliff”, for instance.  While it clearly portrays an approaching crisis and an extreme solution for that crisis, it hides more than it reveals.  For instance, while it illustrates a steep fall we face if we do nothing about fiscal matters like taxes, tax reform, over-spending and on-going issues of government insurance for the elderly and the disabled (misnamed “entitlements”), it clearly does not illustrate the steep climb we face to get back into a balance of disciplined spending, effective regulation of business and labor, and adequate revenue to accomplish what must be accomplished.

Secondly, as is true of our two-party system, the phrase serves to narrow options to too few rather than too many.  Sequestration is certainly a great narrower of options; rigid ideology is a second culprit, and partisanship is a third culprit.  These narrow approaches lead us to fewer and fewer options for acting in a manner that will facilitate a balanced and effective approach to fiscal crisis and help us to climb that steep slope that exists even after a fall over the fiscal cliff. 

One example of a narrow option, that is really not an option, is GOP reluctance to cut the military budget.  Instead, Republicans want to raise it.  Some option!  Not a very smart approach to cutting government spending in a time of “fiscal crisis.”

Some of the narrow choices being ballyhooed include: raising effective or actual tax rates on the rich or cutting deductions for the rich; closing tax “loopholes” (no one has suggested which ones!); cutting or reforming “entitlements“; cutting many governmental “social” programs like food stamps, and returning several programs to the states (like Medicaid).  In addition, there are some who want a “balanced budget” amendment to the constitution to enforce fiscal discipline for all time.  Others talk of certain caps, one on annual spending, another on spending in relation to GDP. 

Of course, there are those who say: just let us all go over the fiscal cliff and then we will be forced to solve our “spending crisis.”  In the meantime, the recession will grow, unemployment will rise, austerity measures will be put in place, and the crisis will have metastasized beyond our ability to resolve it in reasonable ways.

What we need at this juncture is not a phrase that illustrates narrowed options and hidden agendas.  What we need is a vision of where we want to go in terms of principles and goals.  I have some thoughts and suggestions for such an approach, although I must admit that I do not have, nor ever expect to have, all the answers.  I simply want to suggest by this that there is another way to act than by narrowing options.  We must attempt to broaden perspectives and options for action.

1)   Revenue must be increased, not just from taxes, but from closing of tax loopholes: such as hedge fund tax breaks; tax incentives for certain depreciations claimed by businesses; tax breaks and subsidies for big business such as Oil companies. 
2)    No corporation should be able to get away with paying $0 in taxes; there must be a minimum corporate tax and a minimum tax for the richest individuals among us, unless we can actually do away with the very tax breaks that allow corporations and rich individuals not to have to pay at a rate that is reasonable.
3)   All entitlements and tax subsidies must be examined, and reformed or eliminated, depending on their demonstrated outcomes.  According to Sen. Bernie Sanders, the federal treasury is losing over $100 billion annually because the wealthy and large corporations are stashing their money in tax havens in the Cayman Islands and elsewhere.  We must pass real tax reform that ends this outrage. 
4)   The military cannot be exempted from budget cuts, but must find ways to eliminate outmoded weapons systems, close unneeded bases, and streamline private contracts based on demonstrated outcomes that are tied to money provided
5)    All three branches of government must be the first to reform, reduce and re-invent before any cuts are made to programs that benefit the middle class.  
Congress, in particular, must eliminate all entitlements that have been granted it through the years such as: special transport and free parking, extra health care by the military that is not available to other citizens, and the automatic cost-of-living increase in their pay, which is now about 3.4 times as much as the average worker earns. Members of Congress are also eligible for two types of retirement plans and a retirement health care plan, all of which are far more generous than benefits typically offered to private-sector workers (one research group estimates that fringe benefits alone are worth about $82,000 per year to a federal legislator).  Finally, Congress must permanently ban legislative earmarks when their temporary ban expires in 2013.  The Executive must consolidate departments and agencies that essentially accomplish similar objectives; the Judiciary must remove special privileges that accrue to them and no one else such as their own police force.  They must also give up lifetime tenure, a luxury at best.
6)    All grants and contracts, including foreign aid, must be based on demonstrated outcomes with monies assigned based on a goal plan to achieve those outcomes; an evaluation and assessment of every grant or contract plan by outside citizens or citizen-based groups could determine whether continued funding is warranted
7)    Citizen audit groups must be assigned to every inspector general’s office, to all congressional offices, to oversee all contracts with outside agencies; charged with reducing costs, assessing outcomes and recommending needed changes to  operations.
8)    All budgets must be based each year on zero-based funding and not on prior year funding.  An inflation rate shall not be included in any budget automatically, but must be justified with corresponding outcomes expected.
9)   Lobbying and lobbyists must face strong restrictions on their activities, and the sooner the better if we are to see needed reductions in the budget.According to USA Today, for every member of Congress, there are about 22 registered lobbyists who donate money, throw fundraisers and manipulate legislation to the benefit of corporations and interest groups.  Some of the most powerful lobbyists are former members of Congress, who form a "shadow Congress" that has more influence over current lawmakers than pressure from voters does.  
10) So-called “entitlements” must be dealt with, but not in the manner that conservatives favor, such as cutting them, privatizing them, or pushing them off to the states.  Government insurance programs are what entitlements happen to be  (rates or premiums are paid in by workers with the expectation that certain benefits and protections will accrue to them, such as social security as retirement insurance; Medicare as health insurance, Medicaid as long term care and disability insurance).  Essentially, the principle that should hold sway here is that these insurances must not be treated as something one must qualify for (entitlement), but as basic governmental insurance against the exigencies of age and disability and long-term care, and the losses that result.  Rather than always discussing means-testing, or age changes or arbitrary taxing rates, perhaps it makes sense to pay more attention to benefits, coverage and life expectancy (actuarial) tables. 

Thus, we have proposed ten principles.  Why must politicians continually narrow options to a few talking points or tired phrases rather than establish overall principles that need to be maintained and honored so that change is not unprincipled, and undisciplined?  Why can’t we solve problems within a framework of principles, goals, and standards that make sense?

After all, budgeting is not simply a matter of crunching numbers.  Too many in Congress believe that “across-the-board” cuts are inevitable, but they are also nonsensical because they don’t deal forthrightly with endemic problems.  Too many in Congress also believe that we can simply impose caps on spending; others believe that we can set an arbitrary cap related to something like the GDP.  Then, of course, there are those who truly believe that a balanced budget amendment to the Constitution will resolve all of our fiscal problems.  It will not; and in fact will create other problems: emergencies will not be able to be met quickly; some programs, such as food stamps, will have to be cut to keep the military budget bloated beyond its capacity.  In fact, a balanced budget amendment can be seen as nothing more than an austerity measure meant to reduce social programs in lieu of  reductions in other areas such as the military.  Crunching numbers - or simple mathematics - is not the best approach to a balanced budget, or to a humane and effective budget, for that matter.

And there’s the rub.  Budgeting is people-enabling; it is institution-supporting; it is problem-solving and need-meeting; it is patriotism personified and made real; it is democracy and representation indemnified.  It is much more than simply putting together pages of numbers that will add up. That is our main problem: that we allow the bamboozlers in Congress and in the media and elsewhere to lead us astray as to what we are talking about when we debate fiscal responsibilities. 

In his message attached to his 2013 Budget proposal, President Obama made clear that it is much more than numbers that he is presenting.  He declared:

“This Budget reflects my deep belief that we must rise to meet this moment--both for our economy and for the millions of Americans who have worked so hard to get ahead.
“We built this Budget around the idea that our country has always done best when everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules.  It rejects the “you’re on your own” economics that have led to a widening gap between the richest and poorest Americans that undermines both our belief in equal opportunity and the engine of our economic growth.  When the middle class is shrinking and families can no longer afford to buy the goods and services that businesses are selling, it drags down our entire economy. 
“The way to rebuild our economy and strengthen the middle class is to make sure that everyone in America gets a fair shot at success.”

Now we have heard similar words from our President in other contexts, but in this context, they matter even more than in a political campaign, for instance.  Why?  Because establishing a budget based on principles is much more important than political rhetoric.  It is “putting our money where our mouth is”; it is the equivalent to “walking the walk, not just “talking the talk.”  When money is put behind principle, it changes the dynamic immediately.  For instance, had the Peace Corps not been adequately funded, it would have remained just a seminal and principled idea.

Likewise, when we fail to fund something adequately, such as inspectors of food, or border patrol agents, or regulators of wall street firms or big banks, we reap negative consequences in real time and in real life.  Take the recent example of complaints from Republicans about adequate intelligence being unavailable to us when our embassy in Libya was attacked and four US citizens were killed, including the Ambassador.  It came to light that the people who were criticizing our Intelligence agencies were the very same people who had cut their budgets leading to fewer agents in the field!  You simply can’t have it both ways: you can’t expect adequacy in any area if you are not willing to pay adequately for it!

The same people who rail against entitlements and “welfare programs” (the “welfare state”) are those who support the rich in not having to pay their fair share and who provide welfare to the rich in the form of tax breaks, loopholes and subsidies.  In my opinion, they are the very same ones who reject the idea of budgeting based on positive principles, goals and outcomes.  So let us not be drawn into the narrow categories and rhetoric of the radical Right.  Instead, let us stand where we have always stood:  dedicated to the proposition, paraphrasing Lincoln’s words, that all people are created equal, that they are endowed with certain inalienable rights, and that government of the people, by the people and for the people is that which must not be allowed to perish from the earth.

Translated to today’s budgetary debates, it means using government policies, programs and budgets to enable all people to advance, not just in terms of income, but in terms of opportunity.  It means supporting and lifting up those who are beaten down by life’s exigencies, whether they be physically or mentally disabled or challenged.  It means establishing programs that address the needs of people so that they can not only advance their own cause, but can contribute to the welfare of the nation and of other persons. It means acting as though we are interdependent and mutually responsible for one another; as though we have a contract with each other to enhance other lives as we enhance our own; and not to think of ourselves as somehow more deserving or privileged, or independent from others because we have achieved success.  Success is not just an individual achievement, but an achievement contributed to by many helpful and caring people along the path to that success, even if they are merely clients or customers. 

Elitism is the bane of democracy.  Acquired special privileges are equal to rewards stolen from all those who contributed to success and who remain unrewarded.  Not paying one’s fair share of taxes is equivalent to robbing the poor to compensate the rich.  Castigating union laborers is equivalent to cutting off one’s nose to spite one’s face.  Our Commonweal cannot be sustained if we continue the principle of protecting the rich and successful despite all the obligations that riches place upon them:  “of him to whom much is given, much will be required”. 

Let the principles of shared responsibility prevail; and let the elitism of those who believe in special privileges for the successful be undone.  The “fiscal cliff” is the rhetoric of nay-sayers, the privileged and the uninspired.  It is the invention of the few to bamboozle and frighten the many.  It is a device for holding hostage and subduing government programs for the poor and middle class.  And “Sequestration” is the facile way out of a fiscal responsibility that demands evidence-gathering, reasoning, scientific method and principled planning, as well as some common sense!   It is time to approach budgeting from a new perspective, and that is the perspective of meeting the needs of 98% of the people, rather than accepting the narrow dictates of an elite 2% of the country whose primary concern is their success and their rewards.