How To Shrink Government—For Real

When I first started working in the advertising business in New York City many years ago, one of my senior colleagues told me the following joke—both to make me laugh and provide me with a little insight into reality….

 Starting his first day at a new job, a man ran into his predecessor cleaning out his desk, who gestured to the top right hand drawer.

 “I hear you’re taking over from me.  This is a pretty demanding position, so there’s a little tradition we keep up here.  I’ve put three sealed and numbered envelopes in this drawer.  When you hit your first crisis with our boss, open envelope number one.  When the second crisis strikes, open number two.  When you and our boss have your third falling out, open the third envelope.”  

 Smiling at the seeming absurdity of the three envelopes, the man said goodbye to his predecessor and started his new job.

 However, one terrible morning several months later, after his boss had chewed him out for not meeting his performance goals, the man went back to his desk and—his hands shaking—opened the first envelope and read the note: “Blame your predecessor.”  After lunch he went in and explained to his boss what a mess his department was in when he took over the position. It worked.  Mollified by the explanation, his boss sent him back to his desk without further comment.

 A couple of months later his boss was on the rampage again, demanding to know when improved results were forthcoming.  After anxiously reaching into his desk, the man pulled out the second envelope and read the advice: “Announce a reorganization.”  Racing into his boss’s office, the man explained that he was changing around the responsibilities of the people in his department in order to increase productivity.  A bit disbelieving but still satisfied by this plan, his boss sent the man on his way.

 Unfortunately, as yet more months passed, no improvements were apparent.  Frothing with rage, the boss told his underling to be in his office the next morning with a new strategy to finally turn around his department.  Remembering how the first two envelopes had saved him, the man raced back his desk and frantically tore open the third envelope.  

 Inside he found a note that read as follows: “Prepare three envelopes….”

 A good deal of private sector work tracks right along with the three envelopes.  Managers and supervisors have, from time immemorial, followed exactly this arc to keep those above them happy—at least for a while.  Government bureaucracies—and the bureaucrats and elected officials that run them—are likewise prone to either blame their predecessors or announce a reorganization when problems become too obvious to ignore.

 However, those who survive in government jobs become experts at one particular “skill” above all others: keeping their heads down and asking no questions.  Consequently, we employ millions of men and women who will—from the day they start work until the day they retire—plod placidly along while paying little heed to either the utility of their work or its societal outcomes.  The consequence is an ever growing chasm between the costs of government and the actual benefits that are provided to our nation.  

 If you’ve ever wondered why we spend our lives paying taxes for schools that don’t educate, roads filled with potholes, and various departments and agencies that seem to have no discernible or logical function, you are asking the right questions—but you are wrong in believing improvements are possible.  Absent the private sector accountability provided by the need to both produce measurable results and turn a profit, it will always be the predisposition of government to cost more and provide less over time.  Although there are many who believe—believe with all their hearts and souls in many cases—that those who want to reduce the size of government are heartless haters who are putting our lives and the future of our nation at risk, the catastrophic rise of both daily government expense and government indebtedness compels those with the least smidgen of sanity to question our current direction—and seek change.

 Obviously, we need government, and there are basic responsibilities that government is best suited to fulfill.  National defense, local law enforcement, health and safety regulations, and maintenance of the infrastructure and the regulatory framework necessary for interstate and international commerce are clearly the purview of government managed by elected officials.  Protection of our environment is also necessary to help ensure the health and welfare of our citizens.  A free, taxpayer-supported system of primary and secondary education—whether provided by public or charter schools—must certainly be in place to put each generation in a position for future success.

 However, the accountability necessary for well-managed government programs is impeded by the sheer immortality of government agencies and departments—that which is once funded never goes away.  Much like that famous fictional Count from Transylvania, government agencies and departments live forever, sucking the life blood of the citizenry and striking fear into the hearts of all who dare defy them.  Elected and appointed officials, although nominally in control, rarely have the staying power to do much to rein in their inexorable growth.

 Government is, at least in theory, the servant of the people, so the solution might be to let the people decide—directly.  

 Therefore, we should consider allowing the appropriations for every government agency and department—except for a very select few deemed absolutely vital to our nation—to “sunset” every ten years.  In order to continue operations, they would need to be voted back into existence by our citizens—not a handful of legislators who have been purchased through campaign contributions.  During the ten year cycle, appropriations and oversight would be left to elected officials and appointees, but thereafter a plebiscite of the citizenry—local, state, or national, depending on the department or agency or question—would decide whether to allow it to continue to function.  There would, of course, be a brief winding down period if programs were closed so that the enforcement responsibility for regulations promulgated could be smoothly transferred, but this would be manageable—and of limited duration and cost compared to the eternal life and expense prior.

 There will, quite naturally, be those who for a variety of reasons would vociferously oppose such an idea.  The status quo always has its fans—particularly when there is (as is always the case with government) jobs and money involved.  Nonetheless, unless we want to continue to spin on as we are until every last penny is gone from our pockets—and the pockets of our children and grandchildren—we must take affirmative and direct control over the mechanisms of our government.

 If not, we will soon be preparing our own “third envelope” for our nation and its future.  This is an outcome we dare not allow to occur.

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The Cost Of Compassion

A few weeks ago Ruth Marcus caused quite a stir with a commentary in The Washington Post entitled “I would’ve aborted a fetus with Down syndrome. Women need that right.” Her viewpoint was offered as a counterpoint to the actions of state legislatures in North Dakota, Ohio, Indiana, and Louisiana, which have passed legislation that prohibits abortion if the sole reason for terminating the pregnancy is a pre-natal diagnosis of Down Syndrome, a genetic problem that results in impaired cognitive functioning and health problems associated with a shortened lifespan. Ms. Marcus framed this controversy as an attack on the reproductive rights of women, and data she quoted seemed to demonstrate that the majority of women would not choose to bring a child with Down Syndrome into the world because of the long-term financial costs involved—as well as the emotional toll on the parents and family.

However, I wonder whether this horrid discussion actually touches on much broader issues that increasingly vex our nation and seem more and more at the core of many controversies: Are there reasonable financial limits to our compassion, and how should these limitations translate into issues of law and public policy?

Americans are often adverse to the notion of limitations, which is reflected in our continued political inability to live within our means. Our breathtaking levels of federal debt, which has more than doubled in just the past ten years to $21 trillion, and willingness to both impose all sorts of unfunded mandates and pass legislation that robs the future to pay for the present is symptomatic of our societal refusal to grapple with economic reality. Ms. Marcus’ decision-making might seem cold-hearted and inhumane to some, but she is at least honest about the financial limitations of her personal compassion for others.

Public policy and spending are likewise increasingly embroiled in questions regarding the boundary between compassion and foolishness. Whether we are discussing healthcare, housing, education, immigration, or a host of other concerns, the shape of the dialogue does not vary. On the one side we have those who are arguing for limitations based on fiscal reality—they are the “heartless” ones. On the other side, we have those who demand expansion or protection of government programs and services—they are the “compassionate” ones. The dynamic plays out over and over, much like that endless loop of Muzak in the dentist’s office while your teeth are being drilled, and each side shakes their heads at the other while the borrowing and spending continues unabated. Our recent omnibus federal spending bill, which will tack another several hundred billion dollars of debt onto Americans by the end of only this fiscal year, is simply another in a long line of bipartisan failures to somehow balance compassion and the “heartless” arithmetic of fiscal reality.

Those of us who live in Illinois should have a front row seat for the collision of the rhetoric of our “heartless” Governor, Bruce Rauner, and his “compassionate” Democratic challenger, J.B. Pritzker, during the upcoming gubernatorial election. Governor Rauner will, probably to no avail, argue for more fiscal restraint because Illinois is crushed by debt. During just the past year—despite an increase in the state income tax and a strong national economy—the financial health of our state government has continued to deteriorate with astonishing speed. Illinois is now so far underwater that simply rising to the surface to gasp for air is now beyond all imagining.

The functional bankruptcy of our great state will, however, mean little to all those “compassionate” souls who will harken to Mr. Pritzker’s calls for increased spending on education, healthcare, senior care, and social programs. It is, after all, the belief of many that government exists to distribute benefits to the multitudes, which will somehow be financed by higher taxes on Illinois’ rapidly shrinking pool of “wealthy” taxpayers—many of whom are joining the general exodus of residents from Illinois as we sail blithely downwards toward insolvency.

It has been interesting to read the comments regarding Ms. Marcus’ ideas concerning the connection abortion rights and Down Syndrome. Many who agreed with her privileged her right to control her own future by refusing to accept responsibility for a child that would likely impose extra financial burdens on her life and that of her family. Her compassion in this situation is circumscribed by a dollar sign, which seems perfectly appropriate to those who worry about their life choices being limited by government.

Oddly enough, what many compassionate souls fail to recognize is that their demands for more—and more expensive—government programs and benefits are corroding our individual rights because it is binding our futures to unsustainable debt that will limit the choices available to us all. Politicians often try to mitigate the shock of out-of-control spending by framing pure pork as “investments”, but more commonly any effort to rein in spending is positioned as a test of our “compassion”, which puts those who want to spend away our collective futures in the morally enviable positions of being the nice people fighting against those nasty folks who aren’t nearly as good-hearted and generous. We don’t wear signs around our necks detailing the amounts of debt our federal, state, and local governments have saddled us with paying, but anyone who is, for example, struggling with the monthly costs of student loan payments has a clear understanding of how yesterday’s debt tends to constrict the choices available today.

Setting aside the question of the obvious immorality inherent in ending the life of a child for reasons that, high-flown rhetoric aside, pretty much boil down to personal convenience, Ms. Marcus is at least astute enough to recognize that her compassion has a price tag attached—and she can easily recognize this because the costs will not be spread out among our nation’s beleaguered taxpayers. The next time she publicly advocates for more borrowing and spending due to her finely tuned sense of concern for others, perhaps she should remember how the money borrowed today to help demonstrate how much more wonderful she is (unlike those meanies who understand arithmetic) simply burdens generations of Americans to come with the bill for her marvelous “compassion”.

If anyone can effectively explain why bankrupting our nation and its citizens with government spending is compassionate, there is a future in politics—or perhaps an editorship at The Washington Post—waiting for you.

Change Can Be Painful

I have been mulling over the concerning level of distress that now seems to infect so many of our personal and national conversations. Donald Trump is, to be certain, at the root of some of this because he refuses—or is simply unable—to finesse much of anything. President Trump finds the rawest possible nerve to rub at the most inopportune possible time—and keeps right on rubbing it no matter how loud the howls. I will agree with those who argue that he is an irritant; this is not much of a mystery.

It is, however, just as true that a great many problems we have tried desperately to ignore for decades are now impossible to avoid—and Donald Trump is many times simply the blunt instrument for our reckoning with unpleasant realities.

We are enslaved by public and private debt, the cost of medical care is outrageous, our public schools are failing many children, higher education is amazingly costly and often captive to ideological battles, homelessness and hunger haunt many, families and communities are fragmented, and there is a fairly pervasive sense that our governmental structures have devolved into self-serving parasites that pay little attention to the needs of those whom they claim to serve. All of this frustration and rage erupted last November, and our nation opted for chemotherapy over continued palliative care—hence at least some of the pain we are today experiencing. Aggressive treatment of our maladies is a shock to a system long accustomed to soothing platitudes and bland reassurance.

Now we have steep tax cuts and pointed discussions about reducing our expansive—and expensive—government structures. Tough questions are being asked about how to remake our healthcare and health insurance systems to reduce cost. Charter schools and school choice plans are corroding the public education monopoly. Higher education is suddenly having to justify both its mission and its stupendous cost. Public aid programs of all types are asking for much more responsibility from recipients. Zoning and tax policies that artificially inflate housing costs are under attack. People are pushing back against experts and policy makers who promote punitive and half-baked ideas regarding what is best for us.

As for government and government officials, they are disliked, distrusted, and disrespected by the vast majority of Americans—many of whom are now approaching a state approximating open rebellion. This is not surprising because our long national experiment with expanding government to provide endless freebies fueled by reckless borrowing has now crashed into the inevitable arithmetic of profligacy—eventually you run out of money. Avoiding real-life financial decisions by charging the spiraling costs of government programs rife with waste and inefficiency to future generations of taxpayers—who are now stuck with the tab—was loads of fun for elected officials who could keep handing out goodies without the political inconvenience of raising taxes to pay for them, but the incredibly large check for that stupendous party has now been dropped in our laps. Tough and divisive discussions are certainly ahead.

There is, in addition, a certain degree of anger generated by the very act of finally facing up to our problems. I find a good many of our recent hot-button debates concerning education, immigration, economic policy, and national defense seem animated by intense frustration over being forced to make hard decisions rather than being allowed to obliviously cling to questionable narratives and notions—heedless of cost or consequence.

After decade upon decade of waiting for improvements in hidebound public schools, parents are now demanding alternatives for their children. After abdicating control of our borders and endlessly extending the stays of those offered “temporary” refuge in America, enacting reasonable and long overdue immigration policy changes is a shock for a great many. Shrinking government and unshackling businesses from inane regulations seems very frightening to those who have grown comfortable with stultifying statist ideologies. Pushing back against terrorist groups and rogue states has terrified those who have forever counseled appeasement. At every turn, definitive and firm action has raised the hackles of those invested in bureaucratic inertia and willful ignorance.

It is clearly painful for some to have to abandon the familiar failures and pursue a new path. However, watching new charter schools succeed where others had failed, immigration laws and procedures being thoroughly debated and—President Trump’s alleged comments about “sh*thole countries” notwithstanding—vastly improved, business activity rising and unemployment shrinking while the stock market booms, and ISIS crushed at the same time North Korea is finally being forced to the bargaining table, it is increasingly difficult not to recognize that the time for a clean break with the failed ideologies of the past is right now. Bewailing successes that conflict with stale orthodoxy seems sillier by the day, and if we can stop imagining crises and instead work cooperatively to implement yet more fresh creative thinking regarding the issues facing our nation, we can likely achieve wonders.

Abandoning shibboleths is scary, adopting unfamiliar ideas is stressful, and accepting the necessity for change is upsetting. Nonetheless, we need to step out of our comfort zones and recognize that which is familiar may not be either helpful or good, and all the protests and complaints will not diminish the need for a thorough re-evaluation of ideas and philosophies that many have held dear for a very long time. We might not always be pleased—or even comfortable—with the decisions that are made as a result, but many times we—as a nation—will be better off.

The Tax Cut Gamble

Barring unforeseen circumstances, the Republican-led Congress will pass a significant tax cut. This prospect is—depending on your tax bracket, political ideology, and the state where you reside—a cause for either rejoicing or anger. Expert predictions about the effects of this tax cut bill, which will certainly reduce overall federal government revenues, should not be trusted. The long-term outcome will be determined by the unknowable responses of legislators and individuals to both its specific provisions and broad intent—which is to push broad reductions in the size and scope of government by cutting off access to funding.

Those who predict that this bill will increase the deficit and drive yet more federal debt have ample cause for concern. Previous cuts to federal taxes during the Reagan and Bush administrations produced exactly this outcome because there was no political will in Congress to reduce outlays to match available revenue. Washington simply borrowed to make up the difference, which has ballooned federal debt from roughly $1 trillion at the start of the Reagan administration to over $20 trillion today. If voters keep electing members of Congress who promise more despite less money in the coffers, the net result of this tax cut will be no reforms and continuing fiscal catastrophe at the federal level.

Any drop in federal revenues also impacts the states. Washington’s largesse is particularly important to local economies built around schools and healthcare (“Eds and Meds”), which are dependent on a variety of federal cash sources and could suffer if the D.C. money stops flowing. Moreover, given the many mechanisms that shift federal dollars into state economies—which run the gamut from research grants to highway construction money to public safety funding—the possibility that the spigot might be tightened is sending shivers down many a spine.

If states decide the easiest path forward is to raise state taxes in order to avoid making difficult fiscal choices, the effect of any federal tax relief will be lessened. A lack of political will to cut spending to match available revenue—this time on the state level—will diminish or eliminate any positive effect of the federal tax cut for many citizens.

This tax cut legislation is a significant risk for Republicans in Congress because—whether due to sheer economic ignorance or partisan political posturing—many opponents are describing this bill as a “tax cut for the wealthy”. They are absolutely correct that the wealthiest will enjoy most of the gains, but this is simply because the rich pay most of the federal taxes—about 45% of Americans, in fact, pay no net federal income taxes at all. It’s not a conspiracy against the poor, but it plays well with audiences who perhaps slept through ECON 101 in college, and you can be certain that those in government and elsewhere who are worried that shrinking tax revenues might reduce their influence and power will repeat this half-truth—loudly and endlessly.

This does not, however, mean that the Federal tax code is either sound or fair. There are far too many opportunities for imaginative accountants to find perfectly legal deductions and loopholes for wealthy individuals and corporations that enable them to avoid paying their fair share—and this needs to be remedied. These additional revenues can help to correct fiscal imbalances in critical federal safety net programs such as Social Security, which is in dire financial condition due to the flood of baby boomers rapidly bankrupting the system.

One flash point for many voters is the status of the deduction for SALT (State And Local Taxes) now enshrined in the federal tax code, which works out to be an indirect subsidy paid by everyone to those who live in high tax states such as New York and California. As financially painful as the loss or reduction of this deduction might be for some, it works out to be an immense windfall for the wealthiest, an egregiously disparate benefit offered to those who earn the most. In order to cushion the effect, changes could be phased in over a two year period, but this is a reform that must be made out of a sense of fairness for all. Sometimes “me-me-me” must be set aside for a greater societal good, and this might also force wasteful state and local governments to reconsider their excessively expensive policies and practices.

This tax reform is a gamble, but to continue as we are is a disastrous “sure thing”—more wasted tax dollars and more crushing government debt.

 

 

 

 

 

Tinkerbell Explains It All

I have a vague memory of being taken to a performance of Peter Pan when I was a child. Like almost everyone of a certain age, what sticks out the most is the scene where Tinkerbell is apparently dying, and we were exhorted to clap our hands to a near-insane pitch of enthusiasm until, accompanied by our childish squeals of delight, “Tink” revived—thanks to the sheer power of our collective belief.

The “Tinkerbell Effect” refers to the peculiar phenomenon of something seeming to exist only because we desperately wish to believe it is so—and I wonder whether this explains much about the country we live in today. We have chosen to believe in a host of lies and half-truths peddled by our financial, political, educational, and cultural elites—no matter how illogical and inexplicable they might be—and these falsehoods have survived because of our refusals to acknowledge any evidence they might not be true.

Therefore, we ignore increasingly urgent warnings regarding the dangers of our inflated stock markets and housing prices, educationally-deficient schools and colleges, overextended military, and staggering public debts. If we just clap our hands hard enough, we will be safe from any consequences of our greed, stupidity, hubris, and profligacy. Concerns that any—or all—of these problems are imperiling our nation’s future are regularly debunked by elected leaders and well-paid experts who soothingly assure us that all is well.

And we clap our hands like trained seals, content to believe the unbelievable. Stock market and housing bubbles are just fine. Diplomas based on content-free coursework guarantee our children are academically prepared to pursue their dreams. Endless wars have no effect on our military readiness. Functionally bankrupt governments will still be able to take care of our many needs and wants.

Clap. Clap. Clap. Clap

It is, of course, basic human nature to ignore bad news and actively distract ourselves with the trivial and sensational, so it makes perfect sense that vote-seeking politicians and smiling lobbyists can easily convince us the party will never end. Nonetheless, we need to peek up from our digital devices in order to discern the difference between what is truth and what is deception.

We will, unfortunately, need to find a way to solve our problems despite our empty pockets—and the refusal of so many to accept this fact. It is now (nearly) impossible to ignore our dire public sector fiscal problems, which have been compounded by several decades of resolutely refusing to live within our means. The expansive promises of politicians who claim to be able to protect us from all harm through the magic of ever-expanding government programs has become a self-destructive exercise in spending that has been sustained only by increasingly suspect guarantees security is just one more big tax increase away.

However, if you find any of these observations disturbing, upsetting, insulting, or contrary to your most cherished beliefs, that’s your prerogative. If you keep clapping, I’m certain everything will turn out just fine—somehow.

Clap. Clap. Clap. Clap.