Blain Nelson's Blog (not!)

I am guardedly optimistic about the process we’re going through right now, wrt the Sequester <tm>.  The part of policy-making which is so annoying is the part where the process is working — the part where there is weeping and wailing and gnashing of teeth, because those darn other-siders won’t just get out of the way and let us have our way!  Nobody is supposed to get their own way all the way — that’s not what pluralism and democratic institutions are about.  We are supposed to hammer out workable compromises, making concessions in return for concessions on the other side that give us some of what we want.  And what we’re facing right now is a very abrupt change in the way we’ve done things, and that’s really what’s causing the frustration.

Previously, the way we greased the gears of compromise was to give people on each side something they wanted to get — an increase in spending here or there, or a tax break, etc.  And the way those played out tended to be things that increased the deficit.  Now, we’re in a situation where increasing the deficit isn’t available.  We can’t give people what they want that same way anymore.  We’re going to have to give up things we want — everybody is.  And this is hard, because every dollar spent, and every dollar  brought in through taxes (maybe even every dollar borrowed — thinking about that) has a constituency who don’t want to lose what they’ve got.  And the more dollars, the more powerful the constituency.  So, there are loud voices (money and power buy volume) proclaiming that the sky is falling — recall the doom-and-gloom about the Sequester two weeks ago, and how now the word is “We never said all of this was going to happen in a day or a week.”

With the current make-up of the Congress, solutions are going to have to address the concerns and desires of the right and the left.  Tax increases of some kind will be part of the package — and already have been.  Spending cuts will as well, but spending cuts reach more people than tax increases targeted at the very few who pay most of the taxes, so there is resistance there.  But it’s going to have to happen, along with some kind of restructuring of the sacred cattle in the military and SS/Medicare/Medicaid.  Lots of fear-mongering has gone on there, and will continue for a time, but the reality of the need for that restructuring can not be avoided forever, and the price of that avoidance is going up quite quickly.

I think the best thing we can do at the level of the electorate is to not buy in to the fear mongering, even when it’s targeted at us as members of key demographic and interest groups.  This will work best when all parties bring savings by means of giving up things they like, as well as savings by means of giving up things they don’t like.  I’d love to see every member of Congress required to bring forward a solid plan that’s 50/50 stuff they like and stuff they don’t to reduce the deficit to the target by 2/535th each.  If they put it on the table, and take the political hits for it, we can start getting an increase in the reality of the conversation, rather than the rhetoric and hyperbole we’ve been getting up until now.

The “rich” are relatively easy targets right now, politically, but they’re also more able to protect themselves from changes in the tax code — you can spend a million dollars on tax attorneys and accountants to avoid paying five million dollars in increased taxes. And shots at them are more likely to cause collateral damage through unintended consequences than they are the more emotionally satisfying “taking them down a notch” which is frequently behind those shots.

Along those lines, there has been conversation about the confiscatory tax rates from golden ages like the 1950s, and how they must have been good for the economy. What those points fail to grasp is that there was no real intention for anybody to pay those rates, and very few (if any) did. The point of those rates was to be the stick that pushed the wealthy to make use of what are sometimes called “loop-holes” to get them to manage their money in ways policy makers wished them to — the social engineering side to the tax-code, where legislators extend their influence without having to actually take money through taxes and spend it. Personally, I would like to see all of that social engineering done away with, and a simpler tax code that doesn’t require (nor benefit from) the use of tax attorneys and accountants to navigate. But I’m one of those crazy, radical Republicans, and every dollar of tax loop-hole has a constituency as well (lots of money is made via tax preparation and avoidance), so my idea has no chance of happening.