Op-Ed: US budget - Government of the dumb, by the dumb, for the dumb

Posted Mar 2, 2011 by Paul Wallis
If you look up the phrase “The US is broke” on Google, you’ll get 176 million responses. As the House of Representatives passes a range of penny pinching bills mainly directed at Democrat programs like Habitat for Humanity, the prognosis isn't good.
Nowhere but America could you send a nation broke “on principle”. America’s revenue system, which has for generations paid for everything anyone could fit onto a bill can’t carry the load any more.
Now- How to express this at a level even an American politician would understand?
It’s over.
The cookie jar is broken.
Disneyland is closed.
You don’t get your allowances.
Mom wants you to clean up your room for the first time since 1776.
I’m sure there’s some sort of management science expression, like “Fulfilling personal and social aspirations by aspiring to consciousness at some time in the foreseeable future”, but who needs embroidery on a piece of dead salami?
The situation is a lot worse than imagined. Laurence Kotlikoff, Professor of Economics at Boston University wrote in Bloomberg this horrifying snapshot of the real debt issues back in August 2010. One of the figures given is an “unofficial” debt of $202 trillion. Apparently Congress likes to keep some things off the books, and has been doing so since Adam’s birth certificate was getting printed.
Against a figure of $202 trillion, or for those with a poetic sense who like their calculators very much, fifteen times that of the official debt, the current cutting frenzy looks like a daisy chain.
Kotlikoff makes the point that revenue can solve problems, but it looks like nobody’s listening.
What, you may ask, is being done about this wonderful figure?
Is America’s fantastic 19th century taxation system, arguably the most thoroughly and systematically obsolescent in the industrialized world, being modernized?
Is the revenue system being tailored to meet demand?
Are projections of revenue needs being assiduously collected by ardent scribes, bent on perfection?
Are wholehearted, devoted sons and daughters of the American Dream working around the clock on a rebirth of the pursuit of life, liberty and the pursuit of happiness, all of which are rather expensive these days?
Will success spoil Bambi’s mother’s publicist?
The revenue system continues to be the Rube Goldberg nightmare it’s always been at state and Federal levels. Every other country on Earth has streamlined taxation long ago. In Australia, we brought in a single national Goods and Services Tax, and killed off a huge swathe of other taxation legislation, cutting the tax admin costs in the process. That meant that state funding, which was as horrifically hopeless as the US, was finally under some sort of integrated administrative control.
Demand is a forbidden word. There is no demand for revenue. Nobody needs revenue. There is no revenue. The vast US government contracts can be paid for with fairy floss, and Halliburton, Koch, BP, and the other dwarfs can woo Snow White with ballads, instead. The people who benefit most from revenue, ironically, are the ones most stridently opposed to paying taxes. Madoff could be said to have been a charity compared to the mentalities now dictating spending policies.
Projections are basically slide shows, manufactured for people who’ve spent their entire lives in meetings. There is no forward vision, partly because nobody, understandably enough, can envisage any way of paying for a future when breaking even is going to be so difficult.
Wholehearted devotion is being given to getting press exposure and monetizing the personal values of Congressional office. Life, liberty and the pursuit of national solvency are definitely not on the menu. A truly fecal-minded level of concern for the actual state of the nation can now be said to be the main working machinery of Washington and its identical twin, Wall Street.
The alternative to mere efficiency and doing what needs doing is to create a simplistic policy line through a PR agency, talking about cutting the size of government and cutting spending.
The analogy is this:
You have $X in revenue, and you’re incurring $2X in debt over the period in which you receive the revenue. You could be making a lot more revenue, but you decide instead not to eat, to reduce your costs.
So instead of being an insolvent but recovering bankrupt, you become a starving, insolvent bankrupt. The debt keeps right on growing, and all that happens is that you spend less, while making less revenue.
As Paul Krugman said in The New York Times recently, this is repealing the laws of arithmetic.
It’s the perfect solution- For preventing any possibility of solvency or turning the revenue system into a working proposition. No revenue = no country. The US economy is arguably the most dependent on revenue of all the world’s nations. Huge defense contracts, gigantic subsidies for agriculture, Fannie Mae and Freddie Mac, Medicaid, you name it, trace where the money ultimately comes from, and you’ll find Uncle Sam’s battered wallet in there somewhere.
Cutting spending won’t achieve a damn thing if the real problems, the collapse and senility of revenue and the neutering of real time domestic economic growth to support revenue, aren’t addressed. The incoming un-funded generations are already born, and they’re not likely to see much hard cash when they hit retirement age, at this rate.
Ideas are thin on the ground, and the Democrats haven’t exactly been overloading the world with new approaches, either. Statistical feelgood doesn’t quite stack up against the fact that food stamps are the main currency for so many Americans. Talking about economic growth relative to an economy in a coma is also a bit off-key.
(The current form of “growth”, which is “growing” back from a very low, sick and sorry base, doesn’t deserve to be dignified with the description of actual economic growth, but the pundits probably can’t spell “absurd” any better than they can spell “abuse”.)
There’s a bit of US folklore which illustrates the current state of the US economy pretty effectively:
There was an old Simpsons show in which Homer had his arms stuck in a vending machine after trying to steal some cans of drink.
The rescue worker told Homer- “Mr. Simpson, we’re going to have to cut off your arms to get you out.
Homer- “They’ll grow back, right?"
Rescue worker- “Uh, sure…”
Another rescue worker- “Mr. Simpson, are you still holding on to the cans?”
This is pretty much the situation the US political system is in. It’s holding on to concepts which no longer make any sense at all. The arms of the revenue system which prop up the financing of a lot of the US economy won’t grow back. For the sake of a couple of cans of outdated political theory and Rhetoric For Idiots 101, it’s not worth losing them.
A footnote to the Simpson’s episode was that the fire department sent Marge Simpson a note saying that while they were rescuing Homer, a building burned down. In this case the nation is simmering nicely.
Homer might be a better bet as a policy maker, at this rate. Otherwise, it’s government of the dumb, by the dumb, for the dumb. The theories and practices of 1880 don’t work too well in the 21st century.
Homer is a comparative genius, compared to this approach. The pursuit of poverty is the only show in town at the moment.
Nice work, guys, look forward to 2012, because the loser of the election will be the one that has to deal with the results of all this brilliance.