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TheRootDC
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Posted at 10:55 AM ET, 01/04/2013

What politicians won’t tell you about the ‘fiscal cliff’

As the “fiscal cliff” debate continues, it has only served to emphasize the extent to which our political system is out of whack. There’s plenty of blame to go around in Washington. But the reality is far more troubling. The American people have the political system we deserve.
(J. Scott Applewhite - AP)

In this case, the squabbling, dysfunctional government that nibbled around the edges of a seemingly intractable $16 trillion fiscal problem behaved the way it did because we want our politicians to lie to us, and we love punishing them for telling the truth.

President Obama isn’t stupid or naive. He knows we won’t solve this problem by increasing tax rates on just rich people or gently snipping at spending like it is a delicate rose bush. House Speaker John A. Boehner (R-Ohio), another savvy Midwesterner, knows we can’t just cut spending and leave taxes at artificially low rates left by a previous president who drastically cut taxes as he was waging two wars. But neither can say that. Their constituencies would tar and feather them.

The truth is this: We need to raise tax rates for everyone, and we need some serious cuts in spending, including to defense and entitlement programs. But there is no constituency for truth in America — only acquiescence to the demands of the segmented, rapid ideological constituencies of whiners on both sides of the political spectrum who drown out the complacency of the reasonable, common-sense middle.

Former senator Alan Simpson (R-Wyo) and former White House chief of staff Erskine Bowles (D), chairmen of the National Commission on Fiscal Responsibility and Reform, have been preaching this gospel for years — emboldened, no doubt, by the former that precedes their titles. Their prescriptions have drawn the enmity of a rainbow spectrum of ideologues — from the liberal columnist Paul Krugman on the left to anti-tax fanatic Grover Norquist on the right. If Krugman and Norquist hate their ideas, Simpson and Bowles must be onto something.

 America’s inability to accept tough love offered by Simpson and Bowles, and other former politicians, has been fueled by a media culture increasingly dominated by screeching talking heads and bloviating bloggers. Washington has always been a riven, partisan place. But now perhaps more than ever.

Don’t believe me? Imagine for a moment I am a politician, and this is my stump speech:

“America, wake the hell up. We have a major problem that is imperiling the future of our great nation. It is a problem for which there is no simple solution. It is a problem that will not be solved overnight. But if we don’t solve it, here’s what’s a stake: Your children’s and their children’s future, and the very existence of this great nation. If it is our goal to turn the United States into a wholly owned subsidiary of China and the United Arab Emirates, then fine, let’s stay on this path of ideological idiocy and narrow self-interests. Every great nation was great until it wasn’t anymore. You think hegemony is an eternal status? Ask the Mongols, Romans, Brits and Turks how that worked out for them.

“So, here’s what we need to do: Put everything on the table. And I mean everything. No more sacred cows. That includes Social Security. That means the Pentagon. That means taxes. That means no more starting wars and handing the bill to our grandchildren. It means not assuming that every dollar our esteemed military generals demand they need. It means marginal tax rates are going to have to go up a bit, and I don’t mean just for rich people. I mean everyone. It means that we are, in some cases, going to have to accept a nation that has fewer FBI agents, fewer Border Patrol agents, less port security. Less financial regulation, fewer people to inspect our meat and vegetables before they land on grocery store shelves, fewer national parks. Fewer veterans hospitals, fewer embassies and diplomats, fewer air-traffic controllers. Fewer scientists at the Food and Drug Administration to make sure the medications you take work as advertised, fewer safety nets for the poor, and less money for building and maintaining roads, bridges and other infrastructure.

“Oh wait, you thought were going to just get there by eliminating the Department of Education and cutting folks’ food stamps? Did you now? Seriously?

“We’ll delve into the numbers a bit further: About 80 percent of every tax dollar you send to Washington goes to three things: entitlements (Social Security and Medicare), defense and debt service. That’s right. That means all of those things I just mentioned are paid for out of one-fifth of the budget.

 “You could completely eliminate every single program I just mentioned and not get anywhere close to putting a real dent in the national debt. Last year, the federal government spent $3.6 trillion on everything it does, of which tax revenues only contributed $2.2 billion. The government (mostly) borrowed the rest, much of it from financial institutions in China and the Middle East. Each year we have a deficit, it adds to the cumulative debt. But you could eliminate every single nondefense discretionary spending item and still not close the annual deficit, much less the cumulative debt. Think about it. We eliminate all the stuff conservatives hate, like the Department of Education, plus everything else they presumably at least tolerate: The FBI, the State Department, the FDA, the Immigration and Naturalization Service, air-traffic control, new highways and safe bridges, meat inspectors, Security and Exchange Commission regulators, national parks, veterans hospitals and so on. We’d probably still have to have to borrow money from China to pay for defense and entitlements while staying current on our debt payments.

 “Meanwhile, to my friends on the left, I would say this: We can’t just tax the rich. Middle-class people use our roads, schools, rely on our defense, use our entitlements, etc. Everyone has to pay the burden. If you’re middle class and you supported going to war in Iraq, good for you, here’s your bill. Your income tax rates are going to have to go up a little bit. You know why? Because the tax-cut compromise struck on the fiscal cliff that allows taxes to go up only on those making more than $400,000 ($450,000 for couples) a year only eliminates a minuscule percentage of the debt problem. We value the principle of progressivity that our tax system is based upon. Rich folks will and should pay a higher percentage of their income than others. But non-rich folks are going to have to chip in, too. Rhetoric aside, there’s nothing wrong with being rich. We don’t want to de-incentive wealth accumulation so much that we discourage it and the byproducts — namely jobs — it creates. Everyone pays his fair share.

“On the spending side, we are going to have to make some big cuts to the defense budget. According to one recent study, the United States, with about 5 percent of the world’s population, spent 41 percent of all of the money spent by every nation in the world combined on military and defense.

 “But I digress: No more sacred cows means just that. No more sacred cows. As your leader in Washington, I am going to push for the elimination of spending on projects we no longer need. To anyone who looks me in the eye and tells me every single dollar of the $718 billion that the federal government spent last year on defense is justified, I will make my reply simple: You, sir or ma’am, are a moron.

 “I have more bad news for you though, my hopeful Americans. We’re going to have to slow entitlement spending, too. That’s probably going to be harder than cutting the defense budget. I cannot tell you precisely what we should cut. But I’m going to promise you that we are going to come up with some smart solutions that will no doubt anger many of you. But think about it: When Social Security was passed in 1935, the average man lived to be 58, and the average woman 62. In other words, most people died before they got to the retirement age of 65. Now most people are living until their 70s or 80s. Perhaps we need to have a conversation about raising the retirement age in a few years, say to 67?

 “And there’s one last reality we are going to face. Even if we increase revenues and cut spending, we aren’t going to work our way out of this mess until the economy improves. When the economy produces more jobs, tax revenues will go up, and the strain on the social safety net will decrease.

 “We aren’t going to be able to grow the economy if we raise tax rates by too much too fast, or if we cut spending too drastically. For better or worse, the federal government is the nation’s biggest employer. Cutting millions of jobs at a time when the private sector isn’t creating new ones fast enough to keep up with the normal pace of growth in the population is a nonstarter. How do you imagine having millions of unemployed folks — people who get their paychecks either directly from the government or indirectly as government contractors for Northrop Grumman, Raytheon and other companies — suddenly jobless is going to help the economy in the short run?

 “So, here’s what I suggest. Let’s pipe down on the simple, hackneyed, blogosphere-fueled ideological rhetoric, put on our little thinking caps and get to work finding some pragmatic solutions that balance all of these realities. If we do all the right things and get lucky, we might be able to kick this national debt thing in eight to 10 years.

 “So, do I have your vote?

“Nah, I didn’t think so.”

More from The Root DC

Terry Neal is a former Washington Post political reporter who now runs his own consulting company, Neal Communication Strategies LLC. Nealcs.llc@gmail.com.

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