Tuesday, February 26, 2013

In the Water, In the Air: Tuesday, February 26, 2013.

Tuesday, February 26, 2013.  Stupid, childish behavior--or not?

STUPID:  The Washington Post editorial board says that Washington D.C. "is having a stupid fight over a stupid budget issue"--meaning the coming sequester.  The board tosses barbs at both parties, but while it finds President Obama to be "less irresponsible," it also finds the President's "minimal presidential leadership on entitlement reform" to be baffling.  (Editorial Board, The Washington Post, Sequester offers President Obama a Time to Lead, Feb. 25, 2013.)

The board seems to wonder: If entitlement spending is set to crowd out discretionary spending, and if many of the President's priorities (such as health care, energy, and education) come from the discretionary budget, why isn't the President showing more leadership on entitlement reform?

CHILDISH:  Meanwhile, Alice Rivlin (a former Clinton administration Budget Director and Federal Reserve governor) compares our elected officials to children in their fight over who will get the blame for the sequester.  The public must act like the adult in the room and send three loud, clear messages: 1) "Stop the damage!"; 2) "Stop the blaming now!"; and 3) "Get to work!"

More specifically, we should stop the sequester-based spending cuts, move past blaming each other for the sequester, and get down to the business of implementing the policy reforms agreed upon by various commissions, task forces, "supercommittees," and bipartisan gangs: "small gradual changes in the future growth of federal health care and retirement benefits combined with tax reform that produces more revenue."  (Alice Rivlin, RealClearMarkets, Sequester Was Intended To Be Bad Policy, Let's End It, Feb. 26, 2013.)  Notably, Ms. Rivlin has participated on some of the recently-convened debt/deficit task forces and commissions--she worked with former Senator Pete Domenici (R-NM) on a Debt Reduction Task Force held by the Bipartisan Policy Center, and was named to the Simpson-Bowles commission.

The widespread frustration over our inability to resolve our fiscal problems is certainly understandable.  But our problem is not that our elected officials have been behaving like stupid children.  Our elected officials have been behaving like perfectly rational actors.  The problem is that our process for establishing our fiscal policies does not promote the sort of dialogue and outcomes that we associate with adult behavior.  Our problem is that within our fiscal process, rational and adult behavior translates into seemingly stupid, childish outcomes.

It is no real mystery, for example, why President Obama would not want to demonstrate more "leadership" on entitlement reform.  Why should he?  One can confidently predict that whatever reforms he may wish to propose would cut something, and that the Republican party would try to make him pay the maximum price possible, politically.

This is but one instance of the larger political truth: politicians will tend to shy away from the things that may get them removed from office at election time.  Citizens don't like to have their taxes raised (i.e., "tax reform that produces more revenue").  Citizens don't like to have their favorite spending programs cut (i.e., "small gradual changes in the futrue growth of federal health care and retirement benefits").

And yet there seems to be this expectation that the people we elect to represent us in Washington D.C. should just regularly do things that we clearly don't approve of them doing, and for which we will likely punish them at the ballot box.  But why?  If survival is for the fittest, why should we expect officials to stick their necks out and make the sort of tough choices that seem to be required?  Such officials are less likely to survive in office than others. 

We don't need to work harder to solve our country's budgetary problems.  We need to work smarter.  We need to change the incentives that we are providing for our elected officials.  We need to fix our broken process for managing our fiscal policies so that within that process, elected officials behaving like rational actors will produce outcomes resembling responsible, adult behavior.

Fortunately, there is a way that we can fix our fiscal process to promote responsible, adult outcomes...

Have you heard about the Solvency Amendment?

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