BOUNCERS

I think that most of us know what needs to be done to underpin the economic recovery that is apparently underway in America but has a hard time throwing off benefits to the vast majority of Americans. And there is no reason to believe that our politicians in Washington are any different. If America is lacking in anything, it is not think tanks, which we have in any flavor of political persuasion, and these think tanks produce an endless stream of policy recommendations for dealing with the major ills this country has not yet conquered. Our representatives and their staffs are well aware of these recommendations, which are written to be put on their desks and pc’s. Somewhere in there they should be able to find solutions to this over-arching problem of our time: how can we assure that more Americans benefit from the national growth and prosperity this country is capable of. If they don’t act upon any of these recommendations, we need to ask why that is the case.

Now, there is no lack of think tanks who will make the case that government has little or no role to play in this process and that the best thing it can do is stay out of the way of the private sector and do nothing, These advocates will make us believe that gridlock is good, because it keeps the government from doing more harm than good.

This approach finds no sympathy with me. In the first place, I strongly believe that there is a role for government to play in the process of national progress and the equitable distribution of the fruits thereof. This role is best described as an ‘enabler’. The task of a national government is to create the conditions, the framework, and the structure under which its population can prosper. Second, someone has to be the arbiter of how resources are to be deployed for the common good. In a democracy that arbiter has to be the duly elected government. We can have a legitimate argument about the size and the scope of the government, but not about the need for a government in general, including the need for a government in the management of the national economy. We see in places like Libya, Somalia, Syria and Yemen where the absence of a national government leads. We don’t want to go there.

The first order of business for our government is to make sure that America keeps generating sustainable growth in a measure that keeps it competitive in the global context and allows its population to prosper. That should be paramount.

Logically, in order to achieve that mission, our government would operate on the basis of a national strategy that would establish policy priorities and implementation plans aimed at achieving the mission. The national strategy should include a funding plan that would identify what revenues would be required and how to generate these revenues. In our world of today it does not work that way. There is no national strategic agenda and no constitutional mandate to create one. We have our funding system backwards: we guess at what our revenues will be given the existing tax and revenue laws, then we divvy them up over the functions and departments we maintain within the government and we borrow if our expenditures exceed our revenues, which is almost always the case.

If we could start from a clean slate and had complete freedom of action, we would devise a tax system that could be tweaked from year to year to give us exactly the revenues required to pursue the national strategy and execute the implementation plan. Government borrowing would then be reserved to cover emergencies, catastrophes and to make long term investments. If we could start from a clean slate and had complete freedom of action, we would carefully reconsider which sources of revenue to tap into, given the civic and moral need for fairness, efficiency and optimum return. We would not just tinker at the margin of existing tax structures and play with populist redistribution principles. We would reconsider to what degree we want to rely on personal income taxes for revenue generation as opposed to corporate income taxes, consumption tax, user fees and asset taxes like property taxes. And we would want to rid ourselves from all the accumulated tax exemptions and deductions that have crept into our revenue code over the years. Simplicity, fairness, adequacy and certainty of indiscriminate collection should be the guiding principles behind our tax collection process. A fundamental rewrite of our tax code based on these principles would be a great first step in underpinning our nascent economic recovery.

But we cannot and will not start from a clean slate. What keeps us from doing so is the mortal grip that special interests have on our political process and our elected representatives. It is unthinkable, in the current constellation, to fundamentally alter our tax code and do away with all the exemptions and deductions that these special interests have inserted in the system over time. As long as our two parties and our elected representatives depend on these special interests to finance their re-election campaigns, fundamental reform – desirable as it may be - is just not in the cards.

Special interests are like bouncers, who, in the most vulgar ways based on brute strength, decide who can go in and who stays or goes out. Special interests have become bouncers of otherwise laudable legislative initiatives by allowing them, in addition to petitioning the government (lobbying), which is a fundamental, constitutionally guaranteed right, to become the financiers of the political parties and the candidates for elective office. That is where America made a crucial mistake that is now costing it dearly in terms of lost freedom of action when it comes to proper governance of the nation’s and the people’s business.

We hear so often, when people are fed up with the bickering in the Beltway: ”Let’s throw all the bums out.”  That would not do it. The next class of Congressmen would be as beholden to the special interests as the one we got rid of. The solution is in getting rid of the bouncers by transitioning to a system of public financing of election campaigns and taking the money influences out of our governance system.