Liddick: Budget impasses
To borrow a formulation from Malcolm X: Yes, some Republicans are extremist. The budget of the United States is in extremely bad shape. Show me a politician who isn’t an extremist, and I’ll show you one who needs psychiatric attention.
Now we have deadlock on both the state and national budgets, and for the same reason. Apparently, the Democratic party believes “elections have consequences” only when the results go its way. The idea that voters could reject the ongoing New Deal model of tax, spend, and then spend lots more is so alien, so bizarre, that it simply never enters the collective consciousness on the left side of the aisle.
So nationally, we have Sen. Chuck Schumer – evidently fine with allowing the Democratic Congressional Caucus to do his thinking for him – using the word “extreme” to describe people with any degree of reticence about continuing indefinitely to borrow a substantial portion of every dollar Democrats lust to spend, passing the unpaid bills to generations yet unborn.
Sen. Schumer and those who share his view of things say the answer is simple: Tax rich people more. It’s an attractive line: the appeal of the demagogue is often simplicity, and who could be a simpler villain than “the rich?” The problem is, this approach ignores underlying economic reality.
Over the past 60 years, taxation has resulted in an average annual income to the Federal Government of about 18.2 percent of GDP, regardless of the specific rate. It’s been as high as 20.3 percent for a year or so, and as low as 16.1 percent, but the 18 percent range is where it tends to settle. Revenue is higher when the tax rate is lower because of greater economic activity – remember, what you tax, you get less of – but as a percentage of GDP, there’s little change. Historically, that’s the country’s “tax capacity,” and in a logical world, that’s where the federal government would pitch its spending.
Right now, we’re spending about 24 percent of GDP. We’re borrowing the difference between the two sums with no end in sight; Democrats apparently see nothing wrong with this. Moreover, they insist that taking steps to stop the bleeding would be detrimental to our economic recovery, which shows beyond the shadow of a doubt they believe prosperity is a creation not of industry, but of government. One should remember this; it explains much.
Meanwhile, under the golden dome in Denver, we have an impasse which will result in the state Senate sidestepping the Joint Budget Committee to offer its own take on taxing and spending in this fiscal year. This will not result in a budget, but it will generate more bad feeling and make further negotiations between the two houses that much more difficult.
One of the points of disagreement in Colorado is the insistence by Republicans that changes be made to the state pension system, forcing state employees – including teachers – to increase their pension pay-in, reducing the state retirement contributions commensurately.
As someone who contributes to Colorado PERA, I don’t particularly like this idea: it’s a de facto reduction in my take-home pay. But I also know that these are difficult times for the state, and that in hard times, everyone has to be flexible.
The Democratic line, on the other hand, seems to echo the order to Russian troops at Stalingrad: “Not one inch.” Compromise on nothing, fight for everything using fair means or foul, and to hell with the consequences. Anyone who suggests even the most commonsensical adjustments to present realities is an “extremist” who is trying to “Wisconsinize” Colorado. This is not politics; it’s scorched-earth tactics. And worse, because a blanket refusal to acknowledge that the present situation demands accommodation only insures that we will be dealing with an even tighter Gordian knot in the not-too-distant future.
There is further food for thought here: In 2010, many candidates called for deficit reduction and curbs to the size of government, and many of them won. Now, whether it’s Paul Ryan setting out what could be a workable plan to eliminate deficits in 10 years or so, others embracing the unofficial findings of the president’s own Deficit Reduction Commission, or yet others with plans of their own, they are labeled “extremists” by those with a vital stake in maintaining the status quo. What does this say about attitudes toward the voting public?
Politicians taking this sort of political cheap shot are calculating that Americans’ inability to put country above self will prosper their efforts, and that greed, self-interest, inertia, lack of information and unwillingness to think about unpleasant topics will win the day, as they so often have in the past.
This time, the stakes are higher. One hopes for a different outcome, but …
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