Sequester This!

Ok, I admit I was wrong.  The strategy might have been correct, but the tactic was not.

I was thinking that this never-ending financial morass could be approached by finding a way to get everyone to have “skin in the game.”   Where we stand now is that everyone thinks that everyone else is the problem.  For example, here’s President Obama at a press conference today (3/1/2013) to (finally) address the “sequestration.”

“I’m presenting a fair deal. The fact that they don’t take it means that I should somehow, ah, uh, you know, do a Jedi Mind Meld with these folks and convince them to do what’s right.” [4]

Let’s overlook the fact the president somehow mixed Star Wars with Star Trek and observe that it’s really not surprising at all that he is still convinced he’s right and “these folks [Republicans]” are wrong.  It’s emblematic of our nation at large that our leader has not changed his “I’m right; you’re wrong” and “I won; you lost” tune since he took office in 2009 and told the opposition to “eat your peas.”  He’s no better or worse than all of us.

Way back in 2001, when Republicans were gleefully spiking the football after successfully passing the so-called “Bush Tax cuts” – via reconciliation mind you (actually the Economic Growth and Tax Relief Reconciliation Act of 2001) — the taxes paid by many Americans fell to effectively zero.  Many others in the middle class fell so low that, as they say, they had no skin in the game.

Social liberals were screaming about the billionaires’ tax cuts, without mentioning these factoids.  Tax rates fell so much that the percentage of income tax paid by “the rich” (top 1% of earners) went from 29% to 33.7% of all individual income tax collected.  And the top 50% of earners paid virtually 100% of all income tax.[1]

And tax hawks were soon crowing about the fact that government revenues were not significantly affected.  Removing the effects of the 2000-01 recession and the shock waves of the 9/11 attacks, and revenues were back on track with where they had been.  By 2006 and 2007, government tax receipts were at record levels.[2]   

So what happened?  We spent.  And spent. And spent.  The double war adventure cost over $1 trillion. Where did the rest go?  We expanded government.  Raised salaries.  Bush himself had a failed stimulus in May 2008 when he and Treasury persuaded congress to give huge checks to most families and wage earners.  That Republican delusional dump cost us over $150 Billion in one fell swoop.  Who even remembers that, or what they did with the money?[3]   I’m not saying all of that was bad.  What was bad was this: we set up the expectation that someone else would pay for it.  All of it.

 

Now we over-spend and under-tax.  Government spending is up 115% since 2000.  Even with all the “Bush cuts”, revenue is up 43% [2].

 

I think I am still right about “skin in the game.”  The thing is, we need to face this all together, like we handled World War II.  Right up to Pearl Harbor, our population was rife with vehement isolationists and America Firsters.  Yeah, Hitler and Hirohito and el Duce were evil, but it was none of our business.  Then December 7.  We rallied.  We sacrificed.  We rationed everything, from sugar, to metal to gasoline.  For four years.

Now there is no shared sacrifice and a pervasive attitude that it’s someone else, or some other class that needs to pay more in taxes.  It’s the other side (“these people”) who are unreasonable.

It’s not that I was wrong in thinking everyone needs to pay more taxes, this in an effort to get everyone to pay more attention to our government’s dismal budgetary failure as much as raise revenue. It’s that I was silly to think this was remotely possible in the current acrimonious partisan circus we call American politics.

That’s why I’ve come to think that this Sequestration is actually a fantastic idea.  And the weird corollary is that Obama should actually be taking credit for it.

Problem statement: We’ll spend $4 Trillion, but will collect about $3 Trillion in revenue (very round numbers) this year.  Only about 40% of spending is discretionary.  Solution statement: Cut 3% of discretionary spending now.  Then next year, when again there is no meaningful deal, cut another 3%.  Next year, cut another 3%.  At some point there will be real human pain, and justified howls – not the wolf crying we heard from the White House this past week, a feeble and pathetic substitute for actual leadership.

When we all start to feel pain and shame — long TSA lines, defunded highway refurbishment, delayed tax refunds and social security checks, battleships at the bottom of the ocean — American ingenuity, energy and pride will once again kick in.  We’ll pull together and get something done.  We can do it.  We just need one big old embarrassing kick in the pants.

Until then we’ll continue the blame game.  It’s a game we can’t afford to be playing much longer, regardless of who wins.

Keep the faith.

Joe Girard © 2013

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[1] Who pays the most income tax? http://usgovinfo.about.com/od/incometaxandtheirs/a/whopaysmost.htm

[2] Summary of Receipts, Outlays and Surpluses or Deficits, 1789-2017; Table 1.1; http://www.whitehouse.gov/omb/budget/Historicals

[3] Republicans’ and Bush’s wasteful delusional stimulus of 2008: http://www.americanprogressaction.org/issues/economy/news/2011/08/31/10212/republicans-loved-stimulus-when-bush-was-in-the-white-house/

[4] President Obama Press Conference, 3/1/13: Jedhi Mindmeld.  http://www.argusleader.com/viewart/20130301/UPDATES/130301017/Videos-Obama-says-he-can-t-Jedi-mind-meld-budget-deal-

One thought on “Sequester This!”

  1. JohnB

    Joe –

    Skin in the game will not work unless EVERYONE in the game contributes, at whatever level they’re playing in. Whatever percentage of the people (50, 60, ??) who do participate remain reluctant to put in more skin as long as there are freeloaders who only take from the system and use up “my skin”.

    I agree with the assessment of Mr. B.O.’s performance. The head of any large enterprise is where the buck stops (I think a past [good] president or two stated this :)). It’s his or her responsibility to do whatever is necessary to “make it happen”, not always a pleasant job, but the reason they’re in charge. They cannot sit in the chair as an individual, but rather as the President, CEO or whatever, and do what is required to overcome any problem. Choosing up sides, letting ego dictate, I’m always right and you’re wrong, does not work. As the overall leader with all the resources under ones thumb, get the players together and get ‘er done. Not coming up with an answer is not an option. Campaign speeches are B.S. at this stage of term two. All those who are downhill receiving the “stuff” flowing in that direction are depending on it!

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