Tuesday, March 18, 2008

I did not forget you, Libertarians!

Some libertarians are all in tizzy because I didn't mention their party in my Los Angeles Times op ed today: http://www.latimes.com/news/opinion/la-oe-wright18mar18,0,3662044.story. I'm sorry there wasn't enough space to work y'all in. The Libertarian Party deserves many more words than I was given space for. Moreover, I'm not sure that it fits the bill as it tries to cover too many areas. What I'd like to see is a party narrowly-focused on getting our economic, financial, and fiscal houses in order. Then we can worry about gun control, national id cards, immigration, abortion, and all that very divisive jazz. On its website, the LP (http://www.lp.org/article_85.shtml) says it is the third largest party in America, but it only has about 200,000 registered voters nationwide. That isn't very big; there are more people in my neighborhood! I think most Americans are centrists, both left to right (Democrat to Republic) and up to down (libertarian to statist). To win national or big state elections, you have to be close to the center, to found common ground upon which to unite the most people possible. I think that means appealing to things like the budget and the debt and keeping one's mouth shut on social issues. To the extent that other issues impinge on the budget/debt, they should be discussed in those "dollars and sense" terms rather than in ideological ones (e.g. governments or markets suck).

Friday, March 14, 2008

What Does Spitzer Have to Do With the National Debt?

How are Eliot Spitzer and the national debt linked?

Most importantly, for me, his story got my op-ed in the LA Times bumped into next week!

Seriously, his little ... indiscretion ... shows, once again, that our elected officials are as human as the rest of us. Some of them have trouble keeping their penises in their pants, others can't keep their hands to themselves, their mouths shut, or their driving safe and sober. Still others couldn't balance a checkbook if their lives depended on it or, more importantly, balance the government's budget if the entire national economy depended on it. This is why it is so important to look for structural ways of tying politicians' hands, of building more checks and balances into what matters most, the power of the purse.

One idea I throw out in One Nation Under Debt is to make one house of Congress responsible for spending and the other for taxing and borrowing. That way, the spending house (the House of Representatives?) can't spend more than the taxing and borrowing house allows. It'll give 'em what economists call a binding budget constraint. During wars and disasters the other house (the Senate?) would provide ample resources but in fat years will have a better chance of keeping a lid on spending. Chew on that.

Wednesday, March 12, 2008

Universal National Service

Finished reading Sabato's A More Perfect Constitution today. (A very interesting read for a wonky scholar like me. The writing is fluid but doesn't soar.) In Chapter 5, Sabato advocates the formation of a near mandatory Universal National Service, two years of public service for young people. The idea is to get our yutes to join the military, Habitat for Humanity, the Red Cross, something. Unless they opted for the military, they'd only get minimum wage or so but they would also get a great experience, some job training, friends for life, and a sense of civic responsibility.

I find the proposal interesting for two reasons. For starters, I suggested the same thing a few years ago in my ill-fated book ms., "America Down: The Failure of U.S. Higher Education ..." In that ms., I suggest that putting 18 to 22 year olds out in the real world instead of the college classroom would benefit everyone. They could sow their wild oats and earn some dough for college, so work, sex, and drugs don't distract them from their studies when they get to college at age 22 or 23. Secondly, Sabato claims that "the benefits that will accrue as a result of Universal National Service will far outweight the annual price tag for the federal Treasury" (173). He doesn't really demonstrate that in any rigorous way but the idea is fascinating ... with a slight nudge, our wayward youth could be put to work to help pay off the national debt instead of increasing it by wasting the massive educational subsidies we lavish upon them at frat parties and football games. ... Hey, I'm allowed to dream aren't I?

Tuesday, March 11, 2008

Line Item Veto

At the end of One Nation Under Debt I discuss some radical ways to make our government less prone to take on gobs of new debt in good times and bad. In his A More Perfect Constitution, Larry Sabato makes some less radical but no less valid recommendations, including bringing back the line item veto (Pres. Clinton saved us almost half a billion dollars by lining out pet pork projects before the Supreme Court ruled the practice unconstitutional) and decreasing the president's warmaking powers. The latter is a good idea for non-fiscal reasons as well. Of course the easiest way to end the debt death spiral would be for voters to make it clear to politicians that they need to stop running massive budget deficits. That Ron Paul garnered so much support shows that millions of Americans are fed up with the current system. Not enough millions to get him nominated but enough to strike fear in the heart of the status quo.

Sunday, March 09, 2008

Why Does Every (Non-incarcerated adult) Get One Vote?

In my new book, One Nation Under Debt, I mention that we might want to consider allowing taxpayers to allocate their taxes themselves. Under our current system, we elect politicians to do this for us. The problem is that to get elected and stay in office, politicians have an incentive to spend more than the government brings in as taxes or other revenues. That creates chronic deficits which over time leads to a mammoth national debt, now over $9 trillion or $30+k per person! (And that is just the recognized part of the debt. Various contingent liabilities are much larger but nobody knows precisely how much.)

Early in our history, we managed to repay our national debt because both politicians and voters thought maintaining a debt was bad policy. We also had a relatively popular tax base (duties and customs, especially in the North) and little desire in either party for bigger government. None of those conditions hold today.

Many things could be done to alleviate the current situation. One is to make politicians start talking about what they are going to do about federal deficits and the debt and voting for the one with the best plan. Good luck with that one! Larry Sabato also has some interesting ideas on a balanced budget amendment in his A More Perfect Constitution.

Another idea is to allow taxpayers to decide how their taxes are spent. The goal here is to increase tax revenues by giving people an incentive to pay their taxes. Through April 15, millions of Americans will huddle with their "people" or their own consciences and decide, within parameters, how much to pay in federal income taxes. Most will shoot for the low end of the range, reasoning that everybody engages in tax aversion (if not evasion) and that most of the money will go for unwanted projects (the occupation of Iraq, bridges to no where, etc.) anyway. If people could decide where their taxes went, they would pay more in taxes I believe. Increasing taxes and holding the line on expenditures is of course the only way to relieve our debt problem.

When I floated this idea before, some people got very angry because they foresee the rise of a "plutocracy," or rule of the rich. I find this objection confusing because we're pretty close to that already. Everybody knows the rich (and famous) can afford the lobbyists and big campaign contributions that can gain politicians' ears. I think my proposal is actually conducive of democracy because no group could use the tax system to expropriate resources from other groups. As more taxes are taken from a group, the more voting power the group gains under the system, thus giving it the power to repeal or reduce its tax burden.

A similar system has worked well for corporations. Since the founding of the republic, corporations, with a few early and late exceptions, have allowed shareholders to vote based on the number of shares they owned, sometimes 1 to 1, sometimes with caps (no more than 10 or 100 votes), sometimes on what Alexander Hamilton called a "prudent mean" basis. If every shareholder had just one vote, few investors would risk much and hence equity finance would be much more expensive. What we have in the political realm is analogous -- very few wealthy people are vested in the current government in any major way. So they think little of shifing jobs overseas, setting up tax havens, etc.

Another objection is that extremists would rule the system. In fact, extremists would essentially cancel each other out, just as they do in the marketplace. Maybe X says put all my money into national defense while Y says all mine into education, and so forth. It'll all come out in the wash, as they say. And of course most people won't be so extreme and interest groups (AARP, NRA, NAACP, etc.) would be entitled to propose allocations which anyone would be free to adopt if they see fit.

Voting on the basis of taxes paid would essentially take back the proverbial power of the purse, the power to spend our own money the way we see fit. Some current programs would be pared back, others would disappear for lack of funds. No just war or other important project, however, would die for lack of funding. And if the American people don't want to burden their children and grandchildren with debt they would have the power to pay what they owe instead of looking on helplessly as politicians borrow and spend to the hilt, year after year and decade after decade.

I'm Back in the Blogosphere!

Almost a year it has been since last I blogged.

I'm back, and with a vengeance, to support my new book One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe (New York: McGraw Hill, 2008) as well as a forthcoming project called FUBARNOMICS (that's trademarked, dawg!). One Nation Under Debt (ONUD) is already attracting considerable media attention, including a long interview on the Joey Reynolds Show [http://www.wor710.com/pages/46370.php], which you can listen to here:

In forthcoming blog posts, I will elaborate on the more controversial portions of ONUD as well as FUBARNOMICS to help stir debate.