A question of balance

Paul Jacob

1/27/2008 12:00:04 AM - Paul Jacob

A leading candidate for the presidency said recently, and I quote, “I want to get back to the appropriate balance of power between government and the market.”

Though I agree with the statement, the candidate’s meaning is not the meaning I would intend were I saying it.

Government has gotten way out of whack with markets. But contrary to the candidate’s point, there’s too much government, which has grown ferociously in the past seven years. It’s leaching off of private wealth at far too fast a rate. And its tentacles inhibit too much growth.

The candidate in question, however, argued that we need more government taking a more active role, in part to address the “excesses” of the Bush Administration.

Puzzling. The excesses of the Bush administration have been in the area of government growth. Too much spending, too few vetoes.

Example? A new entitlement program, Medicare D, devised and pushed by the administration, now threatens to further destabilize our already over-regulated, over-subsidized health care system.

And, in all the seven years of supposedly compassionate conservative governance, I have no recollection of the administration pushing to repeal the vast array of burdensome and distorting regulations that have so crippled our medical care delivery system. The president has let government grow, and has done almost nothing to peal away the parts of government that are hurting us.

Indeed, the biggest economic threat looming over the nation is the instability of Social Security. Politicians have, over the years, stretched a disturbingly Ponzi-like pension system to the breaking point, repeatedly increasing the FICA contributions to such an extent that the system can no longer be called a safety net system, but a very ill-thought-out socialized pension plan — with no investment.

Now, it’s true, the president had, on occasions, trotted out a quasi-privatization plan. His goal — get people out of a bad system — was good, so I tried to support it at the time. But it went nowhere, in some part because of fears conjured up by the Candidate in Question. Worse yet, the reform did seem not to address some key stability issues. So the administration abandoned the reform.

The nation seemed to sigh a breath of relief, forgetting that we were still all speeding towards Doomsday. Put off till tomorrow that which can . . . I guess that’s the motto of modern-day politics.

And as if to balance out the fizzled-out Social Security reform, the Bush Administration offered a very different kind of balance: it pushed through its brand-new entitlement program.

We need to take the idea of balance seriously. If you propose to spend, you should cover the spending. Medicare D doesn’t do that. Social Security doesn’t do that. And it is balance that we need. The Bush Administration did the very opposite of support balance during its reign, now entering its last (thank goodness! thank term limits!) year.

Indeed, though the president has talked nicely about balancing budgets and cutting back on pork, he’s done precious little for either cause. When, last year, Bush explained that most earmarks for pork spending were not legally placed in the legislation Congress votes on and he signs, he could have simply not spent the money, as he contemplated doing this last December.

But he didn’t, and it looks like he’s turning back on that reform, too.

Thankfully, Bush has not pushed every bit of the spending he has proposed. The Manned Mars Mission, broached years ago, has gone nowhere — precisely the destination for that.

Unfortunately, he has signed into law regulations that allegedly “balance” the market’s problems. In the wake of the Enron fiasco, Congress pushed through — and the president eagerly signed — one of the most idiotic regulatory packages in recent history. Many, many economists have noted its absurdities.

But politicians rarely look for real balance; they tout fake balance, a balance of mere intentions. Conscientious follow-through? Too much bother.

In the Enron case, however, the key trouble was with the company’s fraudulent accounting system. This was the seed from which most of the company’s other frauds blossomed. And that system? It was approved by government regulators, tasked with preventing just such frauds.

One wonders: Why do politicians so rarely review existing institutions, to see why they go wrong, rather than plunge willy-nilly ahead to create yet more regulations and further expanses of bureaucracy?

Of course, the candidate in question did try to make a larger point: The candidate focused on Bush era tax relief, which did favor those earning higher incomes and thus paying higher taxes. I admit, balance was not the exact goal here. Funny, though, how when talking about “imbalance” in tax cuts, Democrats so rarely suggest cutting the more regressive federal taxes. Nor do they mention the rates at which the pre-cut income taxes hit the wealthy.

When rates are progressive, a cutting of marginal rates at the higher end might be seen to restore some flatness, no? Is that a kind of balance worth talking about? (True flatness — true balance in this regard — engenders little interest among politicians for one very good reason: much of their job lies in negotiating a never-ending series of tweaks of the tax code, for which they get paid by special interest groups. Establish flat rates and stick to it? That might put politicians out of their chief funding source!)

But tax cuts are not the chief problem with government today. Indeed, it’s mostly a red (or at least very pink) herring.

Over-spending by Congress is the chief problem.

As is weakness in presidential leadership to fight government imbalance.

So, to sum up: Balance? Good. When it comes to budgets and programs, it is absolutely necessary.

But adding on more government to mess up where government has failed before? Bad. Very bad. The last thing we need.

Just like the last thing we need is a candidate as foolish as the candidate I have quoted.