American voters turned out in smaller numbers in the 2012 election than in 2008, but the result is largely the same. The United States will continue to have divided government, and the electorate remains closely divided. Neither party has sufficient control to pass its own agenda. In some past years, this close division would have promoted compromise, but ever fewer members of Congress populate the moderate middle where compromise occurs.
Yet, doing nothing beyond sloganeering is not an option. The fiscal cliff looms, threatening higher taxes, arbitrary spending cuts and an end to even sluggish economic growth. No one wants to drive over that cliff. Is fear of such an outcome enough to promote a search for middle and more solid ground?
Longer term, more “baby boomers” retire every year, and fewer workers remain to pay the ongoing costs of their pensions and health care. Those costs already have contributed mightily to the accumulation of $16 trillion in federal debt, and further annual budget deficits around one trillion dollars per year stretch as far as the eye can see.
We seem to have the proverbial irresistible force heading toward the immovable object. The obvious question is: Which will break first — the resolve not to compromise or the promise that each generation of Americans will do better than the one preceding it?
The Economist of Oct. 6-12 ran a “2012 Election Special Briefing” identifying the nation’s critical issues as “taxes, spending and the deficit.” Beyond these lie a host of important but secondary questions: “regulation, trade and job creation”; “health care”; “education”; “immigration”; “energy and the environment”; “foreign policy, defense and criminal justice”; and “social values.”
Given this lengthy list of contentious issues against an environment of divisive if not poisonous politics, perhaps the greatest challenge facing Washington is one of priorities. Unlikely to be able to find palatable solutions on most of these secondary fronts, perhaps it will finally concentrate on those few that are most critical, least emotional and potentially amenable to federal action.
A way forward/new path
The above subhead captures the sense that both parties and both presidential candidates want to move away from current circumstances, but they have substantially different visions of how to proceed with respect even to the big issues. Common ground, however, becomes difficult to find “bottoms up.” Each spending program or tax break has developed its own constituency and the organizational capacity to block change. It is interest groups, not just politicians, who have created Washington’s gridlock.
Perhaps this reality will force policymakers to step back from the specifics and try to find some consensus around general principles for governing in this hazardous environment. Agreement on some core ideas or principles might make it possible to forge alternatives that enough players from both sides can support to move the nation ahead.
No doubt, even principles can foster disagreements, but there must be a level of generality that would span a wide enough political spectrum to support a consensus yet specific enough to translate into actionable policies. Here are three for possible consideration.
First, federal spending should be for “public goods,” not private benefits. Governments exist to make those investments that require collective action and that provide broadly accessible gains. Governments err when they get too deeply into deciding outcomes or favoring some interests over others. Defense spending and infrastructure investments are two areas that meet this test and would make a good foundation for compromise.
Second, where federal spending — including both entitlements and “tax expenditures” — produces private benefits, those benefits should be “means-tested.” Government has little business piling additional rewards on winners. Private benefits, in other words, should decline and phase out as the beneficiary’s income rises. Public assistance to private citizens should be needs-based, not open-ended.
Third, public regulation should promote new ideas and options, not by choosing winners and losers but by ensuring a level playing field. Too often, regulation has reached beyond a desirable social goal to a level of intrusiveness that favored some providers over others — whether it was existing companies over new ones or current practices over new
ideas. Competition and entrepreneurship are likely to be more cost-effective than mandates and bureaucracies.
To these three principles could be added an implementation corollary. The role of decider should be separated from the role of provider. In a democracy, government is the most appropriate goal-setter. In a market economy, private actors usually are more cost-effective goal-achievers.
By now it is clear to readers that have come this far that this piece is less a prediction than a wish, but it is a worthy wish. Common goals, decided by governments but largely delivered by markets, might be a path forward out of gridlock and to a better future.