Wednesday, March 19, 2008

A People's Budget

If you are not happy with how Congress has performed over the last ten years, you are not alone. From the days of Clinton’s dotcom economy to today, approval ratings for the job Congress has done have plummeted from roughly 50% to as low as 18% (they now hover around between 20 and 30%, depending on the polling house). One of the reasons for this statistic is that an increasing number of people do not feel represented by Congress, whose priorities are out of touch with those of real America. At a time when the nation is spending billions and billions of dollars every year in Iraq, the government cannot find the money or the political will to provide satisfactory education for many children, or healthcare for 47 million uninsured citizens (including, again, millions of children). If it were up to me to come up with a plan to put Congress back on track, I’d say hit them where it hurts the most: the wallet. Transfer (some) spending power from Congress to “We The People.”

Your immediate reaction might be: hold on a second! Are you advocating more tax cuts, just like President Bush would? You know me better than that, I hope. I am suggesting that we should amend the Constitution of the United States to transfer (some of) the spending power from an obviously inadequate Congress to the People of the United States of America. After all, don’t politicians always tell us that no one knows how to spend hard-earned money more wisely than American families? Well, here’s the president’s and Congress’s opportunity to support in practice those principles they advocate in theory so often.

The “Why”

The Constitution of the United States of America delegates spending power to Congress, and Congress is more and more controlled by special interests more often than not in conflict with the people's best interest. If you want a measure of the control that money exerts on politics, you need to look no further than the current presidential campaign, where candidates have already raised (and spent) hundreds of millions of dollars.

When April 15th comes around, we file our tax returns and pay our taxes on the understanding that that money will be spent for the good of the Commons and of “We The People”. We expect infrastructure to be updated and maintained. We expect that the government will provide national defense. We expect a certain level of public education. We want everyone to have access to healthcare, for many good reasons, and not least because it provides protection for society against the spread of diseases. But what do we really get in return for our tax dollars? Tax breaks for energy companies who have just reaped the highest profits in the history of the world. Bridges to nowhere. Tax breaks for corporations located on tropical islands. Attempts to limit corporate liability for non economic damage awards or awards for pain and suffering to $250,000 per individual, in spite of ample evidence that the only way to change a corporation’s behavior when society has been hurt is to assess exemplary damages. Budget decisions made by representatives in name only are driven mostly by consideration of personal convenience for politicians and their corporate sponsors.

If we want to change the way business is transacted in Washington, we are up against gigantic odds. We will have to fight a system that has developed intricate ways to maintain, and to profit from, the status quo, and that has law (the Constitution of the United States and our legal system) on its side. It is an almost impossible fight, but it would not be the first almost impossible fight that The People have won. So was the fight of this nation’s Founding Fathers against the surging British Empire. Historic change is worth fighting for, no matter what the odds against it, and, as Booker T. Washington correctly said, “Nothing ever comes to one, that is worth having, except as a result of hard work.”

In this spirit, I propose that the Constitution of the United States should be amended to transfer (some of) the spending power from Congress to “We The People.” I believe that it is the only way to realign Congress with the People’s priorities, and to begin curbing corruption and financial mismanagement of taxpayers’ money.

The "How"

The financial year of the United States government starts every year on Oct 1st. The President must submit a budget to Congress between the first Monday in January and the first Monday in February. Currently, the President’s budget proposal is based on 100% of revenue. I propose that the budget submitted to Congress should cover only 80% of revenue, with the remaining 20% being set aside for popular allocation.

After the House and the Senate have approved the budget resolution, each taxpayer, including those who owe no tax because they do not meet necessary income levels, would be sent information about budget outlays by category/department (Commerce, Defense, Energy, Health and Human Services, etc.), as well as matching information for a number of prior years. This would give taxpayers a measure, at a glance, of the spending priorities set by Congress and the President.

With this information in hand, taxpayers would select a number of departments they would want to provide additional funding for (perhaps between three and five). This submission process could happen either electronically or by mail. The process would be optional. If a taxpayer chose not to reply, he would simply lose the opportunity to influence budget allocation.

When all returns are in, the popular 20% of the budget reserved for popular allocation would be divided among the various department and agencies in proportion to popular allocation results. So, for example, if 12% of respondents said that they wanted to increase education funding, 12% of the popular budget (20%) would be allocated to the Department of Education. If 20% of respondents said they want to allocate additional funds to health and human services, HHS would get 20% of the slice of the budget to be allocated by popular vote.

The trick would be to synchronize the popular allocation process with the current budgetary process (which would have to be modified). But, if there’s a will, there’s a way.

So now, let’s take a look at the foreseeable pros and cons.

Is this system too complicated?
This would be the first, foreseeable objection of those interested in preserving the status quo.

Perhaps it would be too complicated for some people. Perhaps some people would not care to answer. If so, their non-preference would simply be disregarded (which would have no influence on percentage totals). As stated earlier, the greatest difficulty would be to make the process fit in with the Congressional budget schedule, but that can be accomplished.

Why 20% (not more, not less)?
In deference to the empirical (if somewhat rough) rule that you achieve 80% of results with 20% of the effort, and viceversa. Also, to guarantee that all departments have an adequate level of minimum funding to function.

Would all taxpayers have this opportunity?
Only individuals. Corporations and special interest groups would not get the chance to interfere with the allocation process. They already do anyway, through lobbying. They get their say in the allocation of the 80% of the budget that is managed by Congress.

What are the risks of such a system?
Congress might be tempted to completely defund a department, the reasoning being that if people really care about certain departments or agencies, they will select them for additional funding. Since this is an all too real possibility, a provision must be added to Congressional budget funding that no department can lose (or gain) more than twice the rate of inflation (currently, for example, that would be two times roughly 3%, or 6% roughly).

Another potential risk comes from sudden emergencies (like 9/11) that might cause Congress to want to shift its budget allocation priorities. In such a case, it could go and get the money where it should anyway: by repealing tax cuts for the wealthiest individual and corporations. After all, the share of total federal receipts from corporations has dropped from 27% in the 50's to 9.6% of total revenues in the current decade. Also, the effective marginal tax rate for individuals (the highest tax rate paid on the “last dollar earned”) for the wealthiest 1% of the population is now only 39,6%, versus 51.5 in 1960. (In the 50’s it was 91%). Conversely, the share of national income owned by the top 1% (pdf) has gone from 8% in 1960 to 17% in 2000.

Call it a Patriots’ Tax, if you want. That would be the way for the richest people in the nation to give back at a time when the nation needs it most, and when the children of the have-nots are already fighting for their lives in foreign lands.

What effects might such a system have on our budget and on our spending?
People would have a bigger say in how Congress prioritizes expenses, and would benefit or suffer in direct proportion to their wishes. After Katrina, for example, the budget for the Department of Commerce, which includes NOAA (the National Oceanic and Atmospheric Administration), remained the same, and Congress cut the budget for the Department of Housing and Urban Development from 1.7 to 1.6% of the overall budget. They did so in spite of the destruction wreaked by nature and men on one of America’s most beloved cities. It is unthinkable that the people would have been as insensitive and as callous in allocating funds as Congress was, while the Administration was squandering billions of dollars in Iraq (where billions of dollars have literally gone unaccounted for).

What difference would it make?
Those who would make this argument cynically assume that Congress would find a way to simply misuse popularly allocated funds to different cronies and patrons. This may be a valid concern, but the real goal of the proposed system is not to prevent fraud or misuse of funds (the safeguard against such problems being criminal prosecution by state and federal attorneys). Rather, the proposed system seeks to produce more alignment between the popular will and the way Congress and the Administration allocate funds. It would teach them the value of prioritizing, since they would not have direct control on the full pie, but only of 80% of it.

Conclusion
Politicians are right when they tell us, albeit with entirely different goals, that there is power in controlling our own money. But their words are empty rhetoric, when their idea of people controlling their money is to send us $600 tax rebates to stimulate the economy. If we really want to change the way business is done in Washington, we have to get involved. Having control of a significant slice of the federal budget pie is a very tangible way to get involved. It would give us a place at the table our Founding Fathers built for us, and from which we have long been excluded. No proposed solution is a silver bullet, but we need to start somewhere.

3 comments:

Jeff Burton said...

There is so much laudable sentiment here that I will ignore the cant.

One thing I hope to teach you is that there is that we have much more in common than you might think. For instance, it is a trope of the left that the right defends and delights in subsidies to large corporations. We HATE them. It is politicians (of every ideological stripe I might add) who enthusiastically participate in the corrupt bargains struck over corporate hand-outs, trade barriers, and sweetheart regulatory shenanigans.

I admire the spirit of your proposal, but I fear it does not touch the inherent problem - the size of government. The bigger the carcass, the more flies you'll get.

Sirfab said...
This comment has been removed by the author.
Sirfab said...

Well, thanks Jeff.

Believe it or not, I am quite willing to learn (and I hope the same goes for you). I am sure that we share some convictions about the political system, so I take your post as a peace offering and as a fresh start.

In reality, I think that the size of government is not as much of an issue as you think it is. I understand your logic, and in some respects I agree, but your analogy ("the carcass") reflect your absolutely negative notion of the government.

In a civilized nation, the government sets the goals and the directions for the nation. For example (this are my priorities, I don't expect everybody to agree): everybody should have access to healthcare, and the government (us) should bear the cost. That does not mean that the government should also be the provider (or the sole provider). There is room for private companies. But the government (us) must set the rules so that everybody has access to the system, that the costs are shared and that service is extended to everyone regardless of their ability to pay. And, most importantly, the government should exercise a strong oversight function to make sure that the private sector does not exert undue influence on the system, or that it does not sacrifice access or service for profits.

Another example is the managing of private data. Some people have made the case that the last entity they want to handle their private information is a government agency, because they are distrustful of the government's motives. But the alternative is to let private companies handle private data, as if there were no inherent dangers in letting a private outfit handle, often carelessly, the most important data a person has. To add insult to injury, while there is some sort of recourse against the government for failing to protect sensitive information, free-marketers want to abolish or reduce to insignificance the liability that companies bear for damages incurred by individuals.

My view is that some things in life are necessities and that some are not. Private companies that operate in essential sectors should not be able to charge whatever they want (whatever the market can bear). Healthcare is a necessity. So is education. So are social services. And so are pharmaceuticals. If you want to be a player in those areas, in my opinion, you have to accept your social responsibility and understand that profits should not be without limit. And if no companies who want to play within the confines set by civil society, then the government, by necessity, must pick up the slack.

If, on the other hand, you are a car manufacturer, or a TV manufacturer, or a jet-ski manufacturer, then you can charge whatever you want (whatever the market shall bear) for the models you make, because, essentially, those products are a luxury, not a necessity.

Sure, I agree with conservatives that bureaucracies can become unwieldy and interested only in their own prosperity, with little or no regard for the function they were created to serve.
Where I disagree with most conservatives is that they fail to recognize that government has several legitimate roles in a modern civil society and that their recipe of unrestrained free market in all areas of life is the modern equivalent of the law of the jungle. That so many Christians have decided to side with free-marketers, thereby abdicating all concepts of social responsibility, and of being their brother's keeper, is one of the great mysteries we live with.

I know, it's a long post, but these are important matters.

Take care.

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