Tag: deficits

Hit Them Where it Hurts

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[quote]As Congress finds new and ever more inventive ways to spend money (both real money and imaginary money) more and more voters are waking up to find themselves becoming fiscal conservatives. First off, I must say that there are not nearly enough of us among the voters and secondly I feel compelled to add that we would be in a much better position to be taken seriously if there had been many more converts to the cause while Bush was still in office.

Earlier this week a friend of mine asked for my thoughts on an idea he had to slow and/or reverse the growth in government spending. (I feel compelled to state that said friend was awake to this issue well before Obama was elected – lest anyone mistakenly think that he just woke up to this in the last week.) His idea consists of two parts and boils down to this:

Have states set the wages for their Congressional delegation.

Have each member of Congress pay for 0.00001% of the federal budget out of their own paychecks. (That’s one out of 10 Million dollars for each member of Congress.)

My initial response was to point out the fact that it would take a Constitutional amendment to make the first part legal due to the provisions of Article I Section 6 that their salaries be paid out of the U.S. treasury (not that state money is not already mostly from the U.S. Treasury).

After thinking about the proposal more I recognize that it only works if both parts are enacted because if only the second portion is enacted it would only take about 30 minutes for the House to pass emergency legislation (or simply attach it to that proposal if they want to be efficient) in which the calculation for Congressional salaries is changed from it’s current “$170,000 plus an automatic annual cost of living increase” to “0.000012% of that year’s annual budget plus $169,999.99 plus an automatic annual cost of living increase.”

The real kernel of the idea was to hit Congress in the wallet – where it hurts – for the egregious budgets they pass from year to year like kidney stones in the national economy. For myself I have long believed that we should make congress feel the pain of their overspending by having them be responsible for a portion of their deficit spending – say 3 times whatever portion of their budget is financed by deficits. (In other words, if 15% of the budget is deficit spending then members of Congress lose 45% of their salaries – and probably the same portion of their budget for staffers etc. for the year – to help offset their budget.) This only works if there are no exceptions (“oops, we had an emergency and had to overspend – but our regular spending didn’t include a deficit so we should not pay a penalty.”) On the other hand they should also receive some incentive for wise management by offering a bonus of one tenth of any percentage surplus they run for their personal salaries. (That would be, if 10% of revenues were in excess of the annual budget they would get a 1% bonus on their salary for the year.)

Theoretically this would have the downside of encouraging them to raise taxes to cover their spending priorities thus causing citizens to bear a greater cost for their government. Personally I think that would be beneficial because people would spend less time clamoring for more government handouts because they would almost universally feel the effects of any spending increases. Such a change should also have the side effect of having people be more engaged in the process of removing representatives who ignore them because they would be more likely to feel the effects of whatever votes their elected officials cast.

Tags change congress, connections, deficits, ideas, money, taxes

National

Banks Giving Back

While it is good news that 10 banks will be allowed to repay billions in bailout funds I would be much more excited if I didn’t already know what was likely to happen as a result.

The banks were deemed strong enough to leave the Troubled Asset Relief Program, or TARP, after months of lobbying and strong performances on recent stress tests. The banks are expected to return about $68.3 billion to the Treasury Department, more than double the administration’s initial estimate of about $25 billion in funds to be returned this year. The timetable is also earlier than government officials originally intended.

. . .

The $68.3 billion represents about a quarter of the TARP money given to banks.

That last figure tells me that we still have over $200 billion illegally given by our government to our banking system.

My lack of enthusiasm for this news comes from two concerns. First, the administration will use this news as evidence that the bailouts are working better/faster than expected. The truth is that the banks have been working furiously to find a way to get rid of that money ever since they read the regulations that came with it. Second, having that money will be used as a way to help fund other illegal activities by the federal government such as propping up the UAW by buying GM (the money being returned covers everything we’ve put into GM so far) and even worse than that is the possibility that some smart government people might take the news as an excuse to say, “hey, we have $68 billion more than we expected,” and then go on to fund another $58 billion in projects that they did not dare to fund previously. That’s like buying a $500 LCD monitor when you can only afford $100 and then buying an $80 printer when the $100 rebate arrives early.

So the banks are giving back more and earlier – that’s good for them (and “good for them” is what they are paid to do) but that does not mean there’s a chance that the government will start giving back or being financially responsible in any way.

Update @1:20pm: Here are a few words from the president today confirming my claim that the administration would use this to show that the bailouts are working better than planned:

Several financial institutions are set to pay back $68 billion to taxpayers. And while we know that we will not escape the worst financial crisis in decades without some losses to taxpayers, it’s worth noting that in the first round of repayments from these companies the government has actually turned a profit.

. . . We’re restoring funds to the Treasury where they’ll be available to safeguard against continuing risks to financial stability. And as this money is returned, we’ll see our national debt lessened by $68 billion — billions of dollars that this generation will not have to borrow and future generations will not have to repay.

He says that the money is being returned to the treasury, but I’m confident it will find a way to sneak out again like a good rebellious teenager despite the president’s best efforts to keep it at home where it belongs. 😉

Tags bailout, deficits, government, New York Times

culture National

Political Action vs Reaction

Post author By David
Post date April 15, 2009
15 Comments on Political Action vs Reaction

It’s tax day and I doubt anybody who reads this has not heard in advance about the many "Tea Party" events that have been planned around the country for today. Ive been hearing about them from various sources for months and I have been conflicted in my feelings related to such activities. From a constitutional perspective we have a first amendment right to free speech and peaceable assembly so barring any violence there is no question as to the legality of these events. My conflict is in the way the events are being promoted.

Many of the public figures who are promoting these events paint them as a kind of legitimate political action. Among those who really care about the issues of constitutionally limited government and perpetual government deficit spending there are many, such as myself, who recognize that these tea parties have no possibility of bringing about real political results – they are a grand publicity stunt played off of the frustrations of one segment of the population. As such they are merely a political reaction and political reactions are easy to spin. Promoters are spinning this as an argument against larger government and deficit spending. Detractors are spinning it as a bunch of ridiculous anti-Obama rallies.

Real political action, in contrast to political reactions, is very difficult to spin. It takes much more time and effort than simply gathering some press coverage and getting people to show up one day carrying signs and shouting in megaphones. Real political action, for those who are interested, would include regularly seeking information on issues of interest to you. It would include attending county party organizing conventions. As Rob Miller so aptly said, "If you believe that you have something to contribute to the American experience, you should come to a county convention." In Davis County that would be this Saturday (4/18) for both Democrats and Republicans. If you really want to make a difference you should be looking to be a delegate to county and state party conventions (or even national conventions if you are so inclined). It means participating in those caucus meetings and conventions where parties are organized and candidates are chosen. It means not letting your party get away with ignoring its principles in the name of political expedience. (That does not preclude the possibility of compromise, but it does reject the argument that all of politics is compromise.)

Thankfully today I have come to my own resolution regarding that internal conflict. Real political action is what this country desperately needs from many more people of all political persuasions. We need people who are willing to put in the work and engage in civil debate even when the debate gets spirited. While political reactions do not qualify as real, effective political action they can serve as a first step for those who have not participated in real political action before. I hope that whatever else happens with the tea party events we will see many among the attendees who will start to take part in lasting political action.

Tags civic participation, deficits, Obama, taxes