I also haven’t weighed in on the “tea party” phenomenon, the anti-tax protests being held all over the country, largely because I haven’t found the subject particularly interesting. It’s easy to be against taxes. I’d like to know what the protestors’ alternative is. As my colleague at OTB, Alex Knapp, pointed out a few days ago, 80% of federal spending is on Social Security, Medicare/Medicaid, defense, veteran’s benefits, and interest on the debt. Making material cuts in that remaining 20% would severely impair functions of government that practically everybody believes are necessary including inspecting food, approving pharmaceuticals, and running the federal courts.
However many protestors there are these protests have little or no significance unless they can transmogrify into a political movement that can deliver votes, particularly in toss-up districts. If they can elect a candidate, particularly before the midterm elections, there’s a possibility they’ll exert some real influence in the midterms. If no, they’re irrelevant.
Dave –
The Tea Party phenomenon may turn out be mostly symbolic, but that is a quite distinct argument from the ability to control government expenditures. The Tea Party phenomenon is an emotional backlash to the prostrate position taken by pols and govt apologists wrt out of control expenditures.
Both Alex and Bernard Finel make the same argument: the vast majority of government spending is “mandatory” and “simply cannot be reduced.” Or, more properly, the rate of growth cannot be reduced. “So, all you sheep, give up and just pay up.”
I have had managers at some of my companies who made the same arguments. We have a term for those guys: “ex-managers.” And then, as if by magic, we recruit guys who in fact make it happen. We have a term for those guys: “real and competant managers.”
I know Alex and Bernard are smart guys. I see their academic accomplishments and read their stuff. But managers of organizations they are decidedly not. They are staff specialists. This “it just can’t be done, so we have to tax and pay” mentality is awful.
Critics throw the challenge at you: “so what would you cut?” As if this is to be some sort of show stopper. But this is just sophomoric. These people never consider the administrative costs of delivering what most would agree are essential (or at least promised) services. And those expenses are considerable. (Not to mention alternative delivery systems or approaches)
In organizations I am familiar with dramatic changes are available and are achieved routinely……Because of neccessity. (In fact, its one of the very things that we do as PE buyers. We change the paradigm.) Families figure it out (or go bust). Businesses figure it out (or go bust). But government? Nope. Its the only organization I know of where the word “budget” does not apply. “It just can’t be done” is the mantra….So here’s another tax hike. And the apologists meekly follow. (You live here in Illinois. Do you believe, for example, Todd Stroger’s organization is a model of efficiency, and isn’t all larded up??!!??)
This willingness to declare defeat is what the Tea Partyers are protesting. Does this have legs? I don’t know. But I hope we can finally have a real debate about what is doable and what is not in government. If not, I guess we can follow the Eloi model of Alex and Bernard.
And we know how that works out……
My view on government is that there was a window in the late 90’s when what governments should have done was economize and work out better ways to deliver more and better services with fewer resources. That’s not what they did. They went on a spending spree.
Now it’s darned hard to justify the sorts of investments that could make doing more with less possible and it’s politically far too painful for legislators (particularly Democratic legislators) to vote for cutting state payrolls.
I’ve favored means-testing Social Security, Medicare, and every other program that involves transfer payments for more than a quarter century. I still believe in it but I see little prospect of it coming to pass.
I’d also like to see cuts in defense spending but not the sort of cuts that are being put forward. I think we should be doing less.
The dog in the manger right now is healthcare. Cut healthcare spending and it solves the budgetary problems at every level. I think the approach being put forward by the Obama Administration is wishful thinking. Unfortunately, the competing approaches being put forward are wishful thinking, too.
The real solution is to re-engineer the way healthcare services are delivered and sharply increase the supply of healthcare. IMO the movement in that direction is slow to nonexistent.
Dave –
A few observations.
“My view on government is that there was a window in the late 90’s…… They went on a spending spree.”
I’m not sure I understand the focus on the late 90’s. We know that this was an unsustainable econimic period based upon bubbles of the RE, stock market and dot.com variety. Why then vs anytime? In any event, a spending spree was had, as the earmark phenomenon took hold.
“I’ve favored means-testing Social Security, Medicare, and every other program that involves transfer payments……….”
I’d love to see that happen, but probably for different reasons. This would expose these programs for what they are: straight out welfare programs, welfare programs cleverly disguised as insurance programs to gain political support. I suspect the resulting loss of voter support would kill them.
“I’d also like to see cuts in defense spending but not the sort of cuts that are being put forward. I think we should be doing less.”
I’m not competant to know what is the “right” amount of defense spending. I just know it is the only material category of government spending that behaves appropriately, scaling down as a pct of GDP over time. Yet it is the favorite whipping boy of the left.
“Cut healthcare spending and it solves the budgetary problems at every level.”
Indeed, but the demographic timing/nature of health care expenditure need really means that those of us who have been screaming bloody murder for years about the structural flaws in these programs (all along being called heartless) indicates how truly irresponsible the advocates and thoughtless (not to name names….. Bernard…….) have been.
“I think the approach being put forward by the Obama Administration is wishful thinking. Unfortunately, the competing approaches being put forward are wishful thinking, too.
The real solution is to re-engineer the way healthcare services are delivered and sharply increase the supply of healthcare.”
Just as in higher education, price has been removed from the consumer’s demand equation. Is it any wonder college education (and professor salaries) have escalated once govt subsidized the expenditure?? Same in health care. And I don’t think there is ghost of a chance of increasing supply. Already people are abandoning the field for obvious and well documented reasons.
Try this, heartless as it seems. For every doctor visit a minimum $100 deductible is required of the patient. For every hospitalization make it $1000. No matter the insurance program.
I’ll bet you would be amazed at the demand change. And those deductibles won’t break the consumer, especially after you figure in the cost of the premiums they pay because of inflated health care costs. But until the costs are explicit, and price can do what it does in an economy, forgetaboutit.
My grandfather was a doctor, my father a doctor, an uncle a dentist. Years and years ago, and to a man, they told me exactly what would happen to health care costs with third party payers. None were economists. But all understood the dynamic. My father once told me that 2/3rds of the people who came to his office were not sick.
But when health care is “free” you would have to be a think tank academic to not understand what will happen to expenditures.
Many state and local governments were flush at that point—they had a sudden influx of money. They also weren’t under the gun to provide additional services in the way they are now.
Understood.
Drew:
I have actually run organizations… but that is neither here nor there.
It is not an issue of managerial skill. It is a question of political possibilities.
I would like to means-test Social Security as well. I have trouble seeing how you build a political coalition to do that, however. There are some things that can’t easily be done, no matter how strong willed the leader is.
Bush was a tremendously gutsy president, willing to really spend a ton of political capital on issues he cared about. in 2005, newly reelected and with control of both houses of Congress, he still could not pass his Social Security plan… and his plan was less divisive in theory than means-testing.
So, is Bush also just an unexperienced academic like me and Alex? What did you learn from that experience? Or how about Clinton’s failure at health care reform despite controlling both Houses of Congress. He ran on health care reform, won, made it a high profile initiative… and it failed.
There are some things that are just, essentially politically impossible. And when that is the case, you have to pay your bills.