The voices of Urban Institute's researchers and staff
May 22, 2014

When it comes to governing, dead men are calling the shots

May 22, 2014

This spring, Institute Fellow Eugene Steuerle released Dead Men Ruling, a book that, according to former Secretary of the Treasury and former Director of White House National Economic Council Lawrence H. Summers, “moves beyond the urgent to the truly important as it seeks to provide a broad theory of our [federal budget] problems and to chart a forward course.”

Steuerle recently discussed the themes of Dead Men Ruling with GailFosler.com’s Rebecca Rolfes. An abridged version of their conversation is below; for the full text, visit GailFosler.com.

Dead Men Ruling seems like an odd title for a discussion of American governance and budget challenges.

The modern budget debate is almost entirely defeatist, yet I want to convince voters and their representatives that we live in an age of extraordinary possibility. This is not an age of austerity, yet we tie a straightjacket around ourselves that stops us from reviewing, revising, and reinventing policies crafted by now dead or retired legislators decades ago.

And, I might add, our problem isn’t a lack of resources. We’re a richer nation than we were before the recession. Income levels are higher than at any point in the past. We benefit from many things that our ancestors would never have dreamed of, from healthcare to telecommunications to better cars to fresh food even in wintertime. Our can-do confidence has always led us forward, and it needs to be restored to establish a virtuous cycle of new creativity and growth.

And “dead men” get in the way?

That’s correct. Today’s government is constructed and constricted by programs and policies that were designed by men (women, too, but they were largely excluded) decades ago, many of whom are not with us today. Many of these programs were well-designed to improve the economic and social welfare of Americans at the time they were created and some years into the future. But the world has moved on, and these programs have not.

For the first time in American history, we have long-term spending obligations that cost more than all the revenues we could ever take in. These long-run fiscal imbalances arise from long-standing programs (including tax subsidies) that in many cases are legally required to grow forever faster than the economy—which, of course, is impossible.

This is a new disease. The deficit is merely a symptom, not the disease. The question is what to do when you make so many promises that they dominate all the possibilities going forward.

Imagine if a business or household signed today all the contracts for all the transactions it will make in the next 100 years. All of us need the flexibility to respond to unforeseen events and to make new investments or purchases of items we might have only dreamed about before (think cell phones or robots or, for an aging population, long-term care)—but you can’t do that if the money is already spent.

You say that the “disease” from which we suffer is “the effort of both political parties to control the future.” Isn’t that what political parties have always done?

There is always an effort to invest today so tomorrow is better. You build a road, put in a post office, and hope the return on that investment will pay off in the future. Certainly, some discretionary spending can also build obligations for the future. You have to maintain the road, for instance.

But there’s a big difference between that and determining yesterday or today how all the money will be spent in the future. Traditionally, you allocated resources you had on hand and waited for the future to decide how to allocate the new resources provided by economic growth. Moreover, resources would be freed up when the past commitments actually solved the problems to which they were addressed. Thus, most spending wasn’t permanent and it didn’t grow automatically.

These problems seem so obvious. Why can’t we move toward more constructive solutions?

We can’t move forward in part because there is almost no budget flexibility left at all—dead men are ruling. Although today’s politicians recognize that this situation can’t go on, neither party has figured out how to move forward politically. In fact, the extent to which we have obligated the future gets in the way of the two parties working together for constructive change because they have no resources to work with and they fear that if you lead, you lose.

Once we take this straightjacket off ourselves, we can move from a vicious to a virtuous cycle. My motivation in writing this book is to show how we have limited our natural instinct to innovate.

Engaging full-bore in this massive restructuring process would not only enable politicians to retain much of the economic and social value of today’s programs, but also to move to what I consider a real 21st century agenda. This would include doing for our children in this century what we were able to do for the elderly in the last century, building a modern infrastructure, and moving forward with an opportunity and mobility agenda to which both parties now provide verbal, but not real, support.

I think there are real leaders out there who can peer into the future and help move us in this direction. I certainly know that change is inevitable since what we are doing is unsustainable. We stand with our backs to an ocean of possibilities. My simple hope is that we turn around and wonder how we ever became so transfixed on our past and not the future journey.

SHARE THIS PAGE

As an organization, the Urban Institute does not take positions on issues. Experts are independent and empowered to share their evidence-based views and recommendations shaped by research.