McClatchy-Tribune News Service, September 29, 2010
Happy New Year! Or, more accurately, Happy New Fiscal Year. Since the federal government's fiscal year ends on Sept. 30, fiscal 2010 has come to an end. Looking ahead to this coming year and the next, here's what you can expect: annual federal spending of about $30,000 per household and taxes of about $20,000.
The math is easy: just tote up aggregate spending and taxes and then divide by the number of households. The hard part is filling the gap - about $10,000 per household, largely covered these days by borrowing from China and others. And because the gap stretches into the future, we can't blame it solely on the recession.
No, the future gap comes from letting spending grow while keeping taxes low year after year. As a result, we've tied ourselves into a fiscal straightjacket and something has to give. Everyone, from the moderates to the crazies in each political party and elsewhere, knows that simple fact.
But what the leaders of the political parties also know - but can't publically admit - is that it's almost impossible to bridge that gap without asking almost all of us to live with reduced benefits or higher taxes or, most likely, both.
Such admissions are considered political dynamite, so don't expect to hear about these fiscal realities on the campaign trail. Democrats running for office will tell you that unless you're rich, you aren't responsible for getting us out of this fix, especially since we're still recovering from the recession. Their Republican opponents will tell you that they want to cut the deficit by reducing taxes even more than the Democrats will.
And we, well, we will beg for leadership. But our dirty little secret is that as voters we often punish real leaders. I met with a number of members of Congress from both political parties recently, and all complained that taking a stand for fiscal integrity virtually guarantees that the offended group will deluge their districts with negative advertising. Nobody on the other side will thank them for their courageous vote to protect the people - often our children - who stand to benefit in the long run.
All of this sounds pretty sour. And it is. Almost every pundit now predicts that the next two fiscal years will see increased gridlock between a more Republican Congress and our Democratic President. None says how or when the impasse will end.
But it will end one way or another because what can't continue won't. A new fiscal year is a time for new resolutions - for ourselves, not just for others - and to begin in earnest a great national debate about our future.
My suggestion for the opening gambit in this discussion of how to get our system of spending and taxing into reasonable balance is to start with what we are willing to give up ourselves. If you're rich, are you ready to pay estate tax on any assets you don't give to charity when you die? Or to pay tax rates as high as or higher than those of the middle class?
How about the great preponderance of Americans in the middle class? Are you willing to admit that you get most of government's benefits (as well as pay most of its taxes!) and that you're leaving the annual $10,000-per-household deficit for your kids to pay off? If you're in your 40s or 50s, would you be willing to give up that 20th or 21st year in government supported-retirement in future years if jobs were available? Or to lose some of your tax perks, exclusions and deductions?
And for at least some of those who are poorer, are you game for a little more quid-pro-quo - say, work subsidies in place of welfare?
If you're in one of those professions supported directly or indirectly by government programs - such as doctor, farmer, government worker, or economist - are you willing to live on a bit less from government? Or even to admit how dependent you and your profession are on government funding?
If you're in business, how wedded are you to all your business subsidies? Would you accept lower compensation in exchange for all those government guarantees that keep your industry afloat?
Maybe you don't like these options. And maybe you (like me) think that some changes should be adopted now, but phased in gradually as we pull out of this painful recession. Fine, come up with your own ideas for costing the government less than you now do. But at least resolve to declare what you - not others - must give up to help end our current national habit of spending as much as 50 percent more than gets collected in taxes.
Our political class largely follows. When they see a parade being organized, they fight to march in the front row. If they don't see a groundswell of voters willing to pay their share to right our current fiscal suicide trajectory, the politics of blame will never give way to the sanity and statesmanship of shared responsibility.
So what do you say? Isn't it time for a new year's resolution?