But we actually NEED those government services

The Thinker by Rodin

It’s hard to believe, but there are senators and congressional representatives who actually want to be in the Supercongress.

The Supercongress (otherwise known as the Joint Select Committee on Deficit Reduction) was a creation of recent legislation signed into law to raise the federal debt ceiling. It will consist of twelve members, six from the House and six from the Senate, with each house contributing three Republicans and Democrats each, appointed by their majority and minority leaders. The Supercongress gets to write a bill that will realize at least $1.5 trillion in deficit reduction over ten years. The law will be voted on by each house and only a simple majority is required for passage. No amendments or filibusters are allowed. If their recommendations are not voted into law and signed by the president, the “one size fits all” meat cleaver comes out, chopping most programs including defense by large amounts, exempting only some of the biggest entitlements.

It’s clear that the legislation authorizing an extension of the federal debt ceiling did not solve our deficit problem. That’s the job of the Supercongress: twelve of 535 people in Congress, required to seek compromise that so far has proven elusive. By law, the committee must have its recommendations by November 23, 2011 and both houses must vote on it by December 23, 2011.

In the field of project management, we have use a term called the triple constraint. Every project is constrained by three forces: cost, scope and schedule. If you want to manage a project properly, you must adjust these factors intelligently or the project will fail to meet its objectives of delivering a project on time and within cost. The federal government has its own triple constraints: taxes, deficits and programs. In the past, no one wanted to raise taxes and no one wanted services cut, so deficits expanded. Now deficits cannot expand, at least beyond the current debt ceiling, without new legislation. This means that either taxes have to rise, programs must be cut, or some combination of the above.

Republicans think they are being principled by saying they will not allow taxes or the deficit to rise, meaning all deficit reduction will come from program cuts. Members of the new Supercongress are already nervous. Some of them are carefully qualifying their conditions. For example, some Republicans are saying they might allow revenues to increase by “closing loopholes”, as if these were not tax increases. This scenario is unlikely in any event because Republicans will be pressured by their party not to permit any tax increases. Even if some new taxes become part of the bargain, it won’t begin to be enough to close the deficit gap. As much as Republicans would like to get rid of the EPA and Education Departments, Democrats will ensure these agencies would survive. In any event, these programs are tiny compared to entitlements. Which means the only way to realize savings will be to cut entitlements like Medicare, Medicaid and Social Security. In short, the committee and Congress would have to vote in favor of a package guaranteed to cheese off the voting public come November 2012.

A few outcomes can be predicted with reasonable certainty:

  • Those Republicans and Tea Partiers dead set against raising both taxes and the debt ceiling will pine for the good old days when they would just charge the difference, and wonder why they were so brainless to press the issue when they will take the political fallout. Most of them will be thrown out of office if they follow through on their convictions. Their hands have not yet been pressed to the hot stove yet. When it is, they will realize that America has an important message for them: Don’t you dare mess with my Social Security and Medicare! They will learn something amazing: a vocal minority called The Tea Party does not represent Americans at large.
  • You don’t mess with American business either. American business depends as much on the federal dole as do Social Security and Medicare recipients. Take, for example, our bloated defense industry. Do you think they are going to go on a diet without expending massive amounts of capital to ensure they are exempted? Granted, a lot of defense spending is wasted, purchasing armaments, equipment and services that our own defense secretary says we don’t need. But that money still goes somewhere. It feeds a huge array of middle class defense and technology workers, and keeps afloat companies like Northrup Grumman, Boeing and Unisys. It pays for lavish salaries for their CEOs, provides for their corporate jets and their personal staffs. Take away their defense business and for all practical purposes they go bankrupt. Since defense spending still be severely curtailed with automatic cuts, they would be dramatically impacted. Expect a whole lot of hullaballoo if the tail does not continue to wag the dog.
  • But all that wailing will be nothing compared to heat Congress will get from the soldiers if their retirement benefits are scaled back and their health care costs go through the roof. They already work at substandard wages, often 24/7 in battle zones, and put their lives on the line for our freedom. They do so for patriotic reasons but also because the military offers a fair deal: low pay now for retiring at age 40 on half pay and virtually no health care costs. This is some compensation for the hassle they endure while in the military. They are going to go ballistic. Weren’t these same politicians spouting platitudes about supporting the troops?
  • When push comes to shove, which will happen sometime after whatever laws gets passed or not, future congresses are going to do the only sensible thing they can do in this mess to minimize the political impact: raise taxes, mostly on those who will inflict the lowest political pain. Eventually Congress will figure out this will be the rich people. In addition, poor people will continue to take it on the chin. If any entitlement really becomes a shadow of itself, it will be Medicaid. In the eyes of Congress, the poor always have been and will be second class citizens.

Republicans operate under the illusion that government is a massively wasteful institution. It is certainly bloated, but mostly out of necessity. Major problems like income security and health care in old age do not happen due to the genius of the private sector. Had such solutions existed, none of these programs would have come into existence in the first place.

The reality is the world we live in is incredibly complex, and we need a government to ensure it all works in the first place. Abolishing the EPA does not solve the pollution problem. Getting rid of the Education Department will not make American children better educated. What we need is greater value from the services we already have. We need to control the costs of entitlements like Medicare so people get more benefit. Congress is supposed to look at programs like Medicare and say, “This fee for service thing is too costly. We need to do it more intelligently and pay for outcomes instead.” That’s the real job Congress was elected to do, they just don’t realize it yet. They will after the wreckage of the 2012 election.

Congress can start with a few of my suggestions.

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