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    Beware of the Grand Bargain

    05/26/2011

    Democracy and Power 107:  Counting votes

    Successful … politicians are insecure and intimidated men. They advance politically only as they placate, appease, bribe, seduce, bamboozle or otherwise manage to manipulate the demanding and threatening elements in their constituencies.

    – Walter Lippmann (1889-1974), American Journalist and Author

    In a democracy the politician must favorably influence the majority of their voting constituents.  In all political decisions the politician calculates how many votes are gained by voting money spent on an interest group versus how many votes are lost.

    Beware of the Grand Bargain

    After years of spending and promising benefits to buy their constituents’ votes, the President and Congressional leaders are forced to acknowledge the debt.  Forced? Absolutely.  Wary world credit markets, alarmed citizens and the debt ceiling have compelled politicians to concede there is a problem.

    Reacting, the President, Senate Minority Leader McConnell, and Democrat and Republican leaders convened.  Senator Lindsey Graham (R- S.C) reports on the meeting. “He (McConnell) was telling the president, this is an opportunity. We’re willing to do a Tip O’Neill-Ronald Reagan moment here on entitlements. And that’s what the game is: reducing entitlement costs.”

    Entitlements – Social Security, Medicare and Medicaid - are the goodies given by Democrats and Republicans to their constituents.  Members of both parties bought their constituents votes by increasing the dole, without adequate taxes or savings to pay for the benefits.  Most egregious was a new entitlement in the Bush II era – prescription drug – voted for by Republicans and Democrats. Prescription drugs bought seniors votes at the expense of future generations.

    Now a financial crisis has forced a hard decision.  And McConnell seeks the grand bargain that cannot be used to either parties advantage.  Politico quotes McConnell:

    And when you do something big and difficult together, it’s not usable in the next election,” McConnell said. “If there is a grand bargain of some kind with the president of the United States, none of it will be usable for either side in next year’s election — none of it.”

    Revealing, McConnell, the President, and all politicians count votes – how many constituent votes are gained and lost on every vote a politician makes.  The politician strives to be elected and be a member of the majority – it is all about power.  Good public policy is a distant third, if that.

    Sad and harmful, the grand bargain between Reagan and O’Neill on Social Security was not good policy.  Social Security is broke and a major contributor to America’s debt.  As Charles Blahous related in Social Security: The Unfinished Work the grand bargain never intended to make Social Security solvent.  Thus, instead of kicking the can down the road, the last Social Security deal was merely a thirty year punt.

    These are very critical times for America, freedom, democracy and the world financial order.  Structural limitations on profligate politicians must be instituted...and soon.  FreedomWorks proposes the following structural requirements:

    • Don’t raise the debt ceiling, absent the following.
      • Don’t raise taxes.
      • Fully repeal Obamacare this year and cut spending by at $300 billion next year.
      • Pass a real Balanced Budget Amendment that requires a 2/3 vote to raise taxes and 3/5 vote to increase the debt.
      • Adopt budget control “with teeth” that shrink government to 18% of our economy in 10 years.

    All are needed immediately.

    As to budget control with teeth, make politicians personally liable for deficits rising above 18% of GDP.  As proposed in a previous post  

    A Constitutional amendment establishing an 18% spending limit to GDP will halt the detestable and dangerous debt creation by all politicians – Democrats and Republicans alike. 

    Alas, there must be an enforcement mechanism.  A politician, voting to exceed the fiscal gap limit (the 18% of GDP), should be personally liable for the amount of the debt.  In reality, a politician voting to exceed the debt would lose their personal fortunes.  Only when monetarily forced to respect a limitation will politicians be responsible.

    Only an indestructible spending limit will assure a fiscally sound government and advance democracy and self-government in America.