There is a new paradigm in the halls of power and the best description for it is “austerity”.
In the aftermath of the housing bubble and a near complete meltdown of the global financial system, Federal, State and City governments are faced with a sudden and sharp decline in tax revenues juxtaposed against a surge in prolonged unemployment and an increasing demand for government assistance.
With a sustained recovery still uncertain and debt loads at unprecedented levels, it is not surprising that lawmakers, governors and mayors are clamoring to reduce spending in government programs at every level, especially those categorized as ‘discretionary’. There is no denying it, the prize is bigger than just a balanced budget.
There is no easy answer to what ought to be cut or trimmed and slashing across the board blindly is not a sensible thing to do either. We have to bear in mind that the intent or objective of most government assistance programs are to help those who are most in need. Cutting funding for those programs would deprive the most needy of a lifeline. Whatever we do and however we do it, we must be extremely careful that it does not turn into a race to the bottom where the cuts will affect our country's competitiveness and future.
One target currently in focus is Education spending. While increasing class sizes in public schools will deliver savings in total teachers’ salaries paid, the possible long term impact cannot and must not be ignored. Public schools are where most of the country’s middle income and poorer half send their kids for an education. The cuts would further disadvantage the very ones who need a greater degree of attention to help them climb out of the reaches of poverty and to do better than the generation before them. The gap between these kids and those from well-to-do families who attend private schools will widen, increasing the wealth gap and social class distinction.
We cannot afford a race to the bottom where Education is concerned. Already, Americans kids lag in many areas when compared to test scores of students in other countries.
If we were to be honest about balancing the budget, we need to face the reality that we will be spending over a trillion dollars on defense in 2011. By choice or by default, we’ve become the world’s policemen and we are faced with the hefty costs as a consequence.
The war in Afghanistan is still on-going after nearly a decade and, although the bulk of our troops are out of Iraq, the costs there are continuing to mount. In 2007, the Congressional Budget Office issued an estimate that the total cost of the two wars will reach $2.4 trillion by 2017. Yet, there is and has been no “War Tax” to pay for those costs and that fact is conveniently swept under the carpet in the nation’s budget balancing exercise.
Returning to the topic of “austerity”, a New York times columnist wrote that any cut should ‘make everybody hurt’. I’m not sure how his mind works on that one – the rich do not depend on government help so any proposed cut won’t affect them negatively. If the rich is to share in the pain, they would have to contribute to the revenue side of the equation, i.e., pay more taxes.
Businesses have benefitted from lower wages and interest rates; executives and CEOs of banks have benefitted from the government bailout and low interest rates and are once again reaping six and seven digit bonuses. The value of their stocks and stock options have soared in the last two years. If we have to balance the budget, they should be the first in line to participate in the pain of getting the nation’s finances in order, and be proud of the fact that they did.
Sadly, the opportunity to let the Bush-era tax cuts lapse at the end of 2010 or to roll back cuts that benefitted the rich was swiftly put away for political expediency. As the 2010 mid-term elections have shown, politics is an expensive business and it takes a lot of money to get elected or re-elected. If you think that the amounts spent on political campaigns were indecent then, brace yourself for worse. The Supreme Court’s decision in Citizens United v. Federal Election Commission has, for all practical purposes, removed restrictions on how much corporations (or individuals using the cover of a corporate entity) may spend in advertising to back candidates who are favorable to their causes.
Here again is another potential race to the bottom that is most vile and undesirable. We are at the edge of a pit of cronyism, bribery and corruption. Take a deeper look at the social unrest sweeping across Egypt, Africa and the Arab nations and you will realize that the cause of the uprising is not Facebook or Twitter but the pent up frustrations of a people denied a dream. Ignoring the needs of the underclass while pampering to the rich does not bode well for the type of Democracy we claim to represent or are trying to promote in other parts of the world.
Any program of cut should be targeted at weeding out inefficiencies, mismanagement and waste. There are many systemic inefficiencies in almost all governmental departments. Archaic organizational structures, systems and procedures must be reexamined, eliminated or replaced and resources freed for more productive use. Paperwork, forms, files, processes, etc., must be streamlined and automated. Taxpayers should be encouraged to make suggestions on how the services they need may be delivered more efficiently or to file complaints regarding poor public employee attitudes. Unions should, by law, not be permitted to retaliate against management for taking disciplinary actions against employees for cause. Government departments should be made to bid for the work that they do against independent outside contractors to ensure that they remain competitive and cost efficient. If you have any doubts about how much can be saved, you’ll be reassured to know that the Congressional Budget Office report in 2007 estimated that the cost of mismanagement and waste in the Iraq war alone was some $10 billion.
“Austerity” is a nice word, as are the phrases “balancing the budget” or “living within our means” but they should not mean austerity for some and a ‘get-out-of-jail-free’ card for others.
