Is Government Broken or Not?

  • Tuesday, December 4, 2012

As citizens, we expect our elected representatives in Washington, at the State level and locally to address problems which impact our daily lives. Unfortunately, every time we turn on the TV news or read our daily paper it appears those representing us in Washington are not fixing the problems which impact our daily lives but appear more intent on ignoring the factual problems we face as a nation. More troubling is that they make statements which are at odds with real statistical data and unrealistic in their content at best.

Some facts help to clarify the problem.

Fact: Over the past four years, the Obama administration has spent $650 billion more than the Congressional Budget Office (CBO) forecasted in January 2009.

Fact: This year's Federal revenues of $2.5 trillion match the revenues for the Federal government in 2008. Seems revenue is not the issue.

Fact: Spending is now $3.5 trillion per year, up 20% from 2008.

Fact: If the net worth of the richest 400 individuals as identified by Forbes magazine were totally confiscated and given to the Federal government, it would only cover this year's spending with less than 25% left over for next year.

Fact: Medicare's unfunded liability is $82 trillion; Social Security's unfunded liability is in the mid $30 trillion; and Medicaid's unfunded liability is almost equal to Social Security. Not small numbers to say the least.

Fact: While we face a very weak economic recovery and a job creation rate which continues to put us further behind, our corporate tax rate is the highest of the major world economies and is hardly a prescription to encourage corporate hiring and growth. As to capital gains tax rates, even Bill Clinton lowered them to spur economic activity and it worked.

It is clear if one is serious about the factual situation confronting our nation, with a $16 trillion national debt and projections for it to grow in the near term to over $20 trillion, we cannot afford the government we have and we cannot keep the commitments made by previous and current administrations because it is a simple fact that there is not enough money to fund all these promises.

Why then can we not seem to get out of this morass?

There are five basic tendencies in our government operations that have led us to the failure of our government to address problems:

1. Our leaders wait until they are forced to act and then often, it is far too late. The solutions cause great harm rather than solve the problem at hand.

2. Our policy makers systematically ignore long-run costs while providing short-term benefits and in current jargon “kick the can down the road.”

3. Our leaders continue to try to circumvent the basic laws of economics and continue to do so with unsuccessful outcomes and more costs … political pandering over and over again.

4. Policy makers choose to ignore the simplest laws of arithmetic by selectively counting some of the effects of programs while ignoring and excluding others. This is perpetuated through a static analysis of data rather than dynamic analysis of the same data. Most economists would argue that dynamic analysis is more appropriate and leads to better factual outcomes upon which to base policy.

5. We tend to react to events and enact programs or spend money in the face of a crisis which leads to unintended consequences that are negative to the citizens of a nation. These are all done under the banner of “look at us, we are doing something.”

The bottom line is as a nation, we are certainly not short of serious societal problems, but we appear unable to be able to admit the cause of those problems, recognize the seriousness of them and most importantly be honest about the solutions which will be required before we become the next Greece.

Lynn Mueller is a veteran Republican campaign consultant who has joined Swatzel Strategies. His bi-monthly column in the Georgetown Times focuses on economics and politics.

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