One of the most disturbing aspects of the current budget and tax legislation process in Washington is the lack of creative thinking about long term problems. There is considerable political posturing in the Senate and House budget bills. Each chamber pretends to pay attention to the ongoing, record-breaking pattern of deficits and accompanying record borrowing that will be repaid by tax increases (or standard of living decreases) for future generations. They have proposed to cut back on programs like Medicaid, child support enforcement, and student loans--ones that generally have constitutents that are least able to organize to explain to Congress the dramatic impact of small changes in federal funding on their daily lives. The purported "deficit reduction" legislation, however, exists side-by-side with plans for huge new tax breaks that will reduce government revenues by considerably more billions than the budget legislation accounted for. In addition to various unneeded tax breaks for business (such as the extension of excess depreciation), the House proposes to extend the millionaires tax break on capital gains and dividend income. To top it off, the plans disregard the true costs of the continued occupation in Iraq--military/security spending these days is treated as entitlement funding by both the Pentagon and corporate contractors that feed at the Defense trough with the assistance of no-bid contracts and friends in high places.
All in all, it seems the budget and tax legislation processes as currently practiced are bankrupt of fresh ideas, heavy on short-sighted thinking, captured by special interests, and short on recognition of long-standing problems. Two issues cry out for government attention: universal access to education and health care, and infrastructure maintenance and rebuilding. The first is central to quality of life for all Americans and should be a primary focus of funding with taxpayer dollars. Without a healthy and educated citizenry, economic growth is unsustainable. We should be finding a way to endow each and every American with sufficient human capital to function as vigorous, entrepreneurial citizens in the twenty-first century; instead, we are throttling human capital development by funding lenders' huge profits rather than students' direct loans and giving pharmaceutical companies bigger tax cuts through more research and development expensing while providing inadequate funds for independent university research and expecting sick and poor Americans to pay more out of their meager incomes for what little health care we provide. While Europe and Japan invest in the future, the Bush tax cuts have starved the government of federal funds for vital infrastructure projects--to (re)build and protect schools and universities, fast intercity rail lines and more secure ports, better bridges and levees, and renewed Gulf marshes and heartland prairies.
One idea for dealing with the $1.6 trillion of delayed infrastructure projects in this country has been proposed by Warren Rudman and Feliz Rohatyn--a "national investment corporation" that could issue long-term bonds guaranteed by the federal government and oversee expenditures from trust funds for infrastructure projects. See their description of their proposal here.
While I think any such proposal would require considerable finetuning to ensure that the entity would not function as a mere conduit of government largesse to big corporate players (as the Defense and Pentagon contracting programs with Halliburton and Shaw have been), it may be that it is time for Congress to consider such an idea. Creating a longer-term outlook for expenditures and prioritization of needs should help reveal the bankruptcy of the tax-cut, "starve the government" rhetoric of the far right. As Rohatyn and Rudman note, nobody wants "big government" per se, whether liberal or conservative, but everybody (except the "starve the government" group) wants effective government that provides safety nets for the poor and security and public goods for us all.
We won't get that kind of effective government if we continue to finance it with money borrowed from foreign countries and future generations, in order to provide tax breaks to top quintile individuals and megacorporations. It's time to stop the giveaways, and start thinking responsibly about the future. Maybe the "national investment corporation" is one idea that should be considered.
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