Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Practice Management > Building Your Business > Leadership

Congress has to toughen up to get a budget passed

Your article was successfully shared with the contacts you provided.

(Bloomberg View) — Quick question for you: What’s the optimal amount of corruption in politics?

If you said “zero,” then I’m sorry. You do not win the prize. (It was a year’s supply of Mr. Clean Magic Erasers, just so you know.)

The optimal amount of corruption in any system is almost never zero, and that goes double for politics.

We shouldn’t try to get corruption to zero because fighting corruption is costly. Think, for example, of government contracting, which mindlessly awards contracts to the low bidder, as if quality and reliability were irrelevant considerations.

This sloppiness inevitably adds time and costs. Or the various requirements we impose on civil service workers to make sure that not one of them enjoys so much as a stray sandwich on the taxpayer dime … and thereby ensure that normal business practices, like sitting down for an inexpensive group meal to discuss something, are almost comically difficult to arrange.

All these procedural rules make government less effective and more costly. My father, who was the head of a trade association for contractors on heavy infrastructure projects, estimates that adding federal money to a project adds about five years to its completion date.

There’s even more reason not to strive for zero corruption: Politics is the art of getting widely disparate factions to come to some sort of policy agreement, and “clean graft” greases those wheels. Now, calm down — I’m not advocating that we move to a full-on kleptocracy like Russia.

What I’m suggesting is in attempting to root every last vestige of pork and patronage out of the system, we have inadvertently produced the partisan gridlock that we now decry. Anyone who thinks that this is a crazy statement should read Jonathan Rauch’s terrific new e- book, “Political Realism: How Hacks, Machines, Big Money, and Back-Room Deals Can Strengthen American Democracy.” At a trim 55 pages, it is a fast read, and at $0, it is the bargain of the century.

Among other insights, Rauch divides politics into two groups: amateurs and professionals. The amateurs are the high-minded folks we all admire, who pursue a single issue, or a narrow set of them, with purist zeal. T

he professionals are the ones we despise: party men and women who are primarily focused on winning elections and making deals so that they can win more elections. It’s a grubby business, this professional politics. But as Rauch points out, it’s also necessary to actually get things done. Left to their own devices, the activists will pursue total war rather than an unsatisfactory armistice, and the rest of us will be left to wander through the barren landscape they’ve shelled to pieces.

For a little more than a century, the amateurs have also been waging war on professional politics, with increasing success. Many of these successes, like the professional civil service, were good things. But fighting corruption offers decreasing returns. The more recent victories had high costs, and less certain benefits — or even a net cost.

Do you wonder why the Republican Congress is so fractured, so unable to come together even on issues where the leadership is united and the political calculation should be obvious? Look no further than the good government reforms of the last few decades: the rising importance of primaries, the limits on campaign contributions, the banning of earmarks.

Those reforms hollowed out once-mighty parties so they can barely exert influence over primary elections, much less frame some sort of coherent policy agenda. The political parties used to be powerful institutions; now they are brands without brand managers. The “leadership” is unable to prevent loudmouthed lunatics from taking over the primary process and tainting the national brand, or ideological hard-liners from torpedoing basic government functions like passing a budget.

Democrats like to think of this as a Republican disease, but no party is immune. As Republican leaders have explained, in increasingly pungent language, their problem is that they have a lot fewer sticks than they used to to discipline their members; they can’t give your seat to someone else, take away your earmarks, or even do much to cut off the flow of campaign cash.

Meanwhile, with earmarks gone and the presidency in the hands of the other party, they’ve got precious little in the way of carrots to reward members who take hard votes. Democrats, of course, have the presidency, which can at least deliver presidential visits on the campaign circuit, and some meager rewards via executive order.

But what happens to Democratic discipline if Republicans take the White House, and Congressional Democrats have nothing to bring home to the party’s many, many interest groups?

It’s far from crazy to think that the increasingly ideological Democratic party might resort to exactly the same obstructionist tactics we saw from Republicans during Obama’s presidency, while their dismayed leadership futilely begs them to stop.

Thanks to “good government” reforms, America is acquiring the ideological discipline of a parliamentary system, without the institutional arrangements and accountability that allow such systems to function.

And it is happening at a time when we most need our politicians to make hard decisions, and take difficult votes. 

Yes, that’s right, I’m talking about the budget. Democrats have been waxing excited about the fact that the budget deficit has finally — just barely — fallen below its postwar average.

But as the Congressional Budget Office indicates, this is a temporary respite. The budget looks much worse than it did during previous recovery cycles, and it’s about to turn south again, thanks to pressure from entitlements, even if we don’t have another recession.

And I’m sorry to break this to you, but we are eventually going to have another recession.

In order to keep our budget from ballooning into unsustainable deficits, we are going to have to trim benefits or raise taxes. And we need to come to some compromise sooner rather than later, because we’re currently scheduled for a massive, disruptive benefit cut in less than 20 years.

We need both parties to sit down and hammer out the kind of compromises we saw in 1983, 1990 and 1993: deals that fully pleased no one, and cost a few people their jobs, but made it possible for the government to operate on some sort of a sustainable fiscal basis.

Just when we need such a deal most, however, we’ve deprived the parties of the tools to make one.

Instead, hard-liners in both parties are insisting on no compromise whatsoever — indeed, many on the left are now pushing to increase benefits without even bothering to explain how we’ll pay for the ones we already have, other than hand-waving nonsense about the sacred status of the real-yet-imaginary Social Security Trust Fund.

If this is “good government,” then maybe we should welcome a little of the bad kind.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.