America Rx

By Clark Peters

Frequent readers of this magazine and, hopefully, this column will know the focus of these articles revolves around health—specifically, human health. This discourse addresses a different issue of health—the health of our country. I am writing this column one week before the November 2012 election, so by the time you read it, we will have elected a president and members of Congress (House of Representatives and Senate) for the next four to six years. Having watched the speeches, debates, ads, and so forth, that accompany the election process and marveled at the monies spent to influence voters (an estimated $6 billion for the various elections), I am convinced the country (or at least its management) is very sick indeed and needs a prescription to change the group of legislators who have created the illness and continue to make it worse. Notice that I have not mentioned political parties. It may shock you to learn that, as an independent (and therefore one of the coveted “swing voters”), I have concluded that it doesn’t much matter which candidate is elected president. Neither will get anything done without the support of Congress. And I think Congress is where the illness began and still resides.

Consider our massive debt. I have never heard any of the members of Congress come out in favor of either deficits or the national debt they engender. Yet we have the largest annual deficit and national debt in history. The president doesn’t create these problems alone. He proposes a budget. Congress then approves it or not. If unapproved, things continue as before. So it follows, if we have deficits, Congress must want them. Similarly, every politician decries war. Yet, we have been at war continuously since Vietnam. Back then, the bogeyman was Communism, now virtually nonexistent. At present, of course, we have terrorism—an amorphous enemy who seemingly cannot be defeated, only contained. And so, our military spending (larger than that of the next sixteen countries combined) continues—to “ensure our safety.” You and I do not set fiscal policy, national security goals or budgets, tax codes, federal budgets, monetary policy via the Fed, and so on. Congress determines all these and more.

Having watched the speeches, debates, ads, and so forth, that accompany the election process and marveled at the monies spent to influence voters (an
estimated $6 billion for the
various elections), I am
convinced the country (or at
least its management) is very
sick indeed and needs a
prescription to change the
group of legislators who have created the illness and continue to make it worse.

There is the power angle; I suppose that appeals to some. But, upon further investigation, the major appeal turns out to be money, after all. Our founding fathers saw serving in the capital as a privilege and expected civic-minded citizens to go to Washington, propose their ideas for consideration and legislation, and then return to their private lives. Now, however, becoming a politician at the national level is almost a guarantee of accumulating enormous wealth—a very different incentive indeed!

This is because our governing bodies have been co-opted by companies, industries, lobbyists, and special interest groups who flood our legislators with cash. Unfortunately, the Supreme Court has sanctioned contributions as a matter of free speech—a legal way to influence opinion on issues facing the nation. The lobbyist population now numbers more than thirty-five thousand persons who come to the Capitol, loaded with money. These monies are funded by special interest groups and the “contributions” are usually “for the next election campaign.” But, make no mistake, there is always a “quid pro quo” for these “donations”—not just implied, but understood by both participants in the transactions. The “contributors” represent for-profit organizations and expect favorable votes and opinions toward their special interests.

No one, from my research, seems to know or track where all these monies end up, so a tidy portion may mysteriously fall into the recipients’ pockets. That may be one possible explanation why persons who enter the public arena with only modest means leave as multimillionaires. Another is that they are not subject to insider trading restrictions like the rest of us, so decisions they make or vote into law inform their investment decisions—a license to coin money.

Some people I have talked to suggest that would-be politicians are well intended and go into the political arena with hopes of changing things for the better. Perhaps this is true, but it is the rare individual who can resist the kind of money we are talking about. Again, gifts in the millions of dollars are made by people who fully expect to get many times those amounts in return. As well, the reelection rate for incumbents is 97 percent, so once they are in office, there is little turnover, which prevents an influx of new blood, ideas, and idealism.

It has been said that the first casualty of war is the truth. The same might be said about a political campaign—a reelection war, if you will. Certainly, it has been difficult for those who tried to find the truth in these campaigns amid all the sound bites, zingers, posturing, and half-truths. I believe this is because politicians simply cannot tell the truth if they wish to be reelected. Their attitude, perhaps accurate, is that “you can’t handle the truth.” Here is the truth: our current budget shows income of $2.5 trillion dollars—a huge amount principally derived from taxes. Unfortunately, our spending totals $3.8 trillion dollars—thus the deficit spending of a trillion or so annually for the period beginning with the George W. Bush administration. The accumulated debt has reached $16 trillion, and interest on the debt alone is $225 billion of the outflows. During my career as a businessman, I never found an enterprise that could survive very long with a lot more going out than coming in. The major part of the outflow is, of course, spending for the military and entitlement programs.

If this is unsustainable (and it most certainly is), then we are facing some very bitter medicine in the future, and maybe the near future. Now, consider the politician’s plight. Consider the chance of reelection if the platform states truthfully that he or she will have to “raise your taxes and cut programs you rely on for your standard of living, and, oh, by the way, will have to cut deeply into one of the sacred cows—the military.” Simply stated, chances of another term would be nonexistent. So we continue to hear empty rhetoric, distortions, and deflections that allow the pols to “kick the can down the road,” thereby prolonging the gravy train for themselves. There is little or no concern for future generations—they will have to sort it out for themselves, at enormous cost and pain.

Well, how do we change this culture and get turned toward a more reasonable future? The answers, I think, revolve around changing the rules for Congress. Sorry, folks, the party is over. The following list is not mine alone—several smart people (Warren Buffet and others) have suggested some of these:

• Term limits. Our founding fathers never intended representing a constituency to become a career. Their attitude was that it was an honor to serve the country for a while and then return to one’s regular life and job. The idea was that concerned citizens would go to the Capitol to present ideas for making the country better for all people. By limiting a representative’s tenure in Washington, we will allow them to focus on the common good rather than having to say or do things to get reelected.
• Budgets. Any time a national budget is unpassed or is passed with more than a 3 percent shortfall, members of Congress will not receive their salaries until they can agree on a balanced budget. Independent auditors will be charged with assuring us that the numbers and math are correct and reasonable—in other words, no playing with the numbers.
• Pensions. You would be angry to learn what pension programs our leaders have voted for themselves—after they leave office, they receive pensions of up to three times their salary for life. This is outrageous, and since they will, in the future, be limited to one or two terms—not enough time to vest in any pension plan—they will not receive one. Congress will participate in Social Security along with the rest of us and monies now set aside for congressional retirement plans will be transferred to Social Security. In this vein, Congress members will pass no law that doesn’t affect them as well as the rest of the nation. Medicare, Medicaid, and Obamacare would fall within these guidelines. Congress will participate in the same health care programs available to the nation.
• Compensation. I don’t think current pay levels are out of line. But I would restrict their ability to vote themselves pay raises or any other form of compensation. Salary adjustments should be limited to 3 percent or the CPI, if lower. Any existing contracts with past or present Congress members will be void. The American people did not make these contracts and indeed were unaware of them. Fringe benefits will befit the job—an important one, to be sure. Office, staff, a reasonable travel and entertainment budget, etc., are to be expected.
• Campaign finance reform. This one has been bandied about for years without progress. Current practice allows special interests to “buy” our government. This must change. I realize it takes money to run for office, but surely we can get the job done competently for much less and without the strings attached. An independent agency/consulting firm could formulate practices for approval by American voters.
• Tax reform. This is another problem that has been around for decades. We now have a system so complex and riddled with loopholes that only the rich can hire the tax experts to pay the minimum and avoid audits. The rest of us wade through the nearly incomprehensible forms and instructions in the hope that we are close enough to avoid trouble. This is ridiculous and enormously expensive, not just for individuals, but for the country as well. The IRS is a huge, expensive elephant in the room. Again, an independent and competent panel or consulting group should be able to find a workable solution. A flat or value-added tax on sales seems simple and fair to me—admittedly I’m not an expert, but perhaps this would be a starting point for discussion.

Well, it has been cathartic for me to vent. I hope my anger is evident and infectious. Of course, the reader will quickly discern a major problem. If you agree with any or all the above, the next challenge is to change laws to reflect the proposed solutions. And the legislators are the ones who created all this. So, we are asking for change in legislation against their interests. This is possible, but hardly likely. I don’t know how to cause a national referendum to address these kinds of issues, but I would hope an overwhelming vote for change on any of the above could not be ignored by the legislators without the risk of people taking to the streets in earnest.

I will close with a quote by a nineteenth-century Scottish professor, Alexander Fraser Tytler. He was talking about the fall of the Athenian republic some two thousand years ago, but his words resonate today: “A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue until that time when the voters discover they can vote themselves generous gifts from the public treasury. From that moment, the majority will always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy, always followed by a dictatorship.”

A democracy is always
temporary in nature; it simply cannot exist as a permanent form of government. A
democracy will continue until that time when the voters
discover they can vote
themselves generous gifts from the public treasury. From that moment, the majority will always vote for the candidates who promise the most benefits from the public treasury, with the
result that every democracy will finally collapse over loose fiscal policy, always followed by
a dictatorship. 
—Alexander Fraser Tytler

POSTSCRIPT (January 2013)

Now we are well past the election, and another opportunity to act in the country’s best interest (the fiscal cliff) has come and gone, with the usual result—a halfway measure that only succeeds in postponing the hard decisions required. And, we have several more (the debt ceiling, etc.) coming during 2013. Unfortunately, I have little confidence that any meaningful change is imminent. Hopefully, the ideas above will start a groundswell of public indignation that cannot be ignored, forcing some meaningful changes in the rules for our “leaders.”

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