What politics can learn from sports
Don Quixote on Nov 21 2011 at 6:39 pm | Filed under: Uncategorized
DQ here. I was laying out this theory to Bookworm at lunch today and she asked me to post about it. Sports team owners understand that they cannot help themselves. They will spend too much on players if they are not stopped by some outside force. Thus, they negotiate with the players to put restrictions on themselves. Major league baseball taxes the teams that overspend. They pay into a pool of money which is then given to the teams that spend the least. The National Football League has a hard cap. There, each team may only spend so much each year on players, period. Every team has at least one person who’s full time job is to “manage” the cap to be sure that it gets the most for its money. The National Basketball Association, which should be playing basketball right now, is not, largely because the players and owners cannot agree on how strong the restrictions should be on the owners.
As you might expect, in all of these cases the owners want to protect themselves from themselves, while the players want to have as few limits on the owners as possible.
Now consider politics. Politicians want to “win” by being re-elected every bit as much as sports team owners want to win. And, as Bookworm pointed out to me, they are spending other people’s money to do it, not their own money, as the sports team owners are. And, of course, the special interests who benefit from spending, like the players, want as few limits as possible. Inevitably, politicians will overspend unless external limits prevent them from doing so. That is why the only, and I do mean only, long term solution to the budget problem is a Balanced Budget Amendment. As is proven in Washington every day, and as was proven again by the failure of the Super-committee today, politicians can no more help themselves than sports team owners can. It goes against human nature to ask them to control their own spending. Only a rule that forces them to do so will work. And, obviously, the sooner the better.
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The difficulty is identified in this quote: “…they are spending other people’s money to do it, not their own money, as the sports team owners are.”
So……what our politicians will do is to make it APPEAR that they are limiting themselves, but set things up so that no genuine limit exists, since anything that LOOKS like a limit will be easily overcome.
The only real solution is to take the drafting of the amendment OUT OF THE HANDS of those who need limiting, and put it into the hands of those whose money is at risk. There are plenty of people with the requisite expertise, as well as abundant experience with shady operators, that will give them the know-how to make the amendment iron-clad.
At least, I hope so….because if it doesn’t get done fairly soon, we’re all toast.
The Founding Fathers worried about tyrannical and overreaching national governments… but they didn’t worry enough.
Experience has shown that the checks and balances in place do not suffice. So a well-crafted Balanced Budget Amendment now seems necessary to me as well. I like the one already in place that 40 of 48 GOP Senators have signed onto to support. It has the proper exemptions (2/3 votes to allow deficits in times of emergency, for example… if you can’t get 2/3 of both Houses, then guess what, it ain’t an emergency!)
I’d love to see a balanced budget amendment passed by congress and sent to the states. Let the state by state fight begin! Of course, the Democrats are blocking it.
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When it comes to spending money, I told DQ at lunch today that it’s kind of like closet space: you always think that just a little bit more will be enough, but it never is. When you live in a teeny apartment, you say “If I lived in a house, I’d finally have enough storage space.” Then, you move to that house and say, “If only I lived in a larger house.” I always envision Queen Elizabeth wandering the halls at Buckingham Palace saying, “If I just had a little more space….”
The same seems to be true with money, especially governments and our money. They always promise that just a little bit more should satisfy government’s needs — and it never does. Government’s capacity for our money is endless and boundless.
I have a problem with the balanced budget amendment (or what I’ve heard of it) because I don’t know what it entails. What does “balanced” mean? In accounting, when you have a balanced anything, it means that both sides of the equation match. Outcome = income. But nothing says that the income has to be the result of your usual dependable activities – it could be borrowed. Then next year’s budget would have to include the interest payment on that borrowed money, but that doesn’t mean that you’re paying off the loan.
If “Assets = Liabilities + Owner’s Equity”, then it always balances. The problem comes when the “Assets” are mostly comprised of expenses instead of hard assets – and I think that’s where we are today. There’s also a problem when the Liabilities are massive, and there are virtually no “Owner’s equity” accounts. In other words, you end up with an accounting balance where “Expenses = Liabilities”.
The other problem is that the government cheats. They should be required to follow the same rules of accounting that they require of all businesses in the US. I’m not sure exactly what those rules are in all cases – they’re pretty much set by the IRS – but whatever they are, if they’re required of citizens, they should be required of the government which sets them. For example, you’ll hear the terms “On budget” and “Off budget” used. What does that mean? _Nothing_” is _off_ budget. Can you just hear a business person trying to tell the IRS that “oh _that_ million dollars – that’s an off budget item, so we just didn’t count it”. Yeah….right!
As a board member, I found the school budget difficult. I expected not to have a problem with it, but the rules and requirements were all entirely different from the standard accounting practices I had learned. Among other things were the restricted accounts – which could only be used for certain purposes. Caused us all sorts of trouble – “you have all this money left over but you can’t give us(the teachers) a raise?” – and frustration, since the money _was_ there, but it couldn’t be used without the proper justification. And the teachers didn’t help…one year, we actually had money left over in excess of needs and voted to pay each teacher a bonus. (not huge – maybe $600 each). They refused to accept it. It wasn’t in their contract, and they were afraid that it would somehow negate their contract or affect the upcoming negotiations (it was a tense time). Besides – they wanted a raise. We couldn’t offer a raise…we didn’t feel secure enough of our income to incur an obligation to pay that in coming years. We were in a financially tenuous situation – bonuses when we had the money were fine. Obligations were not. But people saw that “excess” in the budget and didn’t understand. They thought we just didn’t want to pay teachers what they thought they should have. (which is a different issue!)
Thanks, Suek. I’ll leave it to the experts, but to me “balanced” means that income at least equals outgo (and, hopefully, exceeds it, so we can pay down the debt over time). I agree completely that the government shouldn’t be able to cheat. Maybe the government’s books could be independently audited.
Suek’s questions are germane….the politicians WILL cheat. After all, they’re not spending their own money – and when it comes to “Other People’s Money”, it’s a rare human being who acts as carefully as if their own is at stake.
Plus…simply “balancing the budget” isn’t necessarily good for us. Any amendment needs to LIMIT the government spending – preferably to a (reasonably low) percentage of the GDP, for instance. Our problem is largely that the government is spending so much money that private enterprise simply can’t compete. No private firm has the power the government does – to take money from their “customers” at the point of a gun! With a strict limit in place, the federal government will have to return many of the functions that should be cared for in the states TO the states. They’ll also be compelled to use private contractors rather than fund huge masses of federal workers in unions that corrupt the entire process.
Lots of good things will flow from a simple remedy: Stop The Spending!!
Earl, I agree that a cap on spending as a percentage of GDP is a good idea, but I don’t think it belongs in the Constitution, because I believe we need to be able to change it, up and down, over time. I’ve often thought we ought to have a national election (every 1 or 2 or 4 years) in which the public would vote on the % of GDP each level of their government could collect and spend, say 25% for federal, 7% for state, 2% for county and 3% for local or whatever. We’d have to work out the details of how the election would work, but I’d rather have the people decide from time to time than have the Constitution dictate it for all time.
>>I don’t think it belongs in the Constitution, because I believe we need to be able to change it, up and down, over time>>
I agree and disagree. I really feel like it doesn’t belong in the Constitution as well – but to be honest, I don’t see any other way to limit Congress’s spending. I’d go along with it, with the caveat that it would take a 2/3 majority to change it – up or down – and even then only for limited periods.
>>I’d rather have the people decide from time to time than have the Constitution dictate it for all time.>>
Well…yeah. Except everybody gets to vote while only 50% pay. If it were up to the 50% who pay the taxes, I think I could live with that. But then…I happen to think that you should have to bring your 1040 with you to the polls to show that you’ve actually paid taxes before you can vote…!
But Suek, under that rule, before Social Security was taxed you would have probably disenfranchised the majority of people over 65.
>>Lots of good things will flow from a simple remedy: Stop The Spending!!>>
I agree as well. One of the problems is that it’s very easy to have a balanced budget. And the Dems would agree…they’d just raise taxes to pay for all the spending. You and I have an income that is limited. Regardless of how high or how low your income, it is what it is. You cannot got into your boss’s office and tell him/her that your expenses are up, so therefore s/he has to give you a raise. Congress _can_. They can spend whatever the heck they want and tell the citizens that they’ll just have to cough up more bucks. And of course, if you disagree, they can throw you in jail and seize whatever assets you may have left.
The only solution is to limit the spending – and a % of GNP seems like a very reasonable way to do that. Even though the GNP changes year to year, the change is pretty minimal. Each year’s budget would have to depend on last year’s GNP so you’d take out the “guess” element (also called economic prediction). It would also be a good idea, imo, to require the government to have a “savings” account – no matter how small – which would be untouchable unless you had either that 2/3 majority or even higher. Then maybe Keynesian economics would actually work!
Sometimes it seems as if governments have never heard of “depreciation”. Once again, when I became a school board member (along with 3 others – result of a recall vote), we discovered that there was no depreciation fund. None. And the school was built in something like 1908. We were able to go to the state for repair assistance, but the process took about 2-3 years – not a great help when a heavy truck crossed the septic tank and sort of destroyed it (working to repair the basketball court). By that time, we had set aside funds for that sort of thing, but if it had happened in the first couple of years, we would have had to borrow a big chunk of bucks. By the way – we discovered the lack of depreciation when a couple of classroom air conditioners failed and we learned that no funds had been set aside to replace them. And those were just classroom air conditioners! Thank heavens it was something small!
I think this misses the point. It’s not so much the level of money being spent, as what it is being spent on. Millions for war and police, is not the same as millions for the mafia.
>>…under that rule, before Social Security was taxed you would have probably disenfranchised the majority of people over 65. >>
That could well be true…but you realize what you’re saying here…
a) over 65ers have no income other than SS. No savings, no earnings.
b) income from SS, even though it may be well above the amount contributed is never going to be taxed.
For voting purposes, I’d say that if you’re over 65, you get a lifetime pass to vote even if you don’t pay taxes any more. Or maybe provide your last eligible 1040 prior to retirement.
The above (a + b) are simply observations and topics for discussion.
Hi Suek. As to A and B, keep in mind that not every dime of income gets taxed and some income is not taxable at all (draws from Roth IRAs for example). Anywa, what if you’re over 65 and spent 9/10th of your life on welfare?
Anyway, the idea that only people who pay taxes should be allowed to vote is an interesting one, but I doubt it will ever happen. “One person, one vote” is too well established to turn it into “one taxpeyer, one vote.”
@DQ: Only the INCREASE in the Roth IRA isn’t taxed, DQ….the principal was taxed before it went in there.
Secondly, if you had to show the last five 1040s from before “retirement” (before going on S.S.) that would take care of it.
Last, I agree with you – it’s not going to happen. In a better world, either voters would have to be taxpayers, or the tax base would be broad enough that virtually every citizen was paying SOMETHING.
You are right, Earl, that the money put into the Roth has already been taxed. There is no free lunch. But we were talking about income. The income from the Roth is not taxed. And, of course, the principal coming out is not taxed a second time so, to the extent that principal is considered ”income” to the senior the senior doesn’t have to pay taxes on it again.
>>what if you’re over 65 and spent 9/10th of your life on welfare? >>
No vote.
>>“One person, one vote” is too well established to turn it into “one taxpayer, one vote.”>>
We could always return to the principle of “one landowner, one vote”…
But I agree – it isn’t going to happen.
Would you settle for a civics/current events exam – taken once, then required to be updated periodically…maybe call it a voting license requirement?
Sigh. I know. It’s just so darn frustrating…!
First principles first: We are in deep trouble because we have not had balanced budgets. National debt is NOT caused by spending or taxation policies. It’s caused by spending more money than you have.
The fight over whether to raise taxes, or whether to cut spending, is secondary. The problem is the DEBT itself.
Persistent structural debt means you are indebting your children and your grandchildren. THAT is what is immoral and destructive and leads to the collapse of a civilization. Indebting future generations because yours cannot make tough decisions, or doesn’t give a damn, is as wrong as it gets.
The argument over WHAT to spend on is also secondary. The military or social programs? If you choose the military, but 40% of what you spend is debt to future generations, you’re still immoral and wrong.
Both parties are guilty of deficit spending and persistent structural debt, and the impoverishment of future generations: your kids and grandkids. Both parties are guilty of creating a level of persistent debt that threatens our civilization. They make silly noises against it, but in the end they keep signing on to yet another year of adding to the debt. It was bad enough during George W. Bush’s years, but that only gave Obama and the rest of the Democrats moral sanction to do it twice or three TIMES as bad.
Once the principle of the balanced budget is in place – pay for what you spend – THEN and only then does the argument over how much to spend and on what to spend it, can begin, and how to pay for it. Spending cuts or tax increases? (Spending cuts, of course!) But that is a political fight. If you can’t win the political fight for spending cuts, then you’re going to have to put up with tax increases. But the solution is NOT to simply throw it into a debt pool for the kids and grandkids to pay for.
I think 150 years of non-stop national government growth proves our current checks and balances don’t work when it comes to constraining over-reach by the national government. I think it is time for a Balanced Budget Amendment. There is a good one circulating in the Senate, and 40 of 48 GOP Senators have signed on to support it. The Democrats under Harry Reid are blocking it.
It contains provisions for being overridden, which you can expect in times of national emergency. These would typically occur under threat of war situations. If I remember correctly, 2/3 of both houses would have to vote to agree to override balanced budget restrictions, and proceed into debt spending, to meet the emergency.
If you can’t get 2/3 of both houses to agree, then I guess it’s not an emergency situation, is it? Almost by definition.
I agree completely, Mike, except I’m not sure I’d even allow the 2/3rd exception. It would be all too easy for the politicians to bilaterally declare an emergency and go on spending as usual. Since both parties would agree, neither would suffer the fallout. And it would be way less painful to the politicians than actually balancing the budget. Sorry, but there is no level too low for a politician to stoop to, at least to my way of thinking. I’m not sure we should give them that option.
Can’t agree, Mike….well, I agree with most of what you wrote, but NOT this: “The problem is the DEBT itself.”
The debt is a symptom of the problem….our political class has been using our money to get themselves elected by buying off interest groups with SPENDING.
Here’s the deal – the problem can be solved without a BBA, if we elect a Congress that would pass the Mack Penny Plan. It currently has 40 co-sponsors, and it’s quite simple:
“The Mack Penny Plan balances the budget by:
Cutting total federal spending by one percent each year for six consecutive years,
Setting an overall spending cap of 18 percent of gross domestic product in 2018, and
Reducing overall spending by $7.5 trillion over 10 years”
Check it out at: http://conniemack.com/contact_congressman_mack/mack-penny-plan
We DUMP the baseline budgeting scam, and simply cut 1% each year….that can be across the board, with 1% cuts of every single thing the government does, or (preferably) get rid of whole departments that are worse than useless, and provide flat (or even slightly increased) budgets for more important items.
Then we limit spending to 18% of GDP.
The difficulty with using taxation to balance the budget is that it cannot possibly work if Congress doesn’t stop spending — history makes it crystal clear that no matter what your rates, you aren’t going to collect more than a certain amount. The choice is whether to take a smaller % of a vibrant and growing economy, or a larger % of a stagnant and choking one.
Remember, “Reality always wins”, at least in the long run.
It used to be such huge debts came from war. And that’s one reason why the Colonies suffered such heavy and unfair taxation under King George. King George was in a pickel from the napoleonic wars. Wars, thus, basically shredded a nation’s economy and treasury, back in the Founding Father days. One reason why they were so adamant about leaving European affairs to the Europeans. They didn’t want to foot the bill in lives or gold.
Now a days it is not Defense spending or discretionary war spending eating up the treasury, it is the Leftist antics and power plays to enslave humanity that is destroying the money supply.
I actually agree, Earl. I’m aware of the Mack Penny Plan and I support it completely too. The problem is, it’s just a plan, and can be changed in any year by the politicians in Congress as they wish.
The USA has been engaged in structural debt-based spending for my entire adult life, since 1980. Blame all the presidents since Reagan, blame all the Congresses since then… the fact is, we’ve been doing it. And now there is no end in sight. As Reagan supposedly said upon leaving office, “I’m still waiting for my promised spending cuts from Congress. They never happened.”
I’ve changed my mind over this last year: I’d thought previously that we just need responsible voters who eventually overcome problems like these by electing responsible people to Congress. But now I think the vast rise in government spending since the 60′s, coupled with structural debt spending since 1980, indicates a flaw in our system of government.
I now think we need stronger Constitutional checks and balances, not just legislation. A Balanced Budget Amendment is the key. Then we have all the fights with the left over taxes vs spending cuts. Yes, corrupt politicians could still play accounting games, but at least we would never again see a deliberate policy of sending 40% of our budget onto the backs of future generations. I’d like to see the Amendment process get kicked off, and its passage in the states would take years. In the meantime, we can fight for a legislative solution to current problems by getting something like the Mack Penny Plan passed.
Ah well. Maybe the truth is, if Americans as a whole decide – as they have for 30 years – that we as a nation are going to be utterly irresponsible fiscally, there is *no* way, Constitutional or otherwise, to avoid the coming collapse. We’re simply lemmings heading over the cliff, and you and I sounding alarms isn’t going to make one damned bit of difference as the horde rushes to national suicide. We’re just carried along with the tide, right over the cliff. Maybe there’s no way to avoid, forty years from now, the USA dead and unrecognizable, on the ash heap of history. It might still be called “The United States of America”, but it would be unrecognizable to any of us. Nothing more than a terrible lesson to future civilizations who might seek to avoid our fate.
But at least, in the best Schadenfreude traditions, we’ll get to see European civilizations totally collapse first, before our turn arrives. And for exactly the same reasons.
We DO agree, Mike….and I cannot argue rationally with your analysis.
I still hold that the fundamental problem is spending, however. I HOPE (and pray) that if we actually elected a Congress that would enact Connie Mack’s plan into law, that after two years the electorate would return the same type of legislators so that it could continue another two years, etc. etc.
I’d be very happy to have the BBA proposed and sent to the States….but I do not trust the politicians to write the amendment….it needs to be a group of people that don’t benefit from excessive spending and who are far more likely to produce a document with actual teeth that is genuinely difficult to get around.
When I let my fears get the better of me, I get the sense that a large part of the electorate WANT to believe in unicorns that s**t rainbows and freebies…..it’s pretty depressing.
G-d D**n It!! We’re AMERICANS….aren’t we better than this?
Please?
I agree with Mike Devx that what the US needs is Constitutional reform and limitations, not simply election changes or legislation results. It is no longer enough, if it ever was, to defeat the Left. The Left, to win, must override and destroy the Constitution. Thus the task of anti-Leftists is to preserve and reinforce the Constitution.
Otherwise what you are left with is the Way of the Sword, and whoever wins is who is right about the Constitution and American politics And another Civil War is pretty much just about the right time, in the scale of things.