As we’ve argued over this fundamental issue, the momentum of action has continued its 100-year trajectory toward concentrating more and more resources and responsibility in the hands of government bureaucracies at all levels of government, and we’ve gotten fewer positive results from that shift in money and power. That momentum has continued because Conservatives have tended to take two divergent approaches: on the one hand, we’ve argued for a system of limited government and individual responsibility that was gradually disappearing; while, on the other hand, we’ve enabled the continued centralization of government power and responsibility by simply adjusting and limiting the budgets and policies presented by progressives, instead of actually presenting and promoting policies consistent with a limited government. In essence, we’ve been trying to save the Titanic from the iceberg by re-arranging the deck chairs, rather than by taking control of the helm.
In the meantime, we’ve bankrupted society. Yes, I said “bankrupted”. I know that even the mention of “bankruptcy” or “insolvency” leads our elected officials and public bondholders to look for the “Exit” signs—as well it should. It would be imprudent for them to discuss this issue candidly and publicly unless and until they have a plan to address it. But you and I must face it and discuss it, so that we can help our elected officials develop the plans they will need to address the issue.
In the past, I’ve used the term “re-organize” to talk about what our lawmakers will need to do to transfer resources and responsibilities back to individuals, the private sector and local governments, so that we
- regain the liberty prior generations fought to preserve;
- address the needs of our citizens more economically and effectively; and
- dissolve the organizational structure that has created this mess.
I chose the term “re-organize” on purpose, because many of the problems we face are structural within the governments we’ve enlarged over the last 100 years, and because it is a term-of-art used in Bankruptcy proceedings.
To be candid, if an organizational consultant were hired to address the budgetary problems faced by the public sector of this country, and if that consultant honestly applied the same principles he or she would use to evaluate a private-sector business, that consultant would recommend a liquidation of our public sector in something like a Chapter 7 Bankruptcy proceeding. We are simply too insolvent to continue as a “going concern”—the only way we are continuing to operate is with a combination of incurring more debt at every level of government and by printing more money at the federal level. This approach is economically, morally and political unsustainable.
And we can’t raise taxes to get out of this mess. Even if you could overcome the predictable political revolt, raising taxes is not a viable economic solution for many reasons. For instance, taxpayers now carry too much private debt to be able to pay the exorbitant amount that would be needed to bring current and future government spending into balance. Moreover, any significant increase in tax collections would deprive the economy of the private capital it needs for recovery and re-investment.
So, yes, as a society we are broke, and our imaginary consultant would have to acknowledge it. However, because you can’t “liquidate” a society or government, our consultant would be forced to recommend re-organizing our governments under a procedure like that provided under Chapter 11 of the Bankruptcy Code. This re-organization would be structural, but would be made according to the blueprint of the Constitution; it would not require, and I would never advocate for, a Constitutional Convention as some now are advocating, because the whole goal is to re-establish a limited government within the guidelines provided by the Constitution (and the constitutions and charters at the state and local levels). In essence, this hole was dug by decades of legislative, judicial and administrative action, not by the Constitution; and it will take a combination of legislative, judicial and administrative action at every level of government to get us out of this hole.
Although local governments actually can declare bankruptcy and re-organize under the Bankruptcy Code (and I believe many cities and counties across the country may have to do so eventually), States currently have no such authority; and, even if they did obtain such authority, States would have to address the probability that the Constitution prohibits them from abrogating current contractual obligations (like pensions for current and retired employees). As for the federal government, it can’t really go bankrupt because of its power to print money—though the havoc printing more money would reek could make the Weimar Republic look like paradise.
No matter how we choose to approach the structural re-organization, we will have to begin by removing the impediments to such re-organization. In fact, that is precisely what Governor Walker of Wisconsin is trying to do. Most of the structural impediments to re-organization arise from what generally can be called “Unfunded Mandates,” which take many forms. Typically, they are the fine print in the grand schemes created by the federal or state governments. These mandates shift the responsibility and cost for administration of the schemes to lower levels of government (states, counties, cities or school districts), without providing the necessary funds to pay for the administration.
These Unfunded Mandates can arise in many forms. For instance, they can arise from referendums that restrict taxes, mandate expenditures, or restrict expenditures from certain taxes, like those referendums adopted in California over the last generation; or they can arise from restrictions included in legislation, or collective bargaining agreements, pertaining to the terms of public-sector employment, working conditions, compensation, and benefits. Because every state is organized differently, the nature and impact of federal Unfunded Mandates on each State, and of Unfunded Mandates between State and local governments or school districts, differ across the country. Governor Walker’s bold proposal to limit collective bargaining was an attempt to remove an impediment to the structural re-organization at the county, city and school district levels of government in Wisconsin.
As we can see from the protests and counter-protests across the Midwest (as well as from the cowardly retreats of Democratic legislators to that Mecca of good governance, Illinois), removing these structural impediments will be difficult because the interest in maintaining the status quo is pervasive and strong. Even though virtually everyone agrees that we are on an unsustainable course, the commitment to the 100-year trajectory of the role of government runs very deep, and the Democratic Party and its labor union allies are committed to maintaining the structure they have created. So, though they call themselves “progressive,” they actually are the forces of the status quo in this country. And they’ve dug-in their heels pretty deep against any attempt to re-organize.
Wisconsin is a lesson for all of us who see the need to re-organize and re-establish a limited government. It will take more than good intentions and bold talk to overcome the status quo to which the Democrats and fellow progressives are committed. It will take more than simply cutting programs and dollars from budgets—more than re-arranging those deck chairs.
It will take a transformation: a transformation about the expectations we have of ourselves, our neighbors, our communities, our schools, and our governments; an actual concept for the transformation, which can be adapted not only to the federal government, but to the unique experiences, needs and structures each state and locality; and a sustained commitment to implement that concept with concrete policies. And this transformation will require leaders and leadership to pursue—now and for years to come. If it took 100 years to get us to this point, we must be willing to devote many years to this effort; and we must be willing to make progress one step at a time, while occasionally taking advantage of opportunities to make bold leaps.
The good news is that I think we’ve recently crossed the threshold of that transformation, and there is no going back. Indeed, I believe the next few months present an opportunity for some bold leaps that the public will accept.
At the federal level, I think the public is ready not just to stop raising the debt ceiling, but they are ready to discuss the consequences of not incurring more debt. They are ready not only to change the way we spend discretionary funds, but also to look at how the vast majority of tax revenues are spent. Specifically, they are ready to consider ways to restructure the way we spend our dollars on Social Security, Medicare, Medicaid and on the Unfunded Mandates associated with Medicare and Medicaid; and to consider how to re-structure our Defense and Homeland Security Departments to cost-effectively defend the country against the threats we face now, and against those threats we will face over the next generation. If you listen closely, the only people talking about shutting-down the government are the forces of the status quo among Democrats and their allies, who are seeking to preserve the current system at all costs—that should speak volumes to all of us about the challenges we face.
At the State and local levels (including counties, cities, and school districts), our neighbors are ready to take back control of their families, their neighborhoods and their schools and make them more effective vehicles for addressing the needs of their communities. In essence, they are ready to rekindle the bonds of the American neighborhood, which de Tocqueville found so unique and effective in providing a social safety net. To do that our neighbors are ready to discuss the hard choices to be made within government, within the private sector, and within their own families, to accomplish the needed shift in responsibility; and to make the painful decisions related to public-sector organization and employment that will be needed to implement those hard choices. Again, for those who are watching closely, the only people trying to avoid these discussions and decisions are those who are so vested in the status quo that they were willing to abandon their responsibilities in the legislature and the class rooms in order to retain the current system.
Regardless of how the stalemate in Wisconsin ends (and I hope it ends in favor of Governor Walker’s proposals), the Wisconsin debate has done us all a favor by forcing us to cross a threshold—a threshold away from merely adjusting numbers in a budget and toward the transformation we desperately need.