The Long Run
Posted on January 26, 2012
The Long Run was one of the best albums ever produced, and I was thinking about the title song on Tuesday.I have long believed that our federal government is far too focused on short-term thinking, and our policies are not built for the long run.
And I think that most voters get that fact, which it is one of the reasons they are so frustrated with our national politicians.
Probably the best part of the President’s State of the Union speech came when he used the word “durable” to describe his vision of the American economy.
Of course, it was all bullshit, because the President has been the king of the temporary fix, but the sentiment is exactly right.
Our economy needs to be built for the long run.
What does that mean?
Well, the tax code is not chock-full of short-term tax extenders that expire every year. The business community wants the tax policy, because they want to pay less in taxes. But they are never quite sure if the tax policy is going to continue or not, which means they can’t make any long-term planning decisions.
The President pushed through a short-term payroll tax holiday, which is turning into a longer-term payroll tax holiday. This is terrible policy in the long run, because it puts the Social Security retirement system on weaker financial ground.
The Congressional budget process is also terribly inefficient in the long-run. Because Congress operates under an annual appropriations process (and frequently blows thought its own deadlines), the Federal government usually can plan only a couple of months in advance in how it is going to spend its money. This is extraordinarily inefficient and leads to billions of dollars in waste.
Planning for the long run would also mean coming up with a gradual plan to fix entitlement spending. We all know that Social Security and Medicare are going broke in the long run. We all know that if don’t fix the spending in these programs, we won’t be able to afford anything else in the budget. But because the President is so focused on his short-term prospects, he has done nothing to prepare us for the long run.
The regulatory process is another challenge for long term thinking. Every month, the Feds come up with a bunch of new regulations, which require the business sector to waste billions of dollars just to figure out how to comply. Hard to think long term when to don’t know what the government is going to do to you next.
If the President were serious about his durability argument, he would fight for a tax reform built for the next century, a biannual budget process, a freeze on new regulations for a year, and a plan to save our social safety net without busting the budget.
I am not holding my breath.