Stupid Leadership Equals Stupid Results
First it was the original debt deal. Then it was the fiscal cliff. Next up is the continuing resolution for all but the Defense Department. Then it will be the next debt ceiling extension.
Americans have grown accustomed to the following statements:
"The President insists on increased revenue as a part of any deal. He believes that the wealthy and well-connected should be asked to shoulder their fair share. We should not balance the budget on the backs of the poor, the elderly and students. Targeted investments will make us more competitive in the global economy."
"Republicans already agreed to $600M in additional tax revenue as a part of the fiscal cliff negotiations. The government doesn't have a tax problem, it has a spending problem. The wealthy already pay over 70% of all taxes collected by the government. Without meaningful entitlement reforms, these social programs will ultimately go bankrupt."
These two competing assessments of the current political landscape tell us all we need to know in order to understand why our federal government is failing in even its most basic obligation.
Last year the impetus for further entrenchment was the 2012 presidential election. The president's message had to be crafted in such a way to energize his base. Former Massachusetts Gov. Mitt Romney, on the other hand, was trying to appease a party torn apart by a contentious primary election, already frayed by Tea Party-inspired voters pushing back against the idea of compromise.
President Barack Obama is emboldened by polling that suggests that a large percentage of the American electorate aligns with his overly-simplified view of fairness. When he tells people, in his laconic and comfortable style, that the people who fly around in private jets don't deserve tax breaks, it just feels right to many.
Of course, it's the worst kind of empty, stereotypical speech, but to a relatively uninformed voter, it's undeniably logical. Easy to despise, it reminds us that we're not as successful as others, and the natural human reaction toward jealousy can be converted into political action. President Obama has been doing it his whole political life; he's become a master.
That said, there may be a shred of credibility in his populist message.
The tax code is so complex and confusing that only those who can afford the best accountants and legal advice can successfully navigate it. By navigate, that means to position your income in such a way as to shield as much as possible from collection.
Currently, the nation's wealthiest pay a substantially lower rate of taxation. Billionaire investor Warren Buffet often complains that he is taxed at a rate much lower than his personal secretary, in spite of the huge difference in their respective incomes. I'm not sure why he just doesn't voluntarily pay more if it's such a distraction for him!
Income derived through returns on investments are taxed a much lower rate than is income, the argument being that much of that money was already taxed as income prior to investing it. That's not always true, though. Terms like carried interest mean a lot to a tax attorney, less to someone whose portfolio won't ever really be measured by it.
The current political landscape seems as incapable of creating some form of agreement as ever. Instead of the presidential cycle, they're now focused on the mid-term congressional elections in 2014.
Republicans in Congress fear a further Tea Party backlash if they cave on a deal that raises taxes. Even the less obvious loophole closure discussion, seemingly a way out by increasing tax collections on the ultra-wealthy, will appear unacceptable when conservative talk radio and pundits get done with it.
Democrats, on the other hand, will claim that our major entitlement programs, Medicare and Social Security, represent a sacrosanct vow to the elderly (or soon to be so). Altering these benefits, even prospectively, seems impossible in light of congressional Democratic leadership's recent statements.
All that's lacking is leadership. Given the recent past, it isn't clear why we would expect anything to change going forward.
We might need to be content to wait and wonder if our federal executive and legislative branches will ever figure this mess out.