Reaffirming the Impotence of the Fiscal Policy Process
In an epic display of the more things change, the more they stay the same Paul Ryan is unhappy with the process of fiscal policy under his own leadership. I will wait to comment on the legislation more fully when the votes are in (what the end passing coalition looks like may be the most interesting part of this). With this policy we essentially put in place tax cuts and spending increases, so something for both parties to celebrate or at least sell as a victory. Of course it is fiscally irresponsible and leads me to the generic comment I want to make: fiscal policy is not working. As much as people (in and out of government) want to take aim at the Fed, their policy decisions can be justified as following a defined approach to policy and the world.
I do not believe that the parties (taken in total, not individual members or collections of members) have a grasp of fiscal reality and have no intent to lower spending. Non-defense discretionary spending accounts for only 17% of federal spending and our politicians win support for reelection quite often by bringing dollars from this category to their constituencies. The Center on Budget and Policy priorities has a nice infographic on what composes this category here. I actually question whether we will ever get 50% of the Congress willing to vote against types of spending at this point for fear of the electoral consequences.
This is not a “throw all the bums out” rant though. Typically, politicians act in a manner that reflects what they feel their constituents want, and that will get them re-elected. By the way, this approach seldom leaves me disappointed in a given politicians action because it explains them very well. Cutting spending at this point represents taking things away from people, not something typically comfortable for those in elected office.
What distresses me most may be the unwillingness to pay for things though. Whether you view the spending increases as important or the tax decreases as important, we should be paying for them by not having the other. There needs to be a prioritization within policy and a plan put to fiscal policy so we can figure out if policy performs as we expect. Without this it is just a series of handouts solely for the purpose of electoral appeasement.
JT asked me if actions under Paul Ryan would be different and I laughed until I realized it was a serious question. This is just early confirmation for us to expect no changes in operation going forward.