“Don’t tax you. Don’t tax me. Tax that fellow behind the tree.”

-Louisiana Senator Russell Long.

 

 

The famous Russell Long quote above reflects a basic truth about politics: Many people want other people’s taxes to go up, but not their own. The same is true for spending: Other programs are wasteful, but not our favorites. City dwellers find agricultural supports wasteful, Farmland dwellers think the same of subsidized mass transit. Programs in other people’s districts are expensive and unnecessary, but those in ours are crucial and required.

This is no way to run a country.

If we were smart, we would apply our understanding of human nature to resolve spending and tax issues. Game theory* is a study of strategic decision making — how “conflict and cooperation between intelligent rational decision-makers” leads to certain outcomes.

Basic game theory could help us with these issues, if we think about it intelligently. How? By stopping the taxing and spending cuts of that fellow behind the tree — and instead force people to raise their own taxes and cut their own spending.

If I were advising the President of the United States, I would make the following suggestion: He should announce a 20% spending cut over the next 10 years. Create a panel — Treasury Secy, Veep, House Speaker, Senate Leader, FOMC rep — to oversee the effort, but with one crucial twist. Instead of the usual cutting, the twist is to use each State’s Congressional delegation must decide what gets cut. Both of a states Senators and all of the Congressmen form a working group to decide how federal revenues, benefits, expenses and costs that flow TO THEIR OWN STATE will be cut.

There would be 50 state working groups elect their own leaders, determine what their own priorities are. If they want to do polls or surveys, its up to them. They get no budget for this, it comes out of their own congressional staffing budgets.

There is no fellow behind the tree any more. Each state delegation determines their own residents’ fate.

The CBO determines how much money flows to each state from the Federal Government. This includes entitlements like Social Security and Medicare, spending on Education, as well as Defense Contracts and other financing. It this includes FEMA.

Each of the 50 state delegations reports back to our original panel, who works together to reflect all of this in one coherent budget. (No earmarks allowed) Any group that fails to submit a plan simply gets across the board budget cuts gets. (You can consider a 5% penalty for those who fail to submit a plan).

All of this literally forces a balanced budget cut by making personal sacrifices — not dumping it on other people. It eliminates the hypocrisy of deficit peacocks who vote for every budget buster and then disingenuously present themselves as concerned about debt.

But most of all, we find out the priorities for government spending by the people of this nation — and their elected representatives. Don’t like military spending? Cut it in your own state. Against Social Security? Cut aid to the elders in your own State. Have a problem with FEMA? Opt out of it.

One of the biggest problems with wrestling the Federal Budget under control is the tendency for it to be so abstract — its all about that other fellow. A simple solution to a complex issue.

What do you think?

 

 

 

_______________

* Roger B. Myerson (1991). Game Theory: Analysis of Conflict, Harvard University Press, p. 1. Chapter-preview links, pp. vii-xi.

Category: Politics, Psychology, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

58 Responses to “Using Game Theory to “Solve” Government Spending”

  1. gms777 says:

    You are far too rational and logical. Nothing so sensible could ever be adopted. Too many cows of the sacred variety would be axed. None of these guys wants to take responsibility for anything.

    I’ll bet that in 1859, sane and logical people suggested a graduated end to slavery, maybe phasing it out over 20 years. Lincoln wanted to send slaves back to Africa. And when Parliament debated the uprising in the American colonies, some members who’d been here spoke against the folly of militarily suppressing the rebels, but those voices were few. Who in the mid-1930s even suggested taking out the Nazis?

    During none of those periods did anyone foresee what truly would happen and how far reaching the consequences would be. Just as markets can remain irrational for longer than an investor can remain solvent, so too can nations’ leaders be in denial about their true circumstances.

  2. danm says:

    It’s all spaghetti no matter who gets to decide.

    Here in Ontario, a few years ago, the leaders got to choose where the cuts came from and it is still a fiasco… They’ll keep a program but cut transportation to get there The list goes on… the net is full of holes. The law of unintended consequences.

    I don’t if you ever knit… if you stick to stockinette, you can easily fix your work along the way. When you start mixing stitches, it gets quite hard to fix a mistake and sometimes you’ve got to undo it ALL and start over or else your work will look like cr*p. I believe we need to start over but it will never happen unless we split into multiple countries… that could give us a clean slate.

  3. MayorQuimby says:

    I think it is a brilliant idea – having states cut their own budgets however…politicians will be forced to spread the cuts out amongst all areas or face an uproar from whichever group is hurt the most which means that the cuts would essentially be spread out which is excellent. Two thumbs up.

  4. Orange14 says:

    Game theory works when the participants are rational. Unfortunately our political system has descended into the black hole of weirdness. It would be far better consign our Republican congressmen and women to Dante’s 5th level of hell where they can “forever lash out at each other in anger, furious and naked, tearing each other piecemeal with their teeth.”

  5. Irwin Fletcher says:

    I think you have a marvelous idea.

  6. Oral Hazard says:

    Barry, while I get and approve of your “all politics is local” accountability idea here, this one’s unworkable under the federal structure of the Constitution. An appropriations law that resulted in a demonstrably lower per capita federal appropriation for, say, health care for children or the elderly in state A, would probably be vulnerable to constitutional attack, endorsement of local congressmen notwithstanding.

    Chinese menu doesn’t work in federalism, quite possibly because of the founders’ sense of humans’ tendency toward corruption and beggar-thy-neighbor (see Prisoner’s Dilemma) politics. Now, certainly, you can structure appropriations to states on an opt-in/opt-out basis, but that’s up to state legislatures, not local congressmen. Also, I would be afraid that this scheme would devolve into both a variant on existing corruption where this becomes fully endorsed pork barrel politics favoring local state power brokers and also certain states have nationally critical resources/deep harbors/remote locations that need to be used based on national need, not local state politics. NORAD needs to be under a mountain, type of thing.

  7. MetFund says:

    How much longer can we remain cynical and continue to shoot ourselves in the foot?

    I like the idea. It does eliminate or at least reduce to some extent the blame game. But, I would have no FOMC rep there whatsoever if you want to succeed.

  8. bobnoxy says:

    I don’t know about that.

    Stupid decisions like the teaching of Intelligent Design over evolution, and firing teachers who object in the name of balancing the budget with fewer teachers, would be adopted in backwaters of education like Kansas, Texas or Tennessee. Having a less educated work force hurts us all.

    Cutting funding for environmental protection in favor of the polluters who came up with the whole ”Clear Skies” scam hurts us all in the long run. That foul air doesn’t stay in Texas.

    We’ve seen cuts in Planned Parenthood, and we know the potential down side of that. Some of those people see affordable preventive health care for women as a threat to their beliefs. Might that cost us all in the long run via Medicaid or Medicare?

    No, until someone throws a net over some of those hyper-conservative legislators and the harm they do, those of us in other states that could be harmed should be skeptical of giving them too much leeway.

  9. lentils says:

    Logical, rational, constitutional idea –
    I say YES!
    Questions now are: When? How?

  10. Roanman says:

    I don’t think that even this President is that stupid, as every cut decided upon by every state would be immediately, directly and vehemently blamed on him. Lame duck or not President Obama has never displayed courage or resolve that approaches a tenth of what would be required to pull this one off.

    Nor do I think that the Democrat party, or any party for that matter has either the cajones or the integrity to let him do it were he of a mind to. The way to stay in power and thus pad that wallet is to keep people at each other’s throats, and as such our system is just about perfect ….. for our elected officials.

    Aside from that, it’s a great idea and a serious approach, unfortunately there are nowhere near enough serious people in Washington or anywhere else in America for that matter ….. yet.

    My opinion is that the great reset will be forced upon us, most likely by the BRICs as they continue to methodically chip away at the reserve currency status of the dollar.

    ____

    BR: How can it be blamed on him? Its their own elected Reps making the cutting decisions . . .

  11. rd says:

    I would throw in one more aspect to make it even more interesting.

    This would also be an opportunity to rebalance the transfer of payments between different states. So, each state would need to address one-half of its over/under per capita federal spending. So if a state received 10% more money than it sends away in taxes, then it would need to cut 25%. If a state sent away 10% more in taxes than it receives back, then it only has to cut 15%.

    The logic here is simple: it is is clear that much of the over-spending is occurring in states that receive more federal money than they provide in taxes so there should be an additional focus on that.

  12. Greg0658 says:

    money is just like air, everyone needs some – cash should float around freely – if you hoard it, people sufficate .. hoarding is power tho – hense power over people to perform – its sad that there are to many people that powercash feels they can abuse .. just sad we let this happen

    I was thinking in a near sleep last nite .. what if we invented communes for welfare receivers – communities just outside of town – that had a different script* to spend in the regular town (*at its own going rate) .. tinyhomes for them with smart meters – if they try to heat the outside “no juice for you” .. neat enough but instill a wish to do better … that would put a stigma as well as a factual look at the issue of the displaced – and as a side effect the other welfare moochers would be starved of their income streams aka that other quasi capitalist|socialist state we live in
    and
    I’m still in favor of a longtail gradual to infinity taxbase – sorta like a tractor pull – winner is found to get the trophy – but there is always that chance of blowing your engine, so cool it

    Leave Some Air
    on this 2,191th day of Econ102

  13. VennData says:

    Reagan’s plan was to put a defense contractor in every district

    “…The industry as a whole cashed in, as Reagan pursued the largest peacetime military buildup in U.S. history, while specific companies got special favors. Rockwell International was able to restore funding for the B-1 bomber, combining White House support with a pork barrel campaign that placed subcontracts for work on the plane in nearly every Congressional district..”

    http://www.multinationalmonitor.org/mm2005/012005/hartung.html

    So the Reagan, the Queen of Let’s Cut taxes and increase spending, taught them. If you want to survive a post-BR-game-theoretic approach, simply be in every district.

    Lesson: You can’t cut taxes for the rich and let spending rise normally. The Reagan / Stockman “Starve the Beast” simply makes another problem, it’s called sequestration.

    What you need is responsible people in the first place, and not Magical Republican tax cutters.

    Look at them now, claiming to be cutters, but all they can do is try to get Obama’s fingerprints on the cuts. You GOP voters are suckers. Period.

  14. matt wilbert says:

    I don’t think this would work at all. First, these cuts aren’t being borne by the people making them, but by their constituents. Just like now. It isn’t clear that the degree of concentration you are describing makes things much better. Second, you would end up with people in different states (for example) getting potentially wildly different levels of Social Security or Medicare? Doesn’t seem at all reasonable; the differences between service levels in different states now is already disturbing. Third, most of the work is being done by forcing people to make cuts or having across the board cuts instead. Sounds like the sequester to me. f you could force them to make cuts under this plan, why not now?

  15. Westport R says:

    The idea has immediate appeal, but as ever, the devil is in the details and the unintended consequences. One concern is the problem of the commons (which is also the problem of “too small insurance pools”). When watersheds cross state lines, when air pollution respects no boundaries and when ignorance (as noted above) is mobile, the benefits of federalism are more apparent. Self-selection opting out will, one assumes amplify the need for those primarily affected/dependent, possibly in an amount that overwhelms the savings. I assume, however, that known “cross border” consequences could be eliminated from the “menu”… but as our good friend Rummy knew, its the unknown unknowns that can bite you on the butt.

  16. cowboyinthejungle says:

    As someone with a simpler mind, I have a simpler idea…

    On your income tax return, you appropriate percentages of your contribution for the following year to federal departments of your choosing. This would provide for a more meaningful reflection of what activities we want our government to focus on. If a department receives too little money to provide any reasonable service, it is dissolved.

    As for spending within departments, establish transparency, and let public pressure dictate priorities. We often hear about how cutting the defense budget will hurt our service men/women. Well, if the DoD budget is itemized for all to see, I think we’re far more likely to cut weapons R&D first.

  17. SkepticalOx says:

    I like the idea!

    Also, isn’t this almost like giving the states more power (which a lot of conservatives/libertarians preach for)?

  18. Bridget says:

    The President may end up with the exact opposite process dropped in his lap. According to the NYT, Republicans are drafting legislation to give him the leeway to decide where the cuts are made. That way, he gets all the blame. Do Red states take all the hits?

    http://www.nytimes.com/2013/02/26/us/politics/obama-urges-congress-to-find-compromise-on-cuts.html?pagewanted=2&_r=0&ref=todayspaper

    Lindsey Graham is looking to revive the Grand Bargain. More revenue in return for entitlement reform and settling sequestration. Back to where we were last year. Maybe it will happen this time.

  19. alexanderdelarge says:

    BR – I like it.
    One question, w/o getting too into the weeds…;
    The 20% over 10 yrs, are those cuts to the current Fed budget, or to the baseline(s) ?
    If baselines, then 30% over ten years, pls.
    AD

  20. RSBH says:

    I think we are making this too complicated. The problem is two-fold: gerrymandering and the way campaigns are financed.

    As long as representatives are “paid” by campaign contributors, they will serve those masters. As long as politicians are “safe” in their districts, they think they can act with impunity. I wish I knew what it would take to correct these two problems, but I think America is the proverbial boiled frog.

  21. b_thunder says:

    I don’t think 20% is nearly enough to make a dent in the Big Financial Picture.

    IMHO, it can work, but with 3 additional elements:

    1. DoD gets cut to pre-9/11 levels; the boondoggles and corporate welfare programs like F35 are either shut down or cost brought under control.

    2. Cost for healthcare are brought in line with other countries, to no more than 10% of GDP. We cannot keep on spending 18% (soon over 20%) of GDP on sickcare. It will bankrupt us. End the corporate welfare for device makers and big pharma. Where’s Priceline for medical services? I want to name my price for that medicine and that medical procedure. And I should be allowed to import them from abroad! We allow foreign engineers to start new .com’s, why don’t we allow doctors to come in to start new hospitals and offer reasonable prices?

    3. Stop subsidizing Wall St, stop taxing labor at higher rate than cap. gains. Close loopholes for personal and corporate taxes. You make a buck – it gets taxed. A company makes a buck from sales in the USA – it gets taxed.

  22. jnutley says:

    I concur with those who say it is a rational and fair idea.

    My problem with it is that I don’t want to belong to any of these 50 rump agricultural age constructs. I want to be a citizen of the superpower that first put men on the moon. I want the priorities and plans of my government to focus on colonizing the solar system, and eventually moving out into the galaxy. Fixing the minds of everyone on what their own little geographical neighborhood will or wont do for them doesn’t get me anything I want.

  23. Sailor531 says:

    That is a great solution. Years ago I heard a proposal to reduce the size of government. Each year a lottery picks 5% (or some percentage) of the people in an organization. Those people are layed off, and their positions are done away with. It is a random lottery so staff and management are both equally at risk. The work is reapportioned among the survivors, or done away with if not vitally important. This would tend to prioritize that actual important work.

    Th0se laid off would be given their full salary and benefits for a year. At the end of that year, if they hadn’t found a job their pay and benefits would be reduced by 25%…or 30%…enough to make it pretty painful if they didn’t find something else to do.

    Just a thought, but it has stuck with me for years. Thanks for all the work you do in keeping the Big Picture going. I read it every day as a priority. Thanks again.

  24. wally says:

    What do you think?

    I don’t think its a very good idea.

  25. PrahaPartizan says:

    I can see no way that such a process can work or would work any differently than the system we currently have in place. Even if the Congressional delegations were to recommend the budget adjustment allocations preferred by their own state, at some point a single entity would need to correlate all of the “recommendations” into a workable whole. Only programs which have sufficient granularity to not affect other states would be subject to the adjustments. Spending programs which span across several states would still need to be synchronized. If one state making a part for something being used by the nation as a whole decided to just take it all out of the budget (say a widget going into a weapon or tranportation system), what would the nation do? Crossing out the component eliminates the program. So eventually, some entity would still need to coordinate just how the budget adjustments would be handled. We do that today through the Office of Management and Budget, so what’s different? We find outselves in this crisis because one portion of the nation since it’s founding has demanded that its approach to society be considered the only right and correct way and that their feelings are hurt when their ignorance and backwardness gets noted. We should have finished Reconstruction when we had the chance.

  26. destor23 says:

    I think you have a great idea, from a practical standpoint but not necessarily a moral one. Basically, I see too much “State’s Rights” here. One minute, you’re opting out of FEMA, the next you’re opting out of the Civil Rights Act. Now, if everyone were equally mobile and could, at the drop of a hat, leave states that make awful decision for better communities, this might not be so bad. But I worry that good people will be trapped with the consequences of terrible decisions under this kind of system. Which is not to argue, by the way, that the current system is much better in that regard.

  27. Roanman says:

    @BR

    You’re looking for reasonable. It will be blamed on him because he’s the big ass obvious target in a world too lazy to think things through. We live in the time of the knee jerk reaction brought to you courtesy of instantaneously delivered spin.

    I believe, unfortunately that the only thing cuttees would be thinking is, This was your big idea moron”.

    It would take a hero. I’d like to be wrong here, butI don’t see it in this guy or his party.

  28. techy says:

    Sorry Barry but when it comes to politics you are a bit naive. you are expecting humans to be rational and fair. Almost 45% of the people beleive organized religious beleifs are the most important thing in the world, everything else is secondary and they are willing to fight for it. This whole deficit thing is just a political fight because it looks weird to debate about religious beleifs and race in the 21st century. So the repubs just make debt\deficit as the war cry when dems are in power. And their voters definitely want the liberals to fail and they are willing to pay a price for it.

    I will vote republican if they can drop all the religious things from their platform, but they wont be the current republican party.

    Organized religion gives power to the stupids, its just sad that somehow its a big deal over here just like it is in islamic countries.

  29. jmpetersen says:

    Like the idea…but implementation comes down to incentives. What incentive scheme could be created for each of the participants to make this move forward? There’s the 5% penalty for not submitting a plan. What else?

  30. GB says:

    Sounds like a super-duper committee with CBO as enforcer. On the former, we have proven a talent at dodging the committee approach. On the latter, would the CBO be considered neutral/non-political, or would there be a Fed-like showdown (or worse) between CBO and congress? Possibly worse, I think, because at least the Fed has an established public voice. Plus elements of @gms777 and @Westport_R comments.

    ___________

    BR: No. The CBO reviews and evaluates the flow of Federal funds to determine how much each state currently receives. All of this must be passed by Congress.

  31. constantnormal says:

    It’s an imperfect idea, due to the inequalities of federal spending on the states, and the basing of some critical aspects of some critical programs (you’ll pardon me, I hope, if I cannot come up with any examples at the moment) entirely within one state, or spread across states, some of which decide to cut that program, and others not. So there is, of necessity, going to be a lot of failed federal efforts simply as a result of this formula.

    But hey — is that any more than we see today? On balance, despite being less-than-perfect, I think it is “good enough” … or rather “almost good enough” …

    Unfortunately, there are a few problems that move this from the realm of the possible to that of Fantasy Island.

    1) While the office of the President may get to meter out the Congressional-mandated budgets, it is not an iron-clad “right”, and the Congress would step in immediately, most likely to impeach the president for intruding into the Constitutional prerogatives of the Congress to dictate our national spending and taxation (I know, the irony herein is strong).

    I think that Obama stands a better chance of identifying Congressional obstacles, declaring them to be enemies of the nation, and either whisking them away to Guantanamo Bay, or sending them a visit from a nice Predator drone. Those actions are within the scope of his authority granted by the Congress (or so he would have us believe).

    2) Several trillion of the ongoing wasteful spending is for military fiascos that Obama (apparently) favors. I doubt that he would want to cancel such pork-laden projects, no matter how much money they would save. And then there is the matter of the loss of tens (hundreds?) of thousands of jobs of military contractors … again, we would see the president driven from office, but by mobs of citizens instead of the Congressional mob …

    http://www.bloomberg.com/news/2013-02-22/flawed-f-35-fighter-too-big-to-kill-as-lockheed-hooks-45-states.html

    http://www.businessweek.com/videos/2013-02-21/littoral-combat-ship-is-like-klingon-bird-of-prey

    If there is any exit from the cul-de-sac we are trapped in, it will be a solution that is enacted gradually over decades, without Congressional interference, or in some form of chaotic collapse of our economy/society (the “quick fix”).

    3) And as to the largest financial problem that the nation faces, the outa-control explosion in health care costs, Obama has already shown us his colors with Obamacare, which supports the health care industry (mostly the insurers, but the other providers too), allowing no citizens to escape, and applying only the tiniest of measures to actually rein in health care costs. No way is he going to do anything that threatens his favored special interests. Looking for a growth industry? Try medical tourism, where US citizens flee this country in search of effective and inexpensive treatments to their health issues. Just don’t go for an operation on a Carnival hospital cruise ship …

    I think that the only workable solution to our troubles is the one that Mr Market will eventually deliver, the same one that uprooted money in politics in the 1930s … that being to burn (almost) all the financial assets in the nation to the ground, and start over.

    There is no guarantee that we will start over in a better direction (e.g., 1930s Germany), but I think it is our best hope for “change we can believe in” … and a helluva thing it is to have to hope for such a catastrophe …

  32. jim2445 says:

    Lets look at this from a different direction. Right now rich states, such as Illinois, are subsidizing poor states,such as Mississippi. Asking Mississippi to forgo spending future wealth redistribution would be like asking for $2 back for every $10 they took, hardly a great inconvenience.
    Why not every second, or third, year simply send each state a transfer payment equal to the amount of in excess of the years federal tax payment spent in that state. Those states supping at the rich states table’ would receive a corresponding diminished amount of federal monies which would equal their federal contribution.
    This would force state politicians to prioritize both state and federal expenditures. Of course it would also break the cycle of welfare dependency that has hindered many states from investing in education and health care rather than using the tax money of well paid workers to fund movement of their high paying jobs to low wage welfare states.

  33. a2ricedgti says:

    It doesnt really solve the overarching issue of money’s influence in politics. The various states would “decide” what cuts would be made, but their list of options and how the various options would be executed would be pre-screened by the moneyed interests. Any options that filtered down to the people would be, as usual, the lesser of two evils.

  34. DeDude says:

    It would seem to me that you would simply get the same problem of “give the pain to others and the benefits to me” at the state or local level instead of at the federal level. Should it be the military base at the east or the west end of the state that is closed? You cannot take the politics out of policy unless you get rid of democracy. That is one of the reasons that dysfunctional societies drift towards totalitarian rule – people get fed up and want a quick “solution”.

  35. Theravadin says:

    The problem is that too much fed spending is not state specific – defense, foreign affairs, regulation of financial markets…

  36. thatguydrinksbeer says:

    So when a state that ops out of FEMA has a *major* natural disaster they’re on their own. Only in Fantasyland.

  37. rd says:

    Bridget:

    The GOP would be insane to hand over the job of selecting the cuts over to Obama. The country is polarized and the Democrats have almost no hope of winning House seats in many areas. However, many of those safe GOP House seats are in states that receive more federal spending that they pay in taxes.

    Obama can, with a very straight face, simply target discretionary cuts on spending in those GOP safe seat areas with federal spendig in excess of the per capita average. After all, that appears to be where some of the more profligate spending is while the Representatives and local citizenry are the people most vociferously demanding spending cuts. The Pentagon could even permanently move some military personnel and base functions to other locations as part of cost-cutting consolidation. There are a lot of Democratic districts that would love to have their military base beefed up.

  38. [...] Using Game Theory to Solve Government Spending – Mr. Ritholtz’s blog The famous Russell Long quote above reflects a basic truth about [...]

  39. constantnormal says:

    The biggest problem we have in our government is that the Congress has no effective checks on it. They pass the laws that dictate their own compensation and behavior, and have an outsized representation of protection in the Constitution. When they saw that presidents could pose a threat to their rule, they modified the Constitution to include term limits — but only on the president.

    And the Constitution specifies rather clearly that the power to tax and spend lies solely with the Congress. All the noise about what this president — or any president — can do is simply that … noise. The Congress is holding all the cards.

    The only way that we are going to get money out of government (without a complete replacement of our system of government) is for the Congress to legislate money out of government … the Supreme Court backs the Big Money interests, and so does the president. Adjust to the existing Reality (as BR so adroitly recently wrote, on a different topic).

  40. Al_Czervik says:

    @ b_thunder correctly identified the three cancers afflicting our economy.

    After reading Steven Brill’s brilliant Time Magazine cover story on the healthcare system, I’m feeling pessimistic that anything can be fixed. We are a first-world country with a third-world government.

    Am thinking about whether there should be a size restriction on countries to limit the potential for damage by regulatory capture.

  41. WKWV says:

    So Alaska has to pay for half of the Coast Guard, South Carolina has to support Shaw Air Force Base and the District of Columbia has to budget for the White House, The Supreme Court and Congress? It’s nice to have people earning money in your jurisdiction, but the benefit isn’t always local.

  42. bear_in_mind says:

    I think this is a terrific concept IF politicians were responsible to their states, districts and electorate at-large. Virtually all evidence suggests just the opposite is the case.

    Exhibit A
    Citizens United
    http://www.citizensunited.org/

    Exhibit B
    Koch Brothers
    http://www.kochbrothersexposed.com/

  43. readerOfTeaLeaves says:

    Aligning incentives with consequences?
    That’s innovative.

  44. advsys says:

    What about the wisdom of Solomon? What if you gave each side a target of 50% of the total you want to cut. ie, one trillion for the dems and 1 trillion for the repubs or what ever the dividing lines are. ie for instance the repubs could then task the tea party with half a trillion and the rest of the party with the other half. Yes, each party would cut what they don’t like but those are well known already and it seems that it would not take more than one week to get a budget and the end result would be cuts from both sides favorites which is what fair is all about after all.

    I think you have also alluded to another key problem. Accountability. Add that back into the mix in any way you can and things would change drastically. ie, hold someone responsible for not doing as they say. When they vote deficit bust, use the power of the media to show a video of their hypocrisy. over and over again until everyone gets that in the future they will be accountable for their actions.

    Just a thought

  45. BillG says:

    The problem with this idea is that some states simply have more federal spending than others do. If you ask some state like Virginia to cut 20% of federal spending then they’re cutting stuff like the military and the CIA. If you ask Wisconsin to cut 20% though then you’re probably going to see cuts in medicare and social security because that state doesn’t have any military bases, national labs, national parks, or any major federal installations.

  46. Joe Friday says:

    Unfortunately, all of this ignores the fact that cutting spending cannot get us anywhere even approaching addressing the federal deficits & debt.

    We have a revenue problem, not a spending problem.

    Non-defense discretionary spending during Obama’s first term was already at levels not seen since the Eisenhower administration in the 1950s.

    Cognitive dissonance run amuck.

    BTW, this isn’t about deficits for the American RightWing (check their track record, they could care less). It’s merely a foil for their attempt to roll-back government (and society) to pre-FDR levels. The Rich & Corporate have no need for pesky little details like Social Security, Medicare, the EPA, the Federal Minimum Wage, and anything else that gets in the way of them paying even less taxes.

  47. Ramstone says:

    Robert Shiller suggests approaching this from the other side of the ledger with revenue sharing. In other words, Uncle Sam says “Here’s your state’s nut, spend it the way you see fit.” If a state’s too clusterfucked to spend it, it goes back in the till.

    We had revenue sharing from Nixon thru Reagan, so hardly unprecedented.

    http://www.nytimes.com/2010/08/29/business/29view.html

  48. AtlasRocked says:

    History is against you: Once a population determines they can vote to get other people to pay for their stuff, they drive the nation into failure. The pattern is clear all over the earth in contemporary cases too – no nation is voting to fix their spending/taxing problems. The top level of gov’t cannot be both the policeman/regulator, and the divider of wealth. The second task always become more important to the people than the first task.

    Second problem: One congress cannot constrain the next. Continuity could not be maintained.

    It aint going to be fixed Barry. A significant portion of our population does not think the debt is even real. Another thinks inflating it away is a great idea, to hell with existing citizen savings accounts. I find only about 30% think we should pay it off, no majority there.

    The current debt is beyond the ability of the populace to pay it, and I have the best case analysis to prove it.

  49. frodo1314 says:

    Best suggestion I have EVER seen at this site BR. Ony I would up the penalty for inaction to at least 10%

  50. Joe Friday says:

    AtlasRocked,

    History is against you: Once a population determines they can vote to get other people to pay for their stuff, they drive the nation into failure.

    Except the “population” didn’t vote for massive tax cuts for the Rich & Corporate and massive Corporate Welfare. By large majorities, they want to reverse both.

    The current debt is beyond the ability of the populace to pay it

    Why should they pay for a burden they didn’t create ?

  51. calvit64 says:

    Isn’t this about what the EU does?

    My counterproposal is a constitutional amendment of two parts:

    Part 1 stipulates each and every member of a congress that does not deliver a balanced federal budget before the start of the fiscal year is banned from re-election at the end of his or her term.

    Part 2 stipulates no member of congress may vote on a bill that influences the financial interests of his or her campaign contributors (aside from actual constituents).

  52. fineoldcorker says:

    I like the BR’s suggestion, but I think it would wreak havoc with major programs. Defense for example would be left with a an enormous hodge-podge and too many programs would wind up unworkable. You gotta a have a whole program or nothing.

    My suggestion is to require that each Congressman make a strict rank order prioritization of the largest capital programs that will total 50% of the Federal budget for the next ten years. Each Congressman casts a secret ballot. The lowest priority programs which total 20%, get cut or pushed into mothballs.

    The remaining 50% of the Federal budget can be cut as BR suggests. Some more jiggling within Departments would have to take place to make things work, naturally, but that can be left to the bureaucrats.

    I have considered one little piece of the program situation: prioritization of Defence weapons development programs. The real defence needs are: (a) contain Iran, (b) contain North Korea, (c) oppose terrorist threats selectively. Any new weapons that do not directly relate to these tasks ought to be defunded. World policeman role and general military fixer roles can be dropped.

    Based on that, were I a Congressman, I would place: F-35, SSN-774 Virginia Class Subs, V-22 Osprey, KC-46A Tanker plane, Trident II missile, Littoral Combat Ship, and UH 60M helicopter, on my defund list. Allowing 10% of the cost of these 7 programs to the various military services to refurbish old equipment in lieu of the new systems builds would still save about $630 billion!

  53. kaleberg says:

    I think spending cuts are a silly idea. We should just eliminate the special interest 50% tax rate on dividends, interest and capital gains, then raise high end taxes across the board. That would probably balance the budget. If we also brought back the corporate income tax, maybe back to 25% of gross, not net, we could run a huge surplus even if we bought everyone a platinum pony. The Reagan experiment failed. Why are we even discussing spending cuts?

  54. Giovanni says:

    Barry, the theory is great but as so many have pointed out the execution is the sticking point. Although Sailor531′s solution sounds like “The Lottery” to me but the real challenge is that Congressional Representatives are elected by very specific localities (can you say gerrymandering?) while their duty is to represent the whole country’s best interests…. which doesn’t get them elected or re-elected. There are so many issues to deal with but if I could only pick one to start with I’d say campaign finance reform. Currently the best and most obsequious panderer stands the greatest chance of being elected or re-elected and this must change. The yin to that yang is that if we limit the power of the legislative and executive branches too much we will effectively be run by the bureaucracy which in most cases outlasts elected officials. Short of following the Western Roman Empire (and only lasting a thousand years) by allowing the weariness of common citizens to devolve into a desire for a savior (emperor/dictator/divine ruler) the best long term solution seems to be reinvigorating common citizens sense of civic pride and responsibility, and getting them back in the game of actively participating in the conversation of what’s the right direction for the country as a whole.

  55. socaljoe says:

    Why not make more government local?

    Citizens would have a stake in how the money is spent and skin in the game how it is taxed.

    Seems to me citizens would be more willing to pay taxes if the money is spent in their community and they had some say over how it is spent, instead of spent 3000 miles away at the whim of some congressman in Washington.

    It also seems to me that government spending would be more sensible if the decisions are made at the local level by those who have to foot the bill and are most affected.

    Less confiscation of wealth from one constituency to buy votes from another.

    Taxation with representation… what a novel concept.

  56. elwatusi says:

    Nice idea, but this is a fail in two ways.

    Nation-wide Public Goods:
    This proposal ignores the existence of shared, nation-wide public goods. Every state will overspend on things for themselves (i.e., their constituent’s social security checks) and underspend on shared items (i.e., defence spending) – hoping that another state will pick up the slack. As a result, important nation-wide public goods like defence, R&D on health/IT/etc, NASA, the EPA/CDC and other agencies, etc, will all see their funding plummet – to everyone’s detriment.

    Euro-like Policy:
    Separating states like that, given that many like VA have long enjoyed indirect (and invisible) subsidies from richer states via federal taxation/spending, will introduce the euro area problem of shared monetary policy with balkanized fiscal policy.

  57. AHodge says:

    i like it
    no representation without taxation

  58. pintelho says:

    It’s a good idea on paper. Unfortunately, I think this is how it works already except that they aren’t usually cutting funds to their state but lobbying for more funds going to their state.

    But formal delegation mini-committees sounds good on the surface for sure. How to enforce that kind of behavior amongst the congress critters is the real challenge.