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Saturday, September 28, 2013

The Debt Deal We Should Want

By Bruce Walker

Using the recurring battle to raise the debt ceiling to raise other vital issues, like funding Obamacare, is certainly wise and noble politics.  ObamaCare is highly unpopular; it has not gained support since its enactment, but has rather lost support, and what Senator Cruz and others are trying to do by defunding or deferring ObamaCare is perfectly proper and constitutional.

There is another approach, however, which we might want to try.  The need to raise the debt ceiling is a clear reminder that federal spending is wildly out of control.  Although part of the reason for that rise is the class of dependents whose entitlement checks drain the Treasury dry, there is an even more potent reason why federal spending is out of control: those who really run government, the bureaucrats and not the politicians, wish for federal spending to grow.

The reason is simple enough: escalating federal spending means that federal bureaucrats in management positions "need" more employees, which also translates to promotions, raises, and prestige for the bureaucrats.  These bureaucrats, who survive all elections and changes of power, have the best view of waste, redundancy, and futility in federal programs, also have strong self-interest in pretending federal programs do great good.

This selfish interest in federal spending is not limited to the Executive Branch.  Legislative staffers, mid-level managers in federal regulatory agencies, and clerks for the federal bench have the same connection to exponential growth in federal spending and the endless expansion of federal power.

There is a reason why four of the six highest-income counties in America are in Virginia or Maryland suburbs of Washington, D.C.  Wealth and power come from the federal government, and that is extracted at the expense of the rest of America.  Moreover, Americans understand this fact and resent it strongly, and it is not hard to tie high federal salaries to high federal spending.  In fact, a Gallup poll on September 23 showed that the percentage of Americans who believe that the federal government is too powerful is at a record level, while the percentage of Americans who believe that the federal government has too little power is at a record low.

Republicans should use their power to block a debt ceiling reduction unless this change is made in federal law: all income from federal employees between $100,000 and $200,000 shall be taxed at a flat rate of 40%, and all income from federal employees above $200,000 shall be taxed at a flat rate of 80%.  Because this is a tax and not a change in compensation, this would affect all federal judges, the president and vice president, and all members of Congress.

As the federal debt is reduced, this federal income tax surcharge on high-income federal employees will be reduced by a corresponding percentage.  This will give all those who really run the federal government a vested interest in reducing federal spending and ending federal deficits.  This is the sort of approach which is directly tied to raising the debt ceiling because it insists that those who have managed this ghastly system pay the same consequences that they would pay if they worked in the private sector. 

Who would argue against those poor, underpaid Washington bureaucrats, legislative analysts, and judicial staffers making a piddling $150,000 a year?  If this actually became part of the Federal Tax Code, there would be other consequences.  Property values in those hyper-rich suburbs of federal employees would drop as well.  The whole slick game of using federal power to create a new class of insulated and affluent federal employees would take a big whack.

This change could also include all lawyers and lobbyists who work in Washington.  This would cut off the escape route of leaving the federal government and entering the quasi-private sector as a paid hack shaking money out of the federal cash tree.  Washington lobbyists and lawyers would be even harder to defend to the American people.

Would this work?  It would certainly change the debate.  No longer would leftists be defending the poor, the old, the handicapped, etc.  They would be defending that vast army of fat cats who prosper when the nation suffers because the "federal solution" to problems always gives them a piece of the action.  These are the same fat cats who want more Americans poor because the poverty of tens of millions of Americans translates into the enrichment of tens of thousands of federal nabobs.

Aside from the pure political advantage, this would tie those paid by us out of taxes and federal borrowing to personal financial accountability.  If this became the standard approach when leftists squealed for higher taxes or more deficit spending, then taking money first from those rich Washingtonians who caused the problem might well just solve the problem.  It is sure worth a try

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