The future sans the government Santas: Will anyone try to map it?

  • Article by: LORI STURDEVANT , Star Tribune
  • Updated: May 30, 2014 - 6:20 PM

The era of government “gifts” may be over, but not the era of government revenue growth. Senate hopefuls, your visions?

Imagine a campaign for the U.S. Senate this year that’s about what Americans can do together to make this a better country in the 21st century — and not about what 20th-century program or tax should be cut or preserved.

That’s a campaign I’d like to cover — especially after reading a new book, “Dead Men Ruling: How to Restore Fiscal Freedom and Rescue Our Future.”

C. Eugene Steuerle, its author, isn’t a household name, though he’s the author of 15 books, a thousand or so policy papers and a blog titled “The Government We Deserve.” But among Minnesota economic policy wonks, the former high-ranking Treasury Department staffer is enough of a rock star that a couple of them urged me to sit in as he discussed his newest book Wednesday at the Humphrey School of Public Affairs.

I’m glad they did. Steuerle’s analysis fires the imagination about what all those candidates who paraded across civic center stages at dueling state political party conventions Friday and Saturday might discuss this year if the next Congress could be unshackled from spending commitments made by Congresses elected decades ago — hence “Dead Men Ruling.”

Steuerle is no apostle of austerity. Rather, he speaks of America as a rich nation possessing an “ocean of possibilities.”

By the numbers, it should be so. The U.S. gross domestic product per household is $141,000 today and is projected to reach $168,000 in 10 years, he said. Today, government at all levels takes $55,000 of that amount for spending and tax breaks. It’s reasonable to expect government’s share to grow to about $65,000 per household in 10 years. Put another way, that’s an additional $1 trillion in annual government revenues.

What to do with $1 trillion more per year? That’s the debate I wish Minnesotans could witness his summer and fall.

One candidate might trot out a “prevention budget” and call for an all-out push to prevent Alzheimer’s disease and diabetes and to improve American nutrition. Another might have a “save the children budget” offering quality early childhood education and year-round elementary ed. Another might tout a “climate stabilization budget” featuring measures to reduce carbon emissions into the atmosphere. Yet another might push a “jobs budget” that spurs new industries offering living-wage jobs — though Steuerle warns that tax cuts that are not accompanied by comparable spending reductions are really tax increases on future generations.

But unless elected officials are also willing to touch some political third rails, Minnesota and the nation will never get to that debate. Those heretofore untouchables are Social Security and Medicare on the spending side and deductions for home mortgage interest and health care benefits on the tax side. I’ll toss in the low federal capital gains tax rate, too. Those untouchables are scheduled to more than consume the entire additional $1 trillion.

With an additional $1 trillion or more per year, Steuerle said, it ought to be possible to advance new priorities and meet new needs while still providing health care and income support for the poor and seniors — just not to the extent that was promised during what he calls the “Era of Two Santas.” That was when Democrats promised never to cut Social Security and Medicare, despite rising health care costs, longer retirements and a lot more retirees in the 21st century. And when Republicans pushed into law large cuts in taxes on capital gains and upper incomes, justifying them as stimulus for “job creation” whether or not the beneficiaries hired a single person.

Both partisan Santas sustained what ought to have been a fatal blow during the Great Recession, Steuerle says. It came in 2009 when prior federal spending commitments — entitlements plus debt service — exceeded that year’s tax revenues, just as the economy cried out for a stimulus. Every cent the feds spent that year to rescue the economy came via borrowed money.

Since then, the economy has recovered just enough for federal revenues to again run slightly ahead of autopilot outlays. That won’t last much longer, Steuerle says. Not with the number of baby boomer retirees swelling.

The two Santas may be zombies. But my guess is that they were both in attendance at their respective conventions in Rochester and Duluth this weekend.

What’s going to usher in a successor to the Two-Santa Era? Change could come via an external shock that rockets ahead of entitlement and tax promises on political priority lists. A few more superstorm Sandys might do the trick, at an awful price.

But, as Steuerle said, more often fiscal trouble “is not like a hurricane hitting the house. It’s termites.” The need for a remedy isn’t visible until the house is nearly destroyed.

Better would be a political coming of age of a large new generation of Americans who won’t stand for so little ability to direct the spending of their federal tax dollars. They’ll insist that the nation invest more in their jobs, their kids and their futures, while not abandoning their parents. They’ll vote for candidates who project a vision that’s not limited by the choices of the past. I hope they hear from one or more such candidates in Minnesota this year.

 

Lori Sturdevant is a Star Tribune editorial writer and columnist. She is at lsturdevant@startribune.com.

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