Tag Archives: Constitutional Amendment

Want Money Out of Politics? Eliminate Government Discrimination

In my work on government-granted privilege, I have repeatedly emphasized the surprising degree of harmony between left and right on this issue. Both abhor the tawdry nexus between corporate power, money, and politics.

(As evidence that I am not the only one who sees such agreement, note that Occupy.com recently reprinted an article highlighting the Mercatus project).

In an article from Friday, progressive blogger Ezra Klein seems to bolster this point:

According to Harvard law professor Lawrence Lessig, only 0.26 percent of Americans give more than $200 to congressional campaigns. Only 0.05 percent give the maximum amount to any congressional candidate. Only 0.01 percent — 1 percent of 1 percent — give more than $10,000 in an election cycle. And in the current presidential election, 0.000063 percent of Americans — fewer than 200 of the country’s 310 million residents — have contributed 80 percent of all super-PAC donations.

“This, senators, is corruption,” Lessig said Tuesday, in testimony before the Judiciary Committee. “Not ‘corruption’ in the criminal sense. I am not talking about bribery or quid pro quo influence peddling. It is instead ‘corruption’ in a sense that our Framers would certainly and easily have recognized: They architected a government that in this branch at least was to be, as Federalist 52 puts it, ‘dependent upon the People alone.’ You have evolved a government that is not dependent upon the People alone, but that is also dependent upon the Funders.”

There is much in here with which I agree. Campaign spending begets access. Access begets privilege. And privilege, in my view, “misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.”

The same article, however, also highlights the ways in which progressives and libertarians disagree about money, politics, and power. Klein quotes and quickly dismisses Cato scholar Ilya Shapiro. In his own testimony, Shapiro argues:

To the extent that ‘money in politics’ is a problem, the solution isn’t to try to reduce the money — that’s a utopian goal — but to reduce the scope of political activity the money tries to influence. Shrink the size of government and its intrusions in people’s lives and you’ll shrink the amount people will spend trying to get their piece of the pie or, more likely, trying to avert ruinous public policies.

This, Klein argues, is impractical. Moreover, he says, “between the dismantling of the social safety net and the destruction of our military might, the cure might be worse than the disease.” Instead, Klein’s preferred solution is campaign finance reform, perhaps necessitating a Constitutional Amendment to get around First Amendment concerns.

I’ll admit I favor Shapiro’s solution. If we shrink the size—and more importantly, the scope—of the government, the wealthy and well-connected will have nothing to gain from playing politics. I also happen to think that Klein’s solution—controlling political speech—is, in fact, “worse than the disease.” (I think Madison would agree…he even used similar language). Moreover, I think that there are plenty of programs to shrink or eliminate before we get to cuts that eviscerate the safety net or threaten our security. To pretend otherwise is to “shoot the cocker spaniel.”

But in the interest of finding common ground with my progressive friends, let me suggest a modest compromise: the abolition of favoritism in government policy. In an interview with James Buchanan, F.A. Hayek once remarked:

[The First Amendment] ought to read, ‘Congress shall make no law authorizing government to take any discriminatory measures of coercion.’ I think that would make all the other rights unnecessary.

This quotation appears in the beginning of an excellent—but often overlooked—book by Buchanan and Roger Congleton called Politics by Principle, Not Interest: Toward Nondiscriminatory Democracy.

Buchanan and Congleton brilliantly trace the political and economic consequences of forgoing favoritism. What happens when government adheres to a sort of “generality” principle by which all policies are required to apply to all equally? What if there are no carve-outs in the tax code? No special favors in the appropriation process? Notice that this need not be the sort of libertarian paradise that Shapiro and I favor. Government might still spend a lot of money and it might still tax a great deal. But it would be constrained by the generality principle to tax and spend in a nondiscriminatory way (Buchanan and Congleton make an allowance for a safety net by proposing “a flat rate of tax on all income combined with a set of equal-per-head demogrants,” p. 161).

Generality would require both sides to give up their own pet projects which favor particular segments of society. No more “targeted investments” in particular green technologies. No more tax credits for people who have kids. No more subsidies for farmers. No more favors for manufacturing. No more bailouts of some firms and not others. Under such a constraint, a majority of Congress could elect to subsidize industry A, but it would also have to subsidize industries B-Z.

The proposal has an intuitive moral appeal. Government, after all, is constituted to promote the general welfare of the entire population, not the specific welfare of certain segments of society. But as Buchanan and Congleton show, it also has economic appeal. For under a generality rule, “no participant has an incentive to invest resources in efforts to secure differential or discriminatory advantage at the expense of others in the collective enterprise.” (p. 44). And that can make the difference between a society that prospers and one that stagnates.

We all—right, left, libertarian, and progressive—seem to agree that something is wrong when wealthy individuals donate to politicians and politicians hand out privileges to these donors. Klein and Lessig think the answer is to regulate donations. Shapiro and I think the answer is to limit the scope of government.

We can continue to talk past one another while the nation slips deeper and deeper into the grips of the pathology of privilege. Or, we can roll up our sleeves and think of alternative solution that might be acceptable to both the left and the right. How about the abolition of favoritism in government policy?

The CAP Act: A Glass Half-Full?

Aaron Merrill is “very pessimistic” about the new “CAP Act” proposal. I’m mildly pessimistic.

First, a few things that I think are good signs:

  1. Unlike PAYGO, the law isn’t just about making sure spending is paid for. It is an attempt to actually limit spending. Also unlike PAYGO, the law targets existing, not just new programs.
  2. In the event that Congress can’t agree on where to cut, the act would trigger automatic, evenly distributed cuts across all categories of spending. This is good. Across-the-board cuts are sufficiently unpleasant to make legislators want to prioritize. But since the cuts will be evenly-distributed, Congress won’t have a strong incentive to scuttle the bill altogether. The last time something like this was tried (the Gramm-Rudman-Hollings (GRH) Act of 1985), a number of programs were exempted from the automatic cuts. These included: Social Security (which was actually in surplus at the time), veterans’ pensions, the earned income tax credit, the president’s compensation, the postal service, welfare payments, and (for the most part) Medicare. This meant that the cuts had to be concentrated on a relatively few programs. David Primo writes (p. 111) that: “At one point, GRH authorized the [office of management and budget (OMB)] to make cuts of over 30 percent to both defense and unprotected discretionary spending.” Faced with this option, Congress found it much more palatable to simply repeal GRH.
  3. It is smart to give OMB—an executive branch agency—the authority to execute the automatic cuts. The goal here is to tie legislators’ hands so that they don’t have to police themselves. GRH initially gave Congress’s Government Accountability Office the authority to execute the automatic cuts. But when a court struck that provision down, the fallback provision was for a joint committee of Congress to execute the cuts. As Primo explained (p. 111), this meant that Congress had “to pass legislation each time it wanted to trigger a sequester.” You can imagine how eager they were to do that. Ultimately, GRH was amended so that the OMB would make the cuts. And to me, that makes sense.   
  4. The CAP Act would permit legislators to avoid the cuts if they can muster a supermajority in both houses. This, too, is a step in the right direction, though I share Aaron’s concern that it is not enough. Normal legislation, of course, can always be repealed with 60 votes in the Senate and a simple majority in the House, plus the President’s signature. By requiring a supermajority in both chambers, this raises the hurdle a bit. But I would be much happier if it were a higher bar (90% of lawmakers?). Of course, even a 90% hurdle could be overcome by repealing the law. In the end, a Constitutional Amendment may be the only way to really bind.    
  5. The cuts are gradual which means that they are more likely to happen. As the GRH experience shows, spending reduction plans that call for cuts that are too dramatic often end up being repealed or ignored.

But it isn’t all sunlight and rainbows. I still have some concerns:

  1. As Aaron points out, the bill is enforced via a “budgetary point of order.” As my friend Jim Musser explained to me, the House Rules Committee can and often does waive all points of order when they consider certain pieces of legislation. In this case, this evidently means that a simple majority of a committee can basically suspend this rule whenever it so chooses.
  2. The reductions are not enough to solve the problem. They want to get spending down to its historical average, but I’d point out that the historical spending average is greater than the historical revenue average and this is a formula of unsustainable debt accumulation.
  3. The reduction in the growth of spending doesn’t start until 2013 and even then, the glide path is so shallow that after 10 years, the national debt will still be well above 100 percent of GDP (assuming revenue remains at its 10 year average).
  4. It is possible that the CAP Act could—perversely—act as an excuse to spend up to the limit. 20.6% may have been the norm for the last 40 years, but I don’t think it is the ideal by any stretch.