Thursday, December 13, 2012

A Tale of Two Budgets

There was a time in my life when I thought the United States would be better off with a parliamentary system of government—instead of the presidential system that it has had for 223 years.

I expect that most people who spend much time thinking about politics have played the game that I have. It goes like this: if I were in charge of the world, how would I rewrite my country’s constitution so that things would work better? Right now a lot of people must be playing this game, as they watch the dysfunctional Kabuki theater that is the current congressional lame duck session.

If you are like me, you will be very happy when we get to the point where we don’t hear the phrase fiscal cliff every time a newscast comes on. The economist and commentator Irwin Stelzer had a better term yesterday evening on BCC radio. He said, aptly, that a better metaphor would be a fiscal bungee jump.

After spending a year in Europe as a student, I became enamored of the parliamentary system. Here are some of that system’s attractive qualities. Election campaigns are mercifully brief—mainly because usually no one knows for sure when the next parliamentary election will be until a few weeks before. You do not have divided government, as the U.S. currently has with voters electing one party to control the House Representatives and another to control the White House. If a government becomes extremely unpopular, it can be brought down and replaced almost immediately. And, perhaps most attractively, it is easier to find a political party that is in line with your own values because there are more of them.

The fact is, when we have only two parties (for all practical purposes) to choose between, most of us will find ourselves voting for the lesser of two evils because neither party will correspond exactly to every nuance of opinion that we hold on the wide array of social, economic and legal issues of the day. It’s no wonder that U.S. presidential elections tend to devolve into highly researched marketing campaigns that attempt to push as many hot buttons for the highest number of targeted voters as possible.

Eventually, however, I came to the conclusion that the United States is simply too large a country—and too complex, given its fifty state governments—for a parliamentary system to be able to work effectively. The current system may have lots of problems, but it’s hard to think of a better one.

The difference between the American and European political systems can be seen clearly in the way the U.S. and Ireland (where I currently live) are going about their budgets. While Barack Obama and John Boehner butt heads and hope that they can make the other appear to be responsible for the looming failure to ward off across-the-board tax increases and budget cuts, Ireland’s Taoiseach Enda Kenny simply presented a budget that was pre-ordained to be passed by Dáil Éireann, the parliament. Kenny only had to negotiate with members of his own party, Fine Gael, and his coalition partner, the Labour Party.

In the end, though, the practical result in Ireland is not altogether dissimilar from the U.S. going over the fiscal cliff. The Irish are looking forward to significant tax increases and budget cuts. This isn’t exactly because Fine Gael and Labour thought this would be a fine and good way to manage things. They had no choice because they were working under constraints imposed by the so-called troika (the European Union, the International Monetary Fund and the European Central Bank), which had to bail Ireland out of bankruptcy.

At the end of the day, does it really matter what political system a country has, as long as it’s essentially democratic in nature? Won’t a society get around to doing what it needs to do under whatever system it happens to have?

The answer is probably, yes—although some systems seem more conducive to decisive action than others. But then decisive action is always easier when there is a predominant political consensus. And that is America’s problem. The country is very divided about what kind of nation it wants to be. In fact, when it comes to consensus, America has the same problem as Europe. It likes the idea of ever increasing government financial obligations to its citizens—but no one (except maybe Warren Buffett, President Obama and a few others) wants to pay for it with their own money.

Here’s a dirty little secret. The reason some billionaires, like Buffett, seem happy enough to see their tax rates go up is that they know that, despite politicians’ claims and promises to the contrary, there will always be loopholes to shelter their money—as long as they contribute wisely during election season.

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