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March 29, 2009

Reader Comments: "Solutions"

Most readers of my op-ed, “The solution Crisis,” generally agreed with me—adding their own take. Anne, over at CosmopolitAnne comments:

The problem with our solutions is that we have forgotten what a solution is actually supposed to do. A solution should not only fix the problem but prevent it from happening in the future. All of the fore-mentioned solutions were quick-fixes, aimed to solve one specific problem. Many solutions are too hastily enacted just so that the American people cannot complain that the government isn't taking action. This goes for the stimulus package as well as the 90% on bonuses over $100,000 for executives of companies that have received tax payer funds. All that the new tax on bonuses is going to do is make the executives find some other loop-hole in the system to funnel the money from the company into their personal bank accounts. However, I agree Bowles, would much rather have a government who is seen to act too slowly on many good problems, than leaders who chose bad solutions our country will never live down. You can't blame our leaders for taking their time to carefully ponder what the correct way to fix a good problem is, but you can fault them for enacting a solution that only opens a whole new can of worms and another problem to pretend to solve. The executive and legislative branches should watch and learn from the judicial branch. Enact solutions and set standards that embody the basic underlying core values of our country and can be applied to multiple situations in the future.

Our friends over at the “Subcontinental Breakfast” agree as well—but are quick to extend the criticism to the media:

The danger of failed solutions overshadowing the very problems they were meant to solve is a real issue, but the use of tax laws for punitive purposes, at least in this case, doesn't seem like it'll end up like that simply because of the overwhelming "outrage" of the public (as beaten into our heads thanks to that great industry, the 24-7 media) about the AIG bonuses and the "greed and ambition" of Wall Street.

And in order for solutions to be spectacular failures like Bay of Pigs or Vietnam, it's usually because public tide has turned against the government actions and so it can be reported as such (and subsequently also beaten into our heads until it really does overshadow the problem).

But that simply makes it a bigger problem, because the public or whatever the media creates of it, is not holding Congress in check in their readiness to punish the Wall Street fatcats (which can lead to things like this). The solution will evolve into a larger mess if they continue to use tax laws this way, especially when people begin to realize what they're doing.

On the other hand, George at “Rand Review” isn’t quite so sure:

“Charley Rangel expressed misgivings. He didn’t think tax law should be used for punitive purposes. And he was absolutely right." You state this as what I would take to be a premise, namely: Tax law should not be used for punitive purposes. However, I am really interested to know the reasoning behind this premise. Is the proceeding paragraph (where you mention the various positions held on the progressive tax and flat tax by liberals and conservatives, respectively) the justification? If so, then aren't liberals ultimately choosing between two evils, that is to return the ill-spent $165million tax dollars vs. to lose an argument to conservatives? If the proceeding paragraph was not the justification for that premise, then I would be very interested to know what Rangel's argument was.

Posted by stevemack at 02:41 PM | Comments (0)

March 20, 2009

The Solution Crisis

On Thursday, the House of Representatives stepped up to the plate and resolved a crisis that had come to light only five or six days before. They voted overwhelmingly to impose a ninety percent tax on bonus payments over $100,000 to employees of corporations receiving a bail out by the federal government. Congressional speed must have set some sort of record.

But as outrage over bonuses and bailouts reaches epidemic levels, and Congress, the White House, and Rush Limbaugh scramble to concoct solutions commensurate with public hysteria, it might be good to pause a moment and remember Erskine Bowles. The man responsible for President Clinton’s greatest disgrace, the Monica Lewinsky scandal.

In 1995, Bowles was Clinton’s Deputy Chief of Staff (later, Chief of Staff). The story goes that Bowles believed that busy executives were handicapped by the frantic pace they were forced to keep, that they had too little time to reflect, to think, to imagine big, visionary thoughts. His solution: keep the president’s afternoon calendar free. Every day. So for a while there, President Clinton had a lot of extra time on his hands—which he filled (both his time and his hands) with Monica Lewinsky.

Politicians routinely confront problems, real and imagined, that would surely break mortals like you and me. Yet it’s never the problems that get them. It’s the solutions.

President Kennedy may have fretted about the apocalyptic possibilities presented by Castro’s Cuba. But what we remember is the “Bay of Pigs.”

There’s barely a soul alive today who can name the ship attacked by Vietnamese communists in the Gulf of Tonkin. Yet nobody gets out of the fourth grade without knowing something about the disastrous War in Vietnam.

You have to be a middle-ager with a sharp memory to remember the difficulties President Reagan had funding pro-American Nicaraguan rebels in the face of congressional prohibitions. But let it drop that those rebels were called “Contras,” and that the solution had something to do with Iran, and the scandalous picture gets suddenly clearer.

And someday, when our grandchildren write school papers titled “Lessons of the War in Iraq,” they will learn, perhaps for the first time, of buildings once called the World Trade Center.

The problem with each of these solutions is that their failure transcended both their historical moment and the problem they attempted to fix. Most effectively undermined the political legitimacy of the means by which governments act. (Remember that the “lessons of Vietnam” made it almost impossible for Senate Democrats to authorize the first gulf war to repel the invasion of Kuwait, and almost impossible for Clinton to intervene in the Balkans to stop ethnic cleansing.) To butcher a quote from Reagan, here, problems are not the problem, solutions are the problem. At least those that are—or are likely to be perceived to be—hasty, demagogic, ill-considered, or socially disruptive.

To be sure, the AIG bonuses that triggered all the hyperventilating in the political culture this week are nothing less than vulgar. They are, in fact, a genuine problem—both in the sense that they rob the failing financial system of some measure of public aid, and, more importantly, that they serve as an all-too fitting symbol of the culture of corporate greed that has brought the world economy to its knees.

It is, moreover, a problem to be solved—even though in real terms, the dollar amounts are puny compared to the gargantuan amount of money that taxpayers are currently funneling into the system.

But this solution smells like, well, a problem to me. It is, in a couple of words, arbitrary and capricious. After all, why 90%? Why not 80%? Or 100%? Or let’s throw in a little penalty and make it 110%. On Wednesday, just 24 hours before the House passed it’s emergency revision of the tax code, Charley Rangel expressed misgivings. He didn’t think tax law should be used for punitive purposes. And he was absolutely right.

But the bigger problem concerns what such manipulation of tax law will appear to say about Democrats in particular—and what they represent more generally, government. To be the party of government—which is to say, the party of law—means being the party of public fairness. And no instrument of government carries the burden of implementing liberal values of fairness and social equity than the progressive tax system. But conservatives have long argued that progressive taxation is really social engineering—that “true fairness” would have rich and poor alike paying the same “flat” tax. Once liberals start using the tax laws to punish the people they don’t like, conservatives have won their argument.

There are a thousand other ways to get at these bonus abusers. Contracts can be broken, and a multitude of lawyers have already pointed out several possible avenues of attack. Even the threat of years of litigation should be enough to spook the miscreants into good moral behavior. The problem, of course, is that litigation takes far too long to be a very satisfying political solution. By the time the case is won, the public hysteria will be yesterday’s news. No one will care or even remember.

Still, as Erskine Bowles might counsel, a good problem nobody remembers beats a bad solution they refuse to forget.

Posted by stevemack at 12:21 PM | Comments (0)