Wednesday, May 14, 2008

Borrowing Against the Future

One of the most powerful tools the right has used to pull the wool over America's eyes these last many years has been their ability to define the terms used to discuss key issues like the economy. One of my favorite examples is "tax and spend."

It's been a rallying-cry of conservatives for years, and a knee-jerk tag to attach to anyone of liberal stripe.

But what does it mean?

Almost nothing, actually.

First of all, while liberals do tax and spend, so do conservatives, especially the spend part.

But what's missing from the phrase is the wonderful loop-hole that conservatives so often skate through. If we keep repeating "tax and spend" over and over (and it appears so often in the media, political advertising, and political speeches, that it feels like being stuck in a room-full of parrots all with the same trainer) it trends to frame all our thinking on government spending and taxation. "Tax and Spend" implies that those are the only two options, and that isn't at all the case.

Okay, the spend part of the equation is pretty accurate. Show me a politician who doesn't spend. Left, right, I don't care. Show me one. I'll go wait.

Pretty hard to find, aren't they? Actually, we pretty much hire politicians to spend, much as we hate the idea. They're there to administer our collective will and resources to solve problems too big to solve ourselves, and too important to ignore. conservatives and liberals (and even fiscal conservatives and some other kinds of conservatives) differ greatly on how these things are defined, and that's a legitimate area of debate, which is probably why the political machine has chosen to avoid it.

Taxing, on the other hand, is far from the only option on how to fund that spending. But it's significant in that it's the most direct and honest way of funding the government, and we can't have that, can we?

Governments, on the other hand, can borrow money, or issue bonds, which is just another form of borrowing. Sure, these just defer the eventual payment, and make it more expensive in the long run, but like running up your personal credit-card, it somehow feels like free money, something that a straight-forward tax is never going to be.

Now sure, there are legitimate reasons for governments to borrow and issue bonds, but it's the "candy-coating" factor that I'm talking about. "No money down! No payments for 90 days! What will you do with all the money you save?" Republicans spend (in different amounts, and on different things, but spending is spending) just like Democrats do. What's different is in how they choose to pay (or often not pay) for what they spend, and how carefully they obscure the facts of that payback.

Okay, I'm getting a bit side-tracked here, as I'd actually like to talk about a specific kind of "obscured borrowing," one I consider the sneakiest, most insidious, and most destructive of all. Call it borrowing against infrastructure. Call it borrowing against the future.

How this works is simple. Governments have assets, usually lots of assets. Buildings, land, vehicles, bridges, subways, equipment, computers, weapons, pipes, wires, office supplies, all kinds of things. But few of these assets are of fixed value. Many things depreciate just sitting there. Others wear out or are depleted as they're used. And most require maintenance, otherwise they depreciate faster and wear out faster. Also, in most governments these assets need regular updating, both to keep things current, and to adjust capacity of government services to follow rising (or changing) populations.

There are other kinds of assets as well that are even less obvious. Employees for example. It's hard to think of the stereotypical, under-motivated government worker as an asset, but each one represents a bank of experience, knowledge and training that would have to be replaced right along with the body. Yes, some employees are much more valuable than others, and some are much more expensive to replace. We'll get back to that.

When you run up financial debts, it's pretty obvious. When you issue bonds, its there for everyone to see. And when you raise taxes or fees, everyone screams. But all this other stuff I've mentioned is like an invisible bank account that politicians can dip into without creating much attention.

The easiest way is simply to defer maintenance. Stop fixing school roofs. Stop repairing bridges. Don't change the oil in government vehicles. Don't replace vehicles as they wear out. Don't paint. Don't repair. Don't fix.

Another way is to delay needed upgrades. Sewage plant over-burdened? Why worry? So what if you have to dump raw sewage into the river every time it rains? And if the EPA wants to fine you, well, blame it on the liberals... Fact is, most any such crisis of capacity is usually slow in coming. Almost universally it can be pushed past the next election cycle, and with luck, until term-limits kick in. Then it becomes someone else's problem (hopefully, the other party's).

The massive application of this strategy dates back to the Reagan administration, which just stopped spending money on infrastructure. We're, in many cases, only now seeing the fall-out (no pun intended) from that policy today, with collapsing bridges, crumbling roads, and failing levies. You've got to give some grudging respect. All than invisible borrowing deferred to not only decades after Reagan left office, but until he is several years safe in his grave.

And since our national government tends to change hands periodically, if you can simply stall long enough, any debts you run up will simply get handed off to the other party, who can take the blame if they actually to raise funds to pay off your debts. Yet another implication of "tax and spend" is that the person or party doing the taxing is also the person or party who did the spending, but very often that is not the case.

Reagan ran up the debt, Bush I ran it up more, Clinton paid it down (more than canceling out the Bush I years) and now Bush II has run it up to unprecedented levels.

Speaking of, a more contemporary (and far more contemptible) example of borrowing against the future is to be found in current US war in the middle-east. Of course, the obvious up-front costs of the war are already eye-bleedingly staggering (if there were some sort of Oscar for Government Spending, George W. Bush would certainly deserve the statue), but there are equally staggering hidden cost here.

The war has been grinding our military down to a nub. Equipment is wearing out at a phenomenal rate. Stockpiles of ammunition, equipment, and supplies (a lot of this stuff in turn left-over from the Cold-war era) have been drawn down and not replaced. Sooner or later, all this junk will have to be repaired or replaced, and somebody will have to pay for it.

But to my mind, the really tragic cost, the one that makes me want to spit, is the human one. This war has been run on the backs of National Guard and reserve units who have been deployed again and again and again in a way that nobody, a few decades ago, would have ever imagined happening short of an alien invasion or World War Three. These people, even the most loyal and determined of them, are exhausted. Most of them have to be thinking that, by now, they've more than done their service to their country, and I don't see how you can argue with them.

For many of them, they're going to take the earliest opportunity to get out of the service, and that means losing their experience and training.

Remember when I said a while back that some government employees are more valuable than others? Well, there are few more valuable than the modern military man or woman. The day of the ignorant grunt is over. The typical modern soldier is a highly trained technical expert not easily, quickly, or cheaply replaced. I'm finding good numbers hard to come by, but it seems safe to say that even the most basic infantryman has several hundred thousand dollars invested in them, and on the other extreme, a fighter pilot's costs are likely well north of two million dollars.

There's also the simple fact that combat veterans have an experience and perspective that can't be obtained through training at any cost, and to which a monetary value can't be assigned. The men and women who fight future conflicts and defend our shores need these experienced fighters, and we're pissing them away.

When you drive people out of the service, and we're doing so on an epic scale, you're most certainly borrowing against the future.

Of course, this only considers the people who are able to walk out of service whole and hearty (and bless them, I wish it was every one), but there are many more who come home with shattered bodies and injured minds, or who simply come home in a flag-draped box. To those people (or their survivors) we owe compensation for their sacrifices. To my mind, when you've borrowed against a soldier's life and future, this is (or should be) an immediate pay-back time.

Sadly, we still hear again and again of nightmarishly run-down medical facilities, of injured veterans denied benefits and proper medical treatment, even of the bodies of returning soldiers being treated with disrespect because somebody found a way to cut corners on the processing.

This makes my eyes red. If you're going to do this thing, run out the national debt, raise taxes, do what it takes, but don't try to hide your spending by putting it on the backs of the very people who have fought the war.

I know that "honesty" and "politician" are two words that rarely interact, but I think the Republicans have pushed fiscal deception to an unprecedented level. It's time for a hard, hard correction. I suggest when election time comes in November, that if you want any possibility of fiscal responsibility and accountability, you look for someone with the "tax and spend" label attached to them.

Sure, you may not agree with them on every detail, but it's right there on the table: what to tax, what to spend, and what to spend it on. From there you can negotiate.

The option is be left eternally wondering what the Republicans are borrowing, how they're borrowing it, who they're borrowing it from, and when you are going to have to pay it back.