TRANSFORM WASHINGTON BY EMBRACING HUMAN FOIBLES

“…  Look, Washington is broken. …So we’ve got to transform Washington. And we’ve got to do some house cleaning. But what we also want to do is to remind young people that if it weren’t for government, then we wouldn’t have a Civil Rights Act. If it weren’t for government, we would not have the interstate highway system… so part of my job, I think, as president, is to make government cool again.” -Barack Obama, ServiceNation Presidential Forum

Columbia University, September 11, 2008

The spectrum of mainstream American politics is very narrow relative to other functioning democracies. It’s no wonder then that single-issue, identity politics cumulatively generate a disproportionate amount of attention. Coupled with gerrymandering abuse, this leads to a bunch of relative extremists earning a trip to Congress. Although the average view is superficially balanced, our elected officials are rarely incentivized to work cooperatively. Hence, achieving Pareto efficient allocation of your hard-earned dollars is a process doomed from the start. In this reality the only objective measure of success is bringing home as much pork as possible. In the spirit of Martin Luther King, Jr's birthday I have my own vision for change to share.

Making Lemonade.  Since massive government stimulus is going to be the first major tool of Obama’s tenure used to slow the rapid deterioration of our economy I hope we can adopt some aspects as a template for future government spending methodology. Each state was asked to submit “shovel-ready” projects that are ostensibly capable of creating meaningful jobs. It doesn't take a cynic to realize we can expect the media to make sport of reporting on a host of “Bridges to Nowhere.” Government spending as we know it simply can't compete with the efficiency of private capital flows so why waste energy on outrage? I propose we accept this reality and consider how to build a better mousetrap.

Campaign finance reform is laudable in spirit, but is too vulnerable to loopholes. Meanwhile, Obama showed that “small ball” fundraising is not only an awesome validation of his popular support, but easily scalable with today’s technology and strong marketing. I submit this is exactlt the type of support anybody seeking higher office should be able to solicit.

Oink Oink.  Corporate spending on lobbyists, in theory, is not inherently evil, but is rife with potential abuse without effective oversight; just like anything else including CDOs. My solution embraces pork spending. Instead of moralizing the issue, we should give every state a dollar allocation based on census population figures and put the burden of efficient spending on the state. 5% of a 4-year rolling average of federal tax receipts doesn’t seem overly generous based on a personal guesstimate that wasteful government spending hovers around 20% of total spending relative to private enterprise. This way Senators cannot claim credit for bringing in pork, and it would be incumbent on state officials to figure out what’s best.

Free Uncle Ted!  I would take this incentivization plan further by availing a bonus pool of another 5%, using the same formula, that automatically rewards success as determined by gains in tax receipts. This would lead to lower levels of taxation (state, local and otherwise), as always, since that is the primary mechanism that any state/country uses to compete for investment dollars. If a state has an infrastructure or environmental liability that makes for an unfavorable comparison, it’s not a stretch to anticipate that those issues would be addressed by the basic state budget on a timely basis. After all, job growth is the lifeblood of any economy. An acillary benefit would be a crack down in tax avoidance abuse as the state would have more to gain than the face value of lost tax receipts. Finally, the august Senate would be freed to do more of what they are supposed to do: think big. Without mandating highly subjective age-limit policies, this also inhibits "small state" senators like Ted Stevens from being in a position to wield undue influence because of seniority.

Prudence. In this example the country would still be ahead by 10% versus the status quo. This is the pool of money savings that we can also split between spending and savings. 50% should be made available toward community projects/bailouts that Representatives can plead cases for on an individual basis, and the other half reserved for a rainy day/debt retirement fund to signal to the Treasury market that USD devaluation is not fait accompli. Obviously I demonstrate little “inside baseball” savvy here, but that's the whole point of the idea: increasing transparency and accountability of our spending practice will in itelf do most of the work of negating the importance of insider politics.

A tidal wave of idealistic energy helped usher in Obama to the White House. Hopefully he can spend this extraordinary amount of political capital efficiently and still continue accumulating more. Now we need to start figuring out how to encourage and enable more of the Barack Obama archtype to enter politics and transform the quality of Congress.