Fiscal State of the Union
The President shall, by the first Tuesday in October, address a joint session of Congress on the Fiscal State of the Union.
Those words are not in the Constitution or any federal law, but they should be. The president should be called on the carpet at the beginning of every fiscal year to explain what specific steps the administration is taking to improve the fiscal health of the nation, at least until the debt reaches a sustainable level. If the administration believes that such steps would not be prudent, the president should be required to explain why.
A bipartisan blue ribbon panel proposed an annual fiscal address as part of the excellent National Academies report, Choosing the Nation’s Fiscal Future (pp. 200-201). The report lays out four paths towards a manageable debt burden (one with high taxes and high spending, another with low taxes and spending, and two intermediate scenarios). But I think its single most important recommendation is creating a modicum of presidential accountability.
Why would a presidential speech accomplish what several blue ribbon panels and much handwringing in the wonkisphere have not?
Because a presidential speech to a joint session of Congress is a big deal. The president’s report on the state of the union, mandated by the Constitution, only became a major news event when President Wilson decided to deliver it in person. Now the weeks preceding the State of the Union Address produce a flood of news stories about what the president might or might not announce, abetted by strategic leaks from the White House, and even some analysis of the actual state of the union. The speech itself is covered live on network and cable television and analyzed and reported upon for several days after delivery. It becomes a focal point for discussion of the administration’s accomplishments and failures, as well as a chance for the opposition to publicize its point of view.
It is news and it captures the public’s attention, at least for a while.
The problem with our fiscal challenges is that they aren’t news. We have a large unsustainable debt burden, just like we did yesterday and the day before and will have tomorrow. It’s news when we run exceptionally high deficits, as we have for the last couple of years, or when we achieve surpluses, as we did briefly at the end of the Clinton Administration. But there’s no event that captures the media’s and the public’s attention, and the problem will only grow worse as giant deficits become old news. There’s little chance for the media to educate the public about the debt and possible solutions.
An annual Fiscal State of the Union Address would change that. There would be news coverage. There would be serious discussion of the causes, consequences, and possible remedies to the problem of too much debt. There would be pressure on the president to have some good news to announce as part of the speech, and enough media scrutiny to guarantee that it wasn’t just smoke and mirrors. There would be pressure on the opposition to put forward a coherent plan to do better than the president, not just warmed over rhetoric and platitudes.
Politicians will never seriously address the debt until the public demands that they do so, but the public only focuses on an issue when the media signals that it is important. The Fiscal State of the Union would become a media event and focus the public’s attention. It might not be the solution, but it’s a start.
Happy Fiscal New Year.
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Dear Len: Maybe an amendment to the Constitution should read: The government shall NOT interfere (interFEAR?) with the economy. GM and Chrysler should have been allowed to go into bankruptcy. Instead its being allowed to limp along and RISK tax payers money (do you understand RISK?). Furthermore, we are now being asked to invest in those two companies at the individual level, diverting capital that could be used for other more profitable and beneficial businesses. Are you going to invest in these two companies Len? If the financial community did not want to invest/bailout GM and Chrysler, why should the government with your money and mine? Government, stay out of business!
The budget message, which is submitted in February, is such a message. Indeed, most years the state of the Union is full of budget policy. The other problem is that October 1 is really not the start of the budget year and until you put teeth in the budget process to make sure bills are passed, it won't be.
The key to reforming the budget process is not to ask Congress to behave (they won't) but to shut off information on and consideration of micro budget priorities until a Joint Budget Resolution is agreed to on broad totals. After the JBR is signed, the President will provide estimates within those totals – which would become law automatically unless Congress passes alternative legislation and it is signed by the President (or the likley veto is overridden). Therein lies the rub – this proposal would be such a shift to the executive that Congress would never pass it. The most they would pass is current law with across the board adjustments to the JBR totals – although the real answer is a constitutional amendment for regional VATs (to fund discretionary) and expanded business income taxes (to fund entitlements) – with automatic business income tax rate increases if entitlement spending is higher than projected and automatic VAT increases and spending cuts if discretionary spending exceeds revenue. To use borrowing to cover the shortfall, a supermajority should be required with the understanding that this funding will be paid back by higher income surtaxes on the wealthy – which are not regional.
I can't recall any case in which the media provided major coverage to a future problem rather than reacting to the problem when it actually occurred. This is probably because future crises don't capture the public's interest. In other words, human nature is incompatible with Len's preferences. I wish it were otherwise.
If foreseeable crises made news, California news stations would have saturation coverage of the need to retrofit buildings and prepare in other ways for earthquakes. People would be bored to death and tune it out. We face the additional hurdle that almost everyone in California has felt an earthquake, but almost nobody alive today in the US has seen a major fiscal crisis.
Here's my idea instead: Invent a computer game called Sim Treasury where the object is to keep the dollar from crashing. That should engage the young people!
Do you honestly think that this would prompt an honest discussion about our nation's finances and wouldn't just be used by the Republicans and Democrats to create sound bytes and take pot shots at one another. I, quite honestly, have not heard a lot of serious talk or analysis about our current financial crisis and deficits. I have mostly heard rhetoric from each side. I do not really see forcing the president to deliver an annual speech to congress as changing this.
The Congress shall have Power To … pay the Debts