(4 of 5)
A Grand Compromise
Both Democrats and Republicans could also coalesce around another concept: fiscal subsidiarity. This doctrine holds that problems should be solved at the lowest government level feasible; it means that more federal revenue would be transferred to states, cities and towns, leaving less for programs directed from Washington. Democrats have traditionally looked to federal programs as key for social relief and public investments. Yet more than ever, sustainable reforms need local design and backing. Suppose that we finally agree to collect more revenue in order to boost spending on health care, education and clean energy. The increased taxes would be collected by the Federal Government and then transferred to state governments, which would design and implement the public programs together with local governments.
A third point of convergence could be to rely on market-type solutions whenever possible. If Republicans accept the need for greater public revenue to address social needs, Democrats could accept the use of school vouchers and personalized health and education accounts as a means to instill personal responsibility within government-financed programs. Similarly, Democrats and Republicans could agree to implement a carbon tax rather than a cumbersome, Wall Streetrun cap-and-trade system as the way to help us move to a low-carbon energy system. The government would phase in a gradually rising tax on carbon dioxide emitted into the air from coal plants and other facilities, with a lead time to encourage the shift toward nuclear, solar and wind power. Similarly, both parties could accept that upgrades in infrastructure (roads, power, environmental conservation and the like) would be financed through tolls and user fees; such mechanisms place the financing burden, as much as possible, on the beneficiaries of the spending.
Finally, our political leaders could agree to get the runaway military budget under control. Just as Republican President Dwight Eisenhower once warned us, the corporate lobbies for weapons systems are so powerful that Congress has a difficult time cutting wasteful programs even when they're rejected by the brass. Perhaps we can also agree that pumping more than $1?trillion into Afghanistan and Iraq was a colossal waste of treasure that should finally be halted rather than ratcheted up yet again in Afghanistan. A few billion dollars for water, clinics, schools and improved agriculture for the peasant villages of Afghanistan's countryside would bring stability much sooner than $100 billion per year in military spending, which is likely to perpetuate the cycle of violence and instability.
There's a lot of potential common ground in that list. But compromises like these won't happen unless two conditions are met. The first is that taxes can no longer be a game of political chicken, with each side waiting to pounce on whoever utters the T word first. Since that game has been the Republican strategy for 30 years, a national breakthrough will require Republican statesmen who will tell the public the truth: that higher tax revenue as a share of GDP must be part of the fiscal solution, just as much as sensible tax reform and compromises on how and where the revenue is spent. Unfortunately, a proposal for a bipartisan commission that might have moved the country in that direction was recently nixed by Senate Republicans, precisely out of fear that some Republican commission members might have signed on to such a compromise. The uncompromising, antitax Republican position is simply too good at the polls. So now we'll need straight-up leadership, without the shield of a commission.