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John Hood: Leaders, not politicians, need to step up in 2019

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John Hood

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BY JOHN HOOD

Monday, December 31, 2018

As another year draws to a close, a year of Democratic resurgence in both national and local politics, I offer this challenge to incumbent and newly elected lawmakers alike. Do you really want to be leaders? Or do you just want to be politicians?

A mastery of politics is required to lead effectively, I grant you. No more how high your ideals and how ambitious your goals may be, you have to win elections and cultivate alliances in order to fashion public policy. But only some effective politicians prove to be effective leaders.

In Washington, there is an obvious test of seriousness that, alas, few would-be leaders have been passing lately. Will Congress and the Trump administration do anything of consequence to address the most consequential issue we face, fiscal irresponsibility?

The federal budget is wildly, recklessly out of whack. Its massive annual deficits will add trillions more to the federal debt in the coming years. Democrats blame the tax cuts enacted by the Republican Congress in 2017. It’s certainly the case that the reductions in personal and corporate income taxes, while growth-enhancing, will lead to lower federal revenues that would otherwise have been collected, at least in the near future. I believe the tax cuts should have been fully offset by budget cuts.

But Washington’s fiscal irresponsibility didn’t begin in 2017, and has little do with the nickel-and-dime stuff we usually hear about on cable networks and talk shows. Nearly three-quarters of what the federal government does can be described as transfer payments. It collects revenue from income and payroll taxes and then sends checks either to households (for Social Security, pensions, and welfare) or to health care providers (for Medicare and Medicaid).

The federal government has promised more outflow than can be financed with the projected inflow. Progressives say they want to make up the difference with massive tax hikes — indeed, most want to expand Social Security, Medicare, Medicaid, and welfare programs even more — while conservatives say they want to control expenditures.

In truth, neither group seems to have the courage of their purported convictions. Few have offered anything approaching a viable plan for balancing the budget. When progressives claim only the “wealthy” will pay for their grandiose schemes and conservatives claim they can bring spending into line by targeting only “waste, fraud, and abuse,” both groups are offering us a governing fantasy, not a governing philosophy. They are being unserious.

Here in North Carolina, the dividing line between politician and leader runs directly through the largest-single function of state government: financing education. Democrats have promised vastly larger expenditures for preschool, elementary, secondary, and higher education than the Republican-led General Assembly has yet appropriated. The money can’t come from borrowing, and the desired amount is too large to be financed by economizing elsewhere in the budget.

Either explicitly or implicitly, Democrats are calling for major tax increases — in the hundreds of millions if not billions of dollars a year. Will Gov. Roy Cooper include them in his upcoming 2019-21 budget proposal? Will Democrats list themselves as sponsors of such a tax hike in the 2019 session? Will the Republicans who have themselves promised much-higher spending levels be willing to sign on, as well?

I expect few such profiles in courage. Rather, I think some will be tempted to construct a kind of collusive settlement in the long-running Leandro litigation that would yield an order by the North Carolina Supreme Court to increase state spending — and, in effect, to raise taxes. This would be a thoroughly political gambit, not an exercise of leadership, and provoke a constitutional crisis.

If they would truly lead, then policymakers of both parties should be looking for mutually agreeable ways to increase the productivity of the tax dollars North Carolinians already pay into education. States such as Florida, Indiana, and Texas have higher-performing school systems as well as tax burdens comparable to or lower than ours. It can be done.

Will serious leaders step forward in 2019?

John Hood s chairman of the John Locke Foundation in Raleigh and appears on NC SPIN at 7:30 p.m. on Fridays and 12:30 p.m. on Sundays.

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