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Sunday, October 26, 2014 |  Madison, WI: 46.0° F  Fair
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Liberals must see light on smaller government
Without consensus on this issue, the political divide will continue
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Now that the recalls are over, some Madisonians believe our most urgent task is mending a body politic that's been bruised and battered by the electoral combat of the last 16 months. Confrontation, demonstrations and petitions are out. Respect, tolerance and dialogue are in.

Respect and tolerance are always welcome, and last week Dave Cieslewicz contributed an admirable column to Isthmus urging Democrats both to speak the language of civility and find common ground with the broad political middle. Citizen Dave deserves a hearty two cheers for this piece, but he does overlook an essential component of common ground, which is a common understanding of what our problems are. This understanding exists on many specific political topics like education, but on the biggest long-term issue facing America - the size and scope of government - the divide between conservatives and progressives is huge. Without at least some consensus on this fundamental issue, the political battles of the next few years could make Wisconsin in 2011-12 look like the Era of Good Feelings.

The simple fact is that the left and the right have very different visions for America. Progressives like activist government and expansive social insurance programs such as pensions, Social Security and medical insurance, all funded by taxes on upper-income workers. Many progressives also believe history ultimately goes in only one direction - towards greater public provision of services, protections against the vicissitudes of life and regulation of the marketplace. Because there's no limiting principle to their view of where government should act (at least with respect to material needs), progressives inevitably find ways to expand government's role and never willingly accept cuts in government services, with the possible exception of the military.

The problem with the progressive view is that it is bankrupt. This is not hyperbole; America literally cannot afford the government it already has, let alone expand it. The federal government alone currently has unfunded liabilities - i.e. promises to provide government benefits in excess of available funds - of at least $50 trillion, with the actual figure probably exceeding $100 trillion. Most of these liabilities come from the Medicare program, whose costs are skyrocketing. For comparison's sake, the value of all goods and services produced in the U.S. economy this year will be about $16 trillion. There is simply no way that Medicare and other social insurance programs can be sustained at their current spending rates.

Dealing with unfunded public-sector liabilities is an exceedingly difficult political issue, and both parties should be in the arena putting forward ideas on how to address this painful but unavoidable problem. On the Republican side, a Wisconsin politician - U.S. Rep. Paul Ryan - has in fact developed a long-term proposal for reining in entitlement spending and putting the country on a path towards fiscal solvency. Democrats have been very critical of this plan but have offered nothing in its place.

This was evident in a revealing and astonishing exchange between Treasury Secretary Tim Geithner and Ryan when Geithner appeared before Ryan's House Budget Committee on Feb. 16. The Treasury secretary did not dispute figures that showed entitlement spending and federal debt taking off in the middle of the next decade due to greater retirements of baby boomers and accelerating health care costs, but instead responded that "we're not coming before you today to say that we have a definitive solution to that long-term problem; what we do know is that we don't like yours."

Unfortunately, knowing what you don't like is not a basis for governing. Too many Democrats seem content simply to oppose any attempt to rationalize or reform unsustainable government programs. This is not a new phenomenon, but it is an increasingly irresponsible one. As ex-presidential candidate and proud Democrat Gary Hart recently wrote, "Sometime in the last 30 years, the (Democratic) party of progress and change became the party of reactionary liberalism." Reactionary liberalism that never gives an inch on progressives' sacred cows is also a stinging but apt description of Wisconsin's recall effort.

Given the extraordinary budget challenges, Democrats and Republicans should work together to transform the delivery of government services to ensure that they are provided as efficiently as possible. Programs should become more focused and designed around the power of incentives, rather than coercive administrative controls, as the means of controlling costs. Redesigning government in this way will be challenging, and the effort can only be improved if creative Democrats, Republicans and independents all lend their talents and experience. This is the most important area where conservatives and progressives should find common ground.

It won't be easy for many progressives to adjust to the new fiscal realities, and I'm certain many won't, but the ground has shifted, and they will either adapt or grow even more frustrated. Perhaps they should remember the words of one of their heroes (and mine) who was recently awarded the Presidential Medal of Freedom. Bob Dylan's lyrics from nearly 50 years ago are even more appropriate today: Your old road is rapidly aging, please get out of the new one if you can't lend your hand.

Larry Kaufmann is an economic consultant based in Madison.

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