A nice piece in today’s The New York Times.com documenting the Republicans’ emphasis on cutting spending as a priority in the 112th Congress. While I’m all streamlining government, it’s interesting how a party that has at times called for government to be run as a business is now calling for government to shrink.
For example, all businesses want to increase revenues, run their operations efficiently in order to actualize savings, and expand. Revenue increases along with eliminating unnecessary expenses leads to increased shareholder income. Increased revenues are a result of selling more goods and services. Businesses reduce their expenses by replacing laid off workers with new technology and squeezing out more productivity from the remaining employees.
We can’t apply that model to government. Government does not produce goods and services for resale in the economy. Its revenues come primarily from tax receipts. Americans have been clear that they are against tax increases, even though this is one tool that can be used to address another fiscal policy issue: the deficit.
What type of impact from this conundrum can we see on the presidential election in 2012? First, for the likes of a Mitt Romney, running on business bona fides won’t do. Notwithstanding his connection to Wall Street and investment banking overall, plus his stewardship of a Massachusetts healthcare plan that reminds some critics of Obamacare, Mr. Romney shouldn’t go around talking about running government like a business unless he is ready to explain how he can grow revenues to cut a deficit while not raising taxes.
Fiscal conservatives like Mr. Romney may have to do something radical: teach and lead. They will have to teach Americans in the simplest and clearest terms that the deficit will not shrink without Americans pitching in.
Second, Mr. Romney will have to persuade not only Congress (which may not be in his hands should they share some of the blame for a still poor economy), but the American people. The average worker will have to be persuaded that giving up their tax cuts in 2012 is better than kicking the deficit can down the road.