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Written by: Eugene Steuerle
To start 2025, I’d like to summarize how a set of intertwined and reinforcing issues, when pieced together, explain why the federal government has become so broken. I promise to dig deeper into these issues in later columns. You can or will find much of this material in my two books, Beyond Zombie Rule: Reclaiming Fiscal Sanity for a Broken Congress (recently published) and Abandoned: How Democrats and Republicans Neglected The Working Class, the Young, People of Color and the Opportunity for All (draft, forthcoming).
Wealth for the wealthy and consumption for the masses. This expression summarizes the two dominant and legislatively successful policy pursuits of Republicans and Democrats in their budget, tax, and spending policies over almost half a century. While a thriving economy requires building up wealth and distributing consumption widely, these are not enough to sustain the health of a republic.
What has been left out? Programs that promote upward mobility and ownership of human, financial, and real capital for the nonwealthy have stagnated significantly relative to other government efforts.
Who has been left out? The working class, the young, and Black people have been among the relative losers in sharing in the nation’s growth in total market income, mainly wages, and market wealth. Government transfers have focused on offsetting some of their losses with more consumption, mainly in retirement, but in ways that have exacerbated their decline in market power.
Who has won? Government tax and spending policy always creates relative winners and losers. The relative winning classes have been the college-educated, particularly the professional classes; those with wealth, particularly the rich; the financial and healthcare industries; and older Americans.
Voting patterns. The Democratic party has increasingly won over the relative winners and lost support from the relative losers; for the Republican party, the reverse holds.
Political responsibility. Both political parties and their pundits continue to focus on acquiring or retaining power in the near term. Neither has yet asked the more important question of how to adjust their agendas over the long term to serve the public best.
Prisoners’ dilemma: Addressing the needs of groups like the working class requires Democrats and Republicans to simultaneously renege on past promises of unsustainable growth in existing programs and taxes kept too low to pay our bills. They are both scared to admit to voters that “enough is enough” and bear the electoral consequences.
Inability to respond to new needs and opportunities. Unfortunately, Congress has made policy commitments to increase, in some cases forever, the share of the budget devoted to those groups that have been past winners. For instance, Congress has scheduled Social Security and Medicare together to increase future lifetime retirement benefits for an average-income millennial couple to more than $2 million (in today’s dollars, adjusted for inflation). Meanwhile, it has scheduled almost no growth in programs supporting working households.
Life-cycle effects. By concentrating so much of growing government resources on consumption for today’s and tomorrow’s old, the government continues to disinvest in the capabilities of the young, the middle-aged, and the old alike. Tacking improvements in quality of life “all on at the end” blocks what psychologist Laura L. Carstensen tells us is an excellent opportunity to engage in a major redesign of life for all ages.
Extraordinary responses to crises have become the norm. In the 21st century, fiscal and monetary policy have tackled new crises with extraordinarily high spending and monetary expansions. However, we haven’t yet figured out how to pay for most of this, even in good times. This failure has added to our modern fiscal woes and the risk that we won’t be able to respond well to the next crisis.
Restoring fiscal democracy. Our budget is unsustainable and no longer fixable by traditional deficit-reduction means. A new budget process requires restoring flexibility, or “fiscal democracy,” where a significant share of future revenues remain uncommitted. To achieve this, Congress must design new rules to limit eternal, often unsustainable, commitments to automatic spending growth and taxes too low to pay the bills.
Beyond Zombie Rule (the title of my recent book). No nation or household can function well when all its revenues, both now and projected for the future, have already been committed. Today, Congress is ruled by dead or retired legislators—zombies from the past—who have made eternal but unsustainable commitments for a future they could not possibly understand. It just doesn’t work. Fearing to do their basic job, our elected officials turn ever more to cultural fights as a distraction.
These issues, such as the breakdown of a viable budget process, the neglect of the working class by both political parties, and the increasing inequality in market incomes, are often treated as separate subjects. Because of their intricate connections, addressing one requires addressing all.
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