Recent Debate in Washington Raises Questions About the Role of Government

By Dan Sadowski

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A year ago, we wrote a column discussing the divided American political landscape in which voters were attempting to find the “change” for which they voted. The public clearly was not prepared for the amount of spending pushed through Congress in 2009 to confront the recession and the resulting jobs loss. Having turned the tables in 2010 with an overwhelming shift in power, Washington politicians still seem to be struggling to understand what voters intend when they vote for “change.” In the coming months, perhaps the most important question to be answered by voters is what they expect the role of government to be.

Last November, voters confirmed what many observers had predicted by delivering an overwhelming rebuke to higher spending and long-term incumbents. Across the country, “vote the bums out” was the refrain, demonstrating voters’ intolerance with their elected officials and a desire to send a message. Congressional Republicans benefited greatly from this new approach to “change,” taking over the majority in the U.S. House of Representatives for the first time since 2007. Given their perceived mandate, Republicans immediately attempted to repeal the health-care law and to address the sluggish economy, lackluster employment and skyrocketing spending by targeting government programs.

As is widely acknowledged, the United States has two fiscal problems. The first is short-term budget deficits for “discretionary programs” made worse by the recession. This includes categories such as transportation, education, health, agriculture and energy. Defense spending is generally considered nondiscretionary, and members of Congress approach cuts at their own peril. The second is comprised of structural problems with “entitlement programs,” whereby not enough money will be collected in the future to cover the expenses for those entitled to receive benefits. The programs include Social Security, Medicare and Food Stamps. Both issues need to be addressed.

In their rush to tackle both fiscal time bombs, the Republican leadership tipped its hand and provided an opportunity for Democrats to respond. House Budget Committee Chairman Paul Ryan (R-WI) issued the “Path to Prosperity,” a document that served as the Republican plan to reduce spending and trim government regulation. The plan also attempts to decrease funding to several long-standing social programs, including Medicare and Social Security benefits.

A focus of attention has been the plan’s proposal to gradually switch Medicare from a guaranteed entitlement to a federal voucher program, transferring potential liabilities from the government to the individual.

President Obama responded by cutting a deal to extend the Bush tax cuts and then address the perception of government intrusion and overregulation. He issued an Executive Order calling on the federal government to review all regulations and identify any that have an unnecessary negative impact on American businesses. In addition, President Obama called for the repeal of the 1099 reporting requirement included in the health-care bill and signed legislation into law making it easier for small businesses to access lines of credit. In taking these issues off the table, President Obama has attempted to blunt the Republican message. Meanwhile, the Democrats have generally avoided suggesting solutions to funding entitlement programs, since it has historically been the fodder for scare tactics and negative ads.

The voting public has sent mixed signals about its current position on these issues. While the electorate appears to still seek “change” by demanding limits on spending, there is a sense that certain reforms are off limits. The debate has recently shifted to the federal debt ceiling and the refusal to raise the limit on the amount of money the government can borrow. Voters appear to demand tighter fiscal restraint—but not necessarily at the expense of entitlements.

On the face of things, it appears that the electorate is voting one way but expecting a different result. While election results show that voters demand less government intrusion in their lives, the call for reform diminishes when programs, such as Medicare, are singled out. As evidenced by the recent special election in New York’s 26th Congressional District, voters will rebuff candidates linked to the plan to reduce Medicare spending. Given this result, are voters sending a message about how far they are willing to sacrifice to reduce the federal deficit?

While these issues will frame the debate as next year’s elections approach, the end result remains to be seen. Is the recent “showdown over spending” between Democrats and Republicans the discussion voters demanded or the beginning of a lengthy and contentious debate over what role government plays in our lives and at what cost? Included in the debate will be other social and economic issues, such as how to balance environmental and economic issues and how to pursue a national energy policy.

Perhaps voters are actually seeking “leadership” rather than change—lawmakers who are willing to identify solutions, explain to the public why the solutions are necessary and build consensus to enable the public to swallow bitter medicine that puts the nation on the path to long-term fiscal responsibility.

These issues—federal spending, deficit reduction and entitlement reform—directly confront our industry because we rely on a healthy and vibrant economy to market and sell our products. Whatever the result of this debate, SEMA remains on the front line in the fight against restrictive regulation and legislative threats to our businesses and our hobby. While it appears that restrictive legislation can be averted for the moment, SEMA continues to promote the strongest position for our membership to succeed within a changing regulatory structure.