Could We Actually Pass Good Tax/SS Reform?
Social Security is receiving enormous attention as pundits everywhere consider the merits of the Bush administration’s suggestions, make wild partisan allegations, and address the political economy behind passing a “reform” plan. At the same time, the administration is laying the groundwork for a similar effort to radically restructure the tax code.
While a case can be made that significant changes to both programs could be beneficial in the long run, changes to the structure of Social Security and the tax code should be approached with significant caution. Broad principles work well for many forms of legislation; for example, “it should be illegal to carry weapons on airplanes” requires relatively little explication. The technical considerations unique to major economic legislation, however, create a task for which Congress may be ill-suited.Considering two types of amendments that could be made to a piece of legislation, those that address the stated purpose of the legislation and those that do not, we can quickly see how more technical legislation differs significantly from its simpler brethren. For each, added riders can significantly alter the political economy of the bill while having no effect on the stated intent. Amendments that alter the nature of the bill are another matter entirely. For simpler legislation, such an amendment can more be easily considered, as the effects of changes are relatively obvious. Granting this, we have learned from experience that the law of unintended consequences demands that unintended consequences grow with increasing complexity. So suddenly, we’re asking Congress to determine between different taxation schemes, a difficult enough task, while in the amendment process, each of the inevitable series of exemptions and adjustments requested will alter the effects of the plan to a point only understood by a handful of technocrats. The effect of the sum of those amendments is then almost beyond the realm of analysis– let alone Congress’s ability to govern wisely.
It would seem then, that a reasonable measure would be one similar to that sought by the executive for trade agreements– limiting Congress to an up-or-down vote without amendments (a natural extension of this would be to disallow motions to divide the question, as well). Naturally, such a measure would not extend to all legislation; it would be the author’s decision as to whether he would accept amendments. Accepting amendments would be a wise option in most cases, as it would facilitate horse-trading and other lubricants of the legislative process, increasing the chance of the bill’s passage. For more complicated, delicate legislation, the bill could receive a vote on the merits of the complete package, rather than be ravaged on the floor of the chamber.
Consider an example: a bill that would slash all farm and corporate subsidies, and return the excess to taxpayers in the form of tax cuts. The net change in efficiency would likely be positive, and as the bill itself would be revenue-neutral, it may end up actually stimulating the economy such that net revenue increased. But many interests would care to see only one half of the bill or the other survive. As the system currently works, half the bill could be crippled in the amendment process, turning a good piece of legislation into one that actually reduced efficiency.
Obviously, such an option would have negative implications for Congressmen and Senators seeking to halt bad legislation through creative amendments– had the Senate not amended S.659 last year, adding a closure of the gun-show loophole and an extension of the assault weapons ban to the proposed bill, which provided liability protection for gun manufacturers, the bill would have passed. We recognize, though, that this type of maneuvering kills bills both good and bad; disallowing amendments on some legislation would make sure that good legislation didn’t turn on us.
On a related note: a fascinating read, which highlights the delicate nature of crafting major fiscal legislation, is available from the American Enterprise Institute (surprise!). It is titled “Toward Fundamental Tax Reform”, and is available as a PDF.