The 537 Accountability Pact-an Introduction

Welcome to 537 Accountability PACT blog. Quite a mouthful. What does it mean?

537-the number of elected representatives the US government has. The 537 are the President, Vice President, 100 Senators, and 435 members of Congress. These 537 represent 300 plus million citizens of the US. In that sense, they are not the 1%, or the 0.01%, but the 0.0002%-about one in every half million.

Accountability-the job of the 537 is to maintain a well functioning government that serves as the foundation for the nation's prosperity and stability. The 537 have failed to govern prudently for a long time, and as a consequence we had the economic meltdown in 2008 and a stalled economy since then. This failure by the 537 is simultaneously accelerating and being rewarded. We've had no budget for four years, and in 2012 we had the debt ceiling crisis, fiscal cliff, a bond downgrade, and another trillion dollar deficit. The economy is moribund, and these manufactured crises are a major reason. And yet the 537, because of gerrymandering, vote buying, the powers of incumbency, and voter indifference, are rewarded by being returned to Washington to continue their mismanagement. The original accountability method of competitive elections is not working as intended because most seats are not competitive. This results in Republican and Democrats engaging in trench warfare from their safe seats, with the real casualty being the fiscal health and stability of the country. An additional mechanism to hold the 537 accountable is needed-thus, the 537 Accountability PACT.

PACT-a pact is an agreement, in this case between America's citizens and her elected representatives. It also means Pension, Annual Compensation, and Taxation. Simply put, if the 537 govern well, their pensions go up, their annual compensation increases, and their tax rate decreases. If the 537 govern poorly, then their pensions shrink, their annual compensation drops, and their tax rates increase.

The 537 are, by and large, a permanent political class. As such, their interests often do not align with the vast bulk of the citizenry. The PACT provisions are designed to align the priorities of the 537 with the fiscal health of the nation, thus enabling better governance.

The Three Major Goals of the Five Thirty Seven PACT are:

1)    Roughly balancing Federal spending with receipts over time without destroying financial flexibility.

2)    Ensuring continuity and visibility in Federal debt ceiling, budgeting, and tax policies so that the nation is not held hostage to fiscal cliffs, debt ceiling increases, and other economically destructive acts that are occurring with increasing frequency.

3)    Ensuring that the full burden of the tax, benefit, and spending policies that the 537 enact is borne by the 537.

The 537 Accountability PACT is neutral with regard to tax rates and spending policy. It does not speak as to whether the Federal government should be large or small, nor does it require a balanced budget over any period of time. It does not change any budget deadlines from those already mandated. What the 537 Accountability PACT does is reward our political leadership for passing fiscally responsible budgets, tax rate changes, and debt ceiling increases in a timely manner, and penalize them for late or out of balance budgets, sudden changes in the tax code, and events like debt ceiling crises and fiscal cliffs. How this is accomplished is detailed in the next post, but the key provisions are outlined below:

• Members of the 537 and their spouses pay a base tax rate on the majority of their income equal to the percentage of GDP spent by the Federal government. No exemptions or deductions. If the government spends 22.7% of the nation's GDP, then that government's leaders should pay 22.7% of their income to the government they run. Members also pay a marginal tax rate that is based on the highest marginal Federal rate any citizen faces.
• Members pay a surtax when the budget is in deficit, and for voting for debt ceiling increases or an out of balance budget. Surtaxes for voting for deficits continue into future years. Federal debt is perpetual; so should the taxes paid by those who vote for deficits.
• Members pay penalties for late budgets, unsettled tax rates, and not passing debt ceiling increases in a timely manner.
• Members receive bonuses if the budget, tax, and debt ceiling processes are completed on time. This bonus compounds.
• Members receive a bonus every year the budget is in surplus. This bonus also compounds.
• Pensions are discounted if budget is in deficit during a Member's term of service, and increased if the budget is in surplus over their term of service.

The Federal government is lurching from self inflicted crisis to self inflicted crisis, and damaging the nation's economy in the process. Our leaders currently have no motivation, no prod, no reason to end this dysfunction. After all, most of them have been reelected recently. The 537 PACT would change this; the 537 literally could not afford to govern as they are now if they were subject to the PACT.

Voltaire said, “With great power comes great responsibility.” Our elected leaders have used the power that we have vested in them to govern in a most irresponsible manner. Debt ceiling crises, fiscal cliffs, large budget deficits, and the inability to pass an on time budget have led to chronic unemployment, underemployment, economic stagnation, and a bond rating downgrade. Enacting the 537 Accountability PACT does not force the 537 to accept the responsibility that comes with the power that we have granted them-nothing can. But the 537 Accountability PACT, if enacted, would motivate to govern responsibly or eventually not be able to afford to stay in their seats.