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'Pursuit of happiness'

December 18, 2007

In a treatise on government published in 1690, British philosopher John Locke laid out an argument for property rights that would resonate on the far side of the Atlantic. Although God gave the fruit of the land to all people in common, Locke wrote, individuals have dominion over the property that is their bodies. And by extension, they own what their minds and hands produce and have the liberty to do with it as they please.

The Declaration of Independence and the Constitution later echoed Locke's notion that government has no rights to an individual's property, nor can it dictate what that person does to earn it. As a result, we take for granted the freedom to pursue our fortunes as we see fit. Yet, as Locke noted, one person's pursuit often conflicts with another's, so government intervenes to strike a balance. Today, our free enterprise system is regulated in many ways by the exercise of government power, including taxes, industry subsidies and monetary policy. A defining feature of the next president's economic strategy will be how he or she uses government power to tilt the balance in the economy -- not just among interest groups and their pursuit of property, but among generations.

The federal budget

A hallmark of the Bush administration has been its willingness to shift the cost of today's government programs onto future taxpayers. Like his predecessor, President Bush sought to stimulate the economy shortly after taking office. But President Clinton and the Republican Congress eventually stopped the deficit spending, allowing the growing economy to yield the first federal budget surpluses since the 1960s. Bush has yet to take his foot off the gas, and now the growth nurtured by lower taxes and greater spending is being threatened by the sub-prime mortgage meltdown, the credit crunch and related problems.

If the country sinks into a recession, as some analysts have been predicting, the next president will have a hard time selling fiscal discipline to Congress. But the time has come to stop billing future generations for the services we enjoy today. The burden on younger workers will soon be increasing anyway as baby boomers retire in ever increasing numbers. The Social Security system has been masking the federal deficit by collecting more in taxes than it pays in benefits, but around 2014, those flows will start to reverse. For the first time in its history, it will start paying more to retirees than it collects. And if there is no change in the system, the Social Security reserves will be gone by 2042, forcing dramatic reductions in benefits.

We want candidates to drop the facile pledges of budget discipline and to talk about how they plan to scale the role of government to the size of its wallet. Carrying on about "waste, fraud and abuse" in Washington is akin to complaining about the rust on the car that ran you over. Similarly, lawmakers' earmarks (a.k.a. "pork-barrel spending") may be a favorite target of candidates, but they don't raise the government's expenditures so much as they micromanage them. The real challenge is to confront the steady increase in spending on programs that probably have a good reason for existing. They do something for somebody, somewhere. And once they get started, they're hard to stop. But just as individuals have to set priorities, so does government. A good place to begin would be to create a system to track whether programs are accomplishing what they set out to accomplish, as Republican Rudolph W. Giuliani has proposed.

Prime targets for trimming include trade-distorting subsidies for U.S. industries, such as the price-and-supply-manipulating farm program. The freedom to pursue a way of life shouldn't be backed by government guarantees, especially when we're struggling to persuade foreign governments to abandon their own protectionist impulses. We seek candidates who declare their support for international competition and lower trade barriers rather than pandering to those who feel threatened by the global marketplace.

The tax code

On the taxation front, candidates from both parties have largely stuck to time-worn scripts. Republicans say they won't raise taxes until hell freezes over. Democrats say the rich should pay more and everyone else less. We want candidates to lay out a plan for simplifying the tax code. The looming expiration of the Bush tax cuts, along with the steady and unintended expansion of the alternative minimum tax, give the next president the opportunity to seek sweeping changes.

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