Tuesday, October 16, 2012

The Detail is the Devil

A friend recently asked us how we get our children to eat healthy dinners.  "We require them to eat exactly 13 bites of baked salmon, 9 bites of steamed broccoli, 12 bites of roasted sweet potato and 12 short sips of 2% milk." 

We are accountants…but we’re not that bad. 

We all know how that approach would end – especially when you’re dealing with children.  In reality, we make a healthy meal, make it tasty and influence our kids to eat it.  If they eat their food we reward that behavior with something fun like ice cream or a peanut butter cup, reinforcing that behavior for the next meal.  Let’s call it principles-based parenting – no need for excruciating detail, just a few principles, some effective negotiating and a little bribe.   

This is not a parenting advice column - the example is instructive when thinking about how a president (the parent) can best influence and drive the legislative results of Congress (the children).
This dynamic has come to the fore recently with the Romney/Ryan approach to tax reform.  It’s safe to say that the Romney Tax Plan is principles-based.  The plan is simply to lower the marginal tax rates (make a healthy meal) and broaden the tax base (make it tasty) to create a healthy tax regime free from distortions and loopholes.  As a reward for completing the healthy reform, the plan expects higher economic growth and increases in tax revenues over time (the ice cream and peanut butter cups).   

Democrats and media pundits highlight the lack of detail as a reason to discredit the plan.  Or worse, they just fill in the blanks with their own assumptions, and claim it’s either mathematically impossible, or that the middle class will get hit with an enormous tax increase while the “rich” will each pay $250,000 less in taxes.      

Details matter, but tax law, in its gory detail, is negotiated and legislated by the 535 members of Congress. 

Sure, the vice president has the tie breaking vote if required in the Senate, and the president has the right to veto, but the details are owned and finalized by Congress.  Therefore, any detailed discussion of tax reform by presidents or presidential nominees, while red meat for debates and talking head shows, is a fool's game and has no bearing on reality.  As Paul Ryan was able to note in-between Vice President Biden’s interruptions, “here’s the framework [the Romney/Ryan Tax Plan], let’s work together to fill in the details…That’s how you get things done.” 

We tend to forget some stubborn facts during presidential elections – first on the list is the fact that the president cannot unilaterally create or change the law (despite the current administrations efforts).  Views on tax reform, abortion, gun control, legalizing pot or any other issue that requires legislative action are interesting, but ultimately inconsequential without the ability to influence.  In our current world where Congress is split evenly across bitterly partisan lines, the best a president can do is influence the debate, with fineess using the powers of persuasion or through the blunt power of the veto. 

A presidential candidate can fabricate as many details as they need to make a certain plan “deficit-neutral” or affect only the “rich” to pander to certain constituents, but these details are meaningless.  The president can’t and shouldn’t micromanage the process of legislating.  We’d much rather see an incoming administration open to different ideas and details on how to achieve a certain goal or principle, rather than locked into their campaign promises of specific giveaways or penalties.  In fact, we think the Romney/Ryan plan is too detailed.  By attaching a 20% target to the marginal tax rate reductions, Romney has invited criticism, caused the wonks to scream “does not compute”, and more importantly, has wasted valuable campaign time on a number that was most likely plucked out of thin air in a time of desperation during the primary.

We deserve a vigorous debate on the presidential candidates principles of tax reform, not meaningless details.  Getting stuck in the weeds of whether someone making $225,000 will get some, none or all of this tax credit or that itemized deduction, is meaningless in a presidential campaign, and a waste of the public’s time, resources and attention.