Message From Washington: You're On Your Own

Recent legislation meant to help the economy is a lot more hollow than it sounds.

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There's been a flurry of productivity in Washington lately, which might create the impression that Washington's looking out for you.

Don't be fooled.

[See the GOP's Top Senate Targets for 2012.]

Recent headlines make it sound like Congress and the White House are working together to fix the economy and get America back on track. The Jumpstart our Business Startups Act, or JOBS Act, signed into law recently garnered bipartisan support and passed quickly, with congressional Republicans joining President Obama for the ceremonial signing. In February, Congress quietly passed a tax cut extension that had been contentious just two months before. It also passed another law that will begin to reduce jobless benefits for unemployed Americans, with little of the vitriol that attended other attempts to roll back benefits.

The hint of civility might be refreshing, except that it's happening because Democratic and Republican leaders are taking up small-bore measures that are easy for both parties to support, while putting off the most pressing issues until after the November elections. "Don't pay much attention to what is said and done in next six or seven months," Democratic Congressman Jim Himes of Connecticut said recently at a New York City conference sponsored by the real-estate research firm Zillow. "You won't see much happen. But watch December. Watch December hard."

The JOBS Act, for example, sounds similar to a big and costly set of proposals for hiring more teachers, rebuilding infrastructure, and cutting taxes that Obama pushed last year. But that bill never got anywhere, and the 2012 JOBS Act is a totally different and far more modest set of measures meant to help startups get funding. Most business experts think it might do a bit of good—but for most Americans it won't change anything.

[See 3 myths contained in the JOBS Act.]

Obama is now making a big push for the "Buffett Rule," which would establish a minimum effective tax rate of 30 percent on people who earn more than $1 million per year. If it ever passed, it might make some people feel like the tax code is a little bit fairer, but it wouldn't do anything to create jobs, boost growth, or reduce the national debt. If anything, it's a nicely packaged campaign talking point for Obama.

There's ongoing chatter about further relief for struggling homeowners, such as new rules that would allow lenders to reduce the principal payments for underwater mortgage holders. But this, too, is likely to lead to little more than a watered-down proposal of the sort everybody can agree on, or a meatier bill whose chance of passing Congress will be inversely proportional to its substance.

[See what the Buffett Rule gets wrong.]

With so much make-work in Washington, you might think there's nothing important that needs to be done. Au contraire. There are momentous decisions looming about taxes, spending, the national debt, and vital safety-net programs like Medicare. But nobody's going to get serious about those until the elections are over, because addressing those problems in earnest is going to require benefit cuts, tax hikes, and other unpopular decisions.

The mirage they're trying to sustain in Washington is the idea that our elected leaders are there to help. That may have been true during the depth of the recent recession, but it had to end sooner or later. The government has been intricately involved in the economy for the last four years, through bailouts, stimulus measures, and "temporary" subsidies that have gone on longer than anybody expected. The government can't afford it anymore, and parts of the economy that have been propped up by government aid need to be weaned off of it, so they can become self-sufficient once again.

If the politicians were honest, they'd level with voters and admit that they're running out of money and good ideas. Instead of the milquetoast JOBS Act, perhaps Congress should have passed the You're On Your Own (YOYO) Act. It would require just one page, clearly stating that Washington's not helping any more, and voters should vote accordingly. One way or another, that legislation is coming, except it will probably be named the PUPPY Act or the RENEW Act. Read the fine print.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success, to be published in May. Follow him on Twitter: @rickjnewman.