One reason Congress is so dysfunctional is that wealthy lawmakers are insulated from everyday concerns like getting paid.

This week, as part of a compromise to ward off a debt ceiling showdown and potential default, the House approved the No Budget, No Pay Act, which would withhold lawmakers’ paychecks starting April 15 unless they pass a budget. If you haven’t been keeping up with GOP talking points, this is the latest attempt to pressure Senate Democrats into producing a budget resolution, which they haven’t done in the last four years for various inane parliamentary reasons. But whatever you think of its intent, it’s an empty gesture and one that highlights the troubling disconnect between average Americans and their elected officials.

Despite its gimmicky origins, No Budget, No Pay has a certain intuitive appeal. As centrist commentator John Avlon writes, “If you don't get the job done at work, you won't get paid.” Sure, you or I would probably just get fired, but we don’t have gerrymandering to save us. Still, why should we reward Harry Reid and his crew for shirking their responsibilities while House Republicans have been keeping their noses to the grindstone and dutifully passing Paul Ryan’s Ayn Rand fan fiction?

For one thing, it’s unconstitutional. Not “unconstitutional” in the wingnut sense that cutting the crusts off your sandwich is unconstitutional if there’s a photo of Barack Obama doing it, but unconstitutional in the sense that the 27^th Amendment specifically prohibits Congress from mucking around with its own pay unless there’s an intervening election. To get around this little detail, the act is designed so that the members’ checks get deposited into an escrow account until a) they pass a budget or b) the term ends in 2014, at which point they get paid in full either way. In other words, it’s less of a threat to their livelihood and more of an experiment in delayed gratification.

But a more significant problem is that most legislators probably couldn’t care less if their pay was withheld indefinitely. As of 2011, the average estimated wealth of members of Congress was $6.5 million in the House and $13.9 million in the Senate. And unlike many of their constituents, they haven’t exactly been struggling through lean times recently. While average American households saw their median net worth drop 39 percent from 2007 to 2010, lawmakers’ rose 5 percent during the same period. That’s not to say that every member of Congress is set for life; some are deep in debt like true red-blooded Americans. But threats to withhold pay are ineffective when most of our representatives have enough money in their rainy day funds to last them through monsoon season. And if worst comes to worst, they can always exit through the revolving door and join a few corporate boards to replenish their bank accounts.

This points to a larger problem with our political system, which is just how far removed our policymakers are from the lives and concerns of ordinary Americans. In a 2005 study, Princeton political scientist Larry Bartels found that:

[S]enators appear to be considerably more responsive to the opinions of affluent constituents than to the opinions of middle-class constituents, while the opinions of constituents in the bottom third of the income distribution have no apparent statistical effect on their senators’ roll call votes.

Read that again: if you’re a low-income voter, you and your policy preferences might as well not exist as far as your senators are concerned. While Bartels doesn’t provide a definitive explanation for these findings, he notes that “the fact that senators are themselves affluent, and in many cases extremely wealthy, hardly seems irrelevant.” Being rich frames the way our elected officials see the world, shapes their social circles, and determines their legislative priorities. In that sense, wealth is the incubator that hatches Washington’s deficit hawks.

Of course, wealth alone doesn’t determine a person’s politics. FDR was no pauper, but he fought for the common good and was labeled a class traitor for his efforts. But noblesse oblige isn’t what it used to be, and today’s well-heeled lawmakers seem more interested in scoring political points than addressing mass unemployment and soaring inequality. No Budget, No Pay won’t do anything to change that, and any consensus budget that it did produce would undoubtedly be laden with more unnecessary cuts to domestic spending and the social safety net. It’s a fair point that lawmakers shouldn’t get paid for a job they’re not doing, but they’re so insulated from reality that no amount of negative reinforcement short of voting them out of office is likely to have a significant impact. And until that happens, we don’t need more gimmicks to make them fall in line and pass an austerity budget. What we could use is a lot more traitors.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter @txprice.

To achieve progress in his second term, President Obama must recognize that his opponents aren't really interested in a "grand bargain."

My fellow countrymen. When four years ago we met to inaugurate a President, the Republic, single-minded in anxiety, stood in spirit here. We dedicated ourselves to the fulfillment of a vision—to speed the time when there would be for all the people that security and peace essential to the pursuit of happiness. We of the Republic pledged ourselves to drive from the temple of our ancient faith those who had profaned it; to end by action, tireless and unafraid, the stagnation and despair of that day. We did those first things first.

Our covenant with ourselves did not stop there. Instinctively we recognized a deeper need—the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization… To do this we knew that we must find practical controls over blind economic forces and blindly selfish men. —Franklin D. Roosevelt, Second Inaugural Address, January 20, 1937

Just over three-quarters of a century ago, in his second inaugural address, Franklin Roosevelt, reflecting on the accomplishments of the New Deal in mitigating the worst effects of the Great Depression, noted that “the greatest change we have witnessed [over the past four years] has been the change in the moral climate in America.” Among “men of goodwill,” he went on, “science and democracy together offer an ever-richer life and ever-larger satisfaction to the individual. With this change in our moral climate and our rediscovered ability to improve our economic order, we have set our feet upon the road of enduring progress.”

FDR based this assumption on the idea that what had transpired over the course of his first term—a first term which brought us, among other things, Social Security, unemployment insurance, the right of workers to engage in collective bargaining, the separation of commercial and investment banking, the establishment of the Securities and Exchange Commission (SEC), the establishment of the Federal Deposit Insurance Corporation (FDIC), the largest single drop in the unemployment rate in the nation’s history to date, and an average annual economic growth rate of 14 percent—was directly tied to a new understanding of the role of government. This new understanding, he noted, was based on the “fulfillment of a [collective] vision…to speed the time when there would be for all the people that security and peace essential to the pursuit of happiness.”

Equally important, however, was FDR’s assertion that in arriving at this new vision of government the people understood that it was critical to find “practical controls over blind economic forces and blindly selfish men,” to recognize the “need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization.”

In essence, what FDR offered the American people was a new vision for the future. This new vision was based the fundamental idea that it was only the power of democratic government that could provide the means to counter “the blind economic forces” and “blindly selfish men” who had profaned democracy and brought the country to ruin in the dark days of the early 1930s.

There is much in this speech that still holds relevance for Americans today. In the massive loss of manufacturing jobs and the globalization of the world’s economy in the last few decades, we can see at work “the blind economic forces” of which FDR spoke. And in the wake of the 2008 financial crisis, the power of the “blindly selfish men” on Wall Street is all too familiar. So too—thanks to the onset of the Great Recession—is the anxiety, fear, and bewilderment that he noted plagued the American people on the eve of his first inaugural. What is missing, sadly, is the contravening narrative, the covenant that FDR made with the American people, the understanding that the reforms achieved in his first term had made the exercise of all power more democratic by bringing:

…private autocratic powers into their proper subordination to the public’s government. The legend that they were invincible—above and beyond the processes of a democracy—has been shattered. They have been challenged and beaten.

President Obama has for the most part shied away from the idea that the real challenge to our democracy stems not from the dysfunctional nature of Congress, but rather from the forces of wealth and privilege who see themselves as “above and beyond the process of democracy.” Rather than take on these forces directly, he speaks instead of asking the wealthy to “pay their fair share in taxes,” of building a consensus, of taking a “balanced approach,” of striking a “grand bargain” that would “make sure that middle-class folks aren’t bearing the entire burden and sacrifice when it comes to some of these big challenges.” In taking this approach, the president argues that he is following the will of the American people, who made it clear through his re-election that they want compromise and action. These may be noble sentiments, but they fall far short of expressing what the American people truly want from their president, which above all else is leadership.

The sad fact is that we now live in a society where the income disparity between the rich and the rest of us now stands at its worst level since the late 1920s—just before the onset of the Great Depression. The Congressional Budget Office, for example, recently reported that between 1979 and 2007 the top 1 percent of households doubled their share of pretax income while the bottom 80 percent of American households actually saw their share of income decline. In a similar study, a recent Census Bureau report notes that the average white male worker earns roughly the same hourly wage that he would have made in 1978, adjusted for inflation, while the average CEO’s pay has increased by roughly 600 percent.

As was the case in the 1920s, such a drastic mal-distribution of wealth is clearly not sustainable, as it makes it very hard for the average worker to sustain the level of purchases necessary to maintain our largely consumer-based economy. Hence, if we truly want to find a way to grow our economy—as the president insists he does—then we must find a way to address this critical structural imbalance in our economy. And this means real reform, the type of reforms we saw in the New Deal, reforms that brought about the birth of the post-1945 modern American middle class that now seems to be so rapidly disappearing.

So rather than beat about the bushes, President Obama might do well to recognize—as FDR did—that the forces of wealth and privilege weighted against him are not really interested in a compromise or a “grand bargain.” What they want is to maintain the economic and political status quo in what FDR once rightly called the “false belief” that happiness can only be achieved “in the mad chase of evanescent profits.”

To overcome these entrenched forces, President Obama will need to provide the country with much more than his somewhat vague efforts to meet the other side halfway. He must learn to recognize that above all else it is his responsibility to give voice to the common aspiration of the people and provide them with a vision for the future -- a vision that recognizes government’s fundamental responsibility to fashion a more just and equitable society, a vision based on the truism, as FDR said in his second inaugural, that:

We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays. We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

Instead of cutting aid to the poor, the president and Congress should focus on reforming costly tax expenditures.

While we often hear critics decrying the redistributive effects of American social spending, government aid does not always benefit households of limited means. Often, aid looks more like a million-dollar vacation home or a luxury health insurance plan than housing vouchers and food stamps. American social spending is more complex than a simple redistribution from high- to low-income households. Over time, the country’s tax and transfer system has adopted provisions that reward specific high-income households. These programs contribute to deficit growth and detract from spending targeted at alleviating poverty among working families.

The most generous social welfare programs are currently administered through the tax code. A list of itemized deductions on households’ income tax returns serves as the only indication of these benefits. Income tax deductions, exclusions, deferrals, and credits, known collectively as “tax expenditures,” amount to more than $1 trillion of federal spending (according to estimates by the Tax Policy Center), not including lower tax rates on capital gains and dividends to encourage investment.

Tax expenditures are the functional equivalent of direct spending. Consider two households with identical incomes of $200,000. Household A purchases a home with a mortgage. Household B rents an apartment. Household A likely receives $5,000-10,000 (depending on mortgage size and APR) through the mortgage interest deduction when filing taxes. Household B receives $0. This, in effect, is a subsidy for homeownership. If the IRS collected taxes without any exclusions or deductions and then distributed payments to those who purchased mortgages, we would most likely categorize this disbursement as a form of direct spending.

Beyond simply diminishing revenues, tax expenditures disproportionately favor high-earning households, thereby reducing progressivity of federal income taxes. One reason for this imbalance is that high-income households have relatively high marginal income tax rates. Consider the exclusion of $10,000 of earned income for two individuals. Taxpayer A is taxed at a rate of 20 percent. Taxpayer B is taxed at a rate of 35 percent. Excluding $10,000 means removing this sum from taxable income. Decreasing taxable income by $10,000 for both of these individuals will yield $2,000 for Taxpayer A and  $3,500 for Taxpayer B. Thus, two taxpayers who engage in identical behavior receive disparate rewards because of income differences.

High-earning households are also more likely to engage in behaviors incentivized through the tax code. This means that, in addition to gaining more from each dollar deducted from tax obligations, high-earning households also deduct more than their middle- and low-income peers. Having more resources, the top 20 percent of households are more likely to purchase homes and contribute to retirement savings plans than households in the bottom 20 percent. They are more likely to hold jobs that offer employer-provided health insurance. Further magnifying the divide, high-income households on average possess more expensive employer-provided health insurance. In subsidizing purchases of homes, retirement plans, and health insurance for all households, tax expenditures disproportionately assist those originally more likely to engage in these behaviors. Consequently, high-income households are in better positions to take advantage of tax deductions.

So if tax expenditures waste essential potential revenues on affluent households, why are they so difficult to reform? General support for simplifying the tax code is not difficult to find. What is difficult, however, is reducing or eliminating particular benefits that households already possess. Tax expenditure reform would be tantamount to a tax hike on households that itemize deductions. For this reason, politicians enthusiastic about tax code simplification become reticent when faced with the task of eliminating specific loopholes.

The first step to simplifying the tax code successfully is treating tax expenditures as spending. This distinction demands that Congress scrutinize expenditures to the same degree that it scrutinizes antipoverty spending. Congress should consider whether particular deductions or exclusions successfully incentivize a desired behavior. Further, it should assess whether social rewards from altered behavior exceed revenue lost. For example, it would be difficult to argue that any social gain from deducting mortgage interest on second homes for families earning more than $250,000 exceeds revenues lost. By simultaneously reducing revenues for means-tested entitlements and subsidizing home purchases of wealthy taxpayers, such a provision merely exacerbates income and wealth inequality. This provision is not worth revenue losses that it engenders.

While tax expenditures for high-income families would not survive this level of scrutiny, some expenditures for low-income families achieve desirable ends. This social value justifies revenues lost. For example, the Earned Income Tax Credit (EITC) supports low-wage workers with supplemental income, reducing the poverty rate for these workers and their families. EITC successfully incentivizes work, achieving a valuable social aim and warranting a degree of spending. Other existing expenditures might also be continued for lower- and middle-income households. For example, Congress might continue the mortgage interest deduction for low- and middle-income households on the margin of being able to afford homeownership. But Congress should only adopt such extensions if a clear argument can be made that social gains exceed revenues lost.

As President Obama and congressional leaders continue to negotiate long-term deficit reduction, the first programs that they trim should be those subsidizing high-income households. More than any other social spending category, tax expenditures for high-income households constitute frivolous spending. Both presidential candidates in 2012 supported reducing tax expenditures for high-income families. Governor Romney suggested setting a maximum deduction, while President Obama proposed setting deductions at lower tax rates. Each of these plans would limit tax expenditures for high-income households to some extent. In order to further decrease tax expenditures’ regressive effects, these proposals could be combined with reforms that target payments toward lower- and middle-income households. This would include restricting the mortgage interest deduction to primary residences and limiting exclusions for luxury health insurance beyond provisions already included in the Affordable Care Act.

Now it is time for the president and Congress to fulfill their promise to simplify the tax code, beginning with those at the top of the income scale. While tax expenditure reform for high-income households will not solve our fiscal problems single handedly, it represents an essential path forward for reducing the deficit without exacerbating the economic hardship of low-income Americans.

Joe Landry is a member of the Roosevelt Institute | Campus Network and a senior at Washington and Lee University in Lexington, VA, majoring in American History and minoring in Poverty and Human Capability Studies. This summer, he worked with Dr. Harlan Beckley, Director of the Shepherd Poverty Program at W&L, researching the historical and comparative context of current American social spending. Their research can be found here.

Money lighting cigar image via Shutterstock.com.

President Obama should use the fiscal cliff to shift the debate away from deficits and take on the inequality that's undermining our democracy.

It has been well said that "the freest government, if it could exist, would not be long acceptable, if the tendency of the laws were to create a rapid accumulation of property in few hands, and to render the great mass of the population dependent and penniless…"

We believe in a way of living in which political democracy and free private enterprise for profit should serve and protect each other—to ensure a maximum of human liberty not for a few but for all…

Today many Americans ask the uneasy question: Is the vociferation that our liberties are in danger justified by the facts?

...Their answer is that if there is that danger it comes from that concentrated private economic power which is struggling so hard to master our democratic government.—Franklin D. Roosevelt, 1938

In his remarks on the so-called “fiscal cliff,” and in numerous campaign speeches, President Obama has repeatedly remarked that “we can’t just cut our way to prosperity,” and that “if we’re serious about reducing the deficit, we have to combine spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes.” The president has also said that he is “not wedded to every detail” of his current plan to reduce the deficit and that he is open to compromise. But he also has made it plain, as he did in his recent remarks at the White House, that he will refuse to accept any approach that isn’t balanced; that he is “not going to ask students and seniors and middle-class families to pay down the entire deficit while people like me making over $250,000 aren’t asked to pay a dime more in taxes.”

For the millions of Americans who remain out of work, or are struggling with hourly wages that when adjusted for inflation stand where they were in 1978, this is welcome news. But the president’s focus on taxes and the deficit is only part of the story. What the country really needs, according to most economists, is more stimulus, for the best way to reduce the deficit is to expand the economy, which would of course result in more government revenue.

The president has certainly made reference to this, and he has included a modest $50 billion in stimulus spending in his recent budget proposal to Congress, but for the most part the public discourse on how to avoid the “fiscal cliff” and fix our economy has been centered not on jobs or the vast structural inequality that now separates the top 1-2 percent from the rest of us, but on the deficit. This is unfortunate, for it means, in essence, that the country’s economic agenda is still very much in the hands of the conservative right; that we are still focused not on the cause of our economic woes—a collapsed economy brought on by the worst financial crisis since the Great Depression—but on the by-product: the vast fall-off in federal, state, and local revenue that naturally came about as a result of this collapse.

A far better exercise would be to move away from the right’s obsession with the deficit and open up a conversation with the American people about a far more critical issue facing the nation: the ever-widening gulf between the rich and the rest of us and the very real consequences that this disparity in income has had on our economy and indeed on the very nature of our democracy.

Roughly three-quarters of a century ago, when faced with a similar set of circumstances—including a conservative right that was fond of labeling his policies socialist—Franklin Roosevelt did not shy away from addressing the conditions that led to the collapse of the world’s economy. He well understood—as did the millions of Americans who lived in or on the threshold of poverty—that “the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself.” He also understood that “the Federal debt, whether it be twenty-five billions or forty billions, can only be paid if the Nation obtains a vastly increased citizen income…The higher the national income goes the faster will we be able to reduce the total of Federal and state and local debts. Viewed from every angle, today's purchasing power—the citizens' income of today—is not at this time sufficient to drive the economic system of America at higher speed.”

Taking note of this—and in a reference to the bottom half of the U.S. population that today sounds all too familiar—FDR observed in a speech on the perils of monopoly that:

47 per cent of all American families and single individuals living alone had incomes of less than $1,000 for the year; and at the other end of the ladder a little less than 1 1/2 per cent of the nation's families received incomes which in dollars and cents reached the same total as the incomes of the 47 per cent at the bottom…

This clearly was unacceptable, he went on, for:

No people, least of all a democratic people, will be content to go without work or to accept some standard of living which obviously and woefully falls short of their capacity to produce. No people, least of all a people with our traditions of personal liberty, will endure the slow erosion of opportunity for the common man, the oppressive sense of helplessness under the domination of a few, which are overshadowing our whole economic life.

Hence, for Roosevelt it was economic plight of the average American—not the deficit—that was the key not only to the restoration of our economy, but also to the health and well-being of our democratic system of government; even to our very way of life.

The debate over the so-called fiscal cliff and the showdown between President Obama and Congress over what to do about it has attracted a great deal of attention from the media. But rather than fall into another round of endless bickering with the budget hawks about the deficit, the president should use this opportunity to remind the American people—as FDR did all those years ago—that an economy and a political system built on fundamental inequality is simply not sustainable. If we really want to help the 47 percent our highest priority should be to adopt policies based on the fundamental idea that “political democracy and free private enterprise for profit should serve and protect each other,” not just the wealthy few at the top.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.