Editor's Note: The following is a guest post by Zachary Karabell, head of global strategy at Envestnet.
Cold War-esque news of tensions between the United States and Russia has trumped domestic news lately, namely the release of President Obama’s $3.9 trillion budget for the fiscal year. That budget was treated with a resounding thud in the media and to some degree in Washington as well. In fact, it was difficult to get a guest to talk about the budget because most people say, “the budget, we pay no attention to it.”
Now I’m not sure that’s entirely true, certainly Washington has been abuzz and the nation's mayors wrote a collective letter to the President of the United States protesting an obscure provision within that budget for capping the municipal bond tax privilege for the wealthy, which mayors warned would lead to millions of dollars of lost infrastructure spending given the degree to which municipal bonds have been the source of funding local infrastructure.
That being said, the tax provisions also generated some animus amongst the wealthy who are continually dyspeptic about the possibility that some marginal income over a million dollars may be taxed in the sums of tens of thousands.
The larger point, however, is that we tend to focus on Washington as the alpha and the omega of our society, driving it forward or holding it back, the source and the locus of all potential good if you are on one side of the political aisle, the source of all political ills and societal malaise if you are on the other. I think, in fact, in 2014 we probably pay too much attention to government than government itself warrants, either for better or for worse. Yes it’s a nearly four trillion dollars budget but it’s a nearly 17 trillion dollar economy which means there is an awful lot of economic activity within the United States alone that does not revolve endlessly around what the government does.
Yes, government can be a constructive allocator of capital, and it can be a completely ineffective allocator of capital but either way, capital is being allocated by all of us daily, few of whom have much to do with government. We live in a global system whether we like it or not. This system is determined by the actions of multiple people acting simultaneously and often with very little reference to each other. The federal government certainly is a major actor and one that we should attend to but it is hardly the actor of the prima inter pares above all that we now pay so much attention to.
So as we debate the President's budget and the response of house Republicans, let’s remember that there’s more going on in the world than the budget, than Crimea, and than this endless focus on Washington would dictate.
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