Tag Archives: social security

We Know Better, Part 9: Economics 101: A Call for sanity

If we managed our family checkbook like the federal government, we would all be bankrupt. It is one thing having deficit spending in wartime or particular crises. It is quite another to simply print money, sell T-Bills and leave $30T for future generations to manage. It is immoral, unconscionable, and terrible economics. We have tried to be a warfare and welfare states since the 1960s and we must alter course.

In this essay, I am not ranting about the current administration’s out-of-control spending and highly political largesse for voters. Anyone can do that. I am not going to lambaste both parties for their refusal to trim waste and remember that all the money they spend in Washington, D.C. originates with taxpayers. I am going to offer a way forward that is at first glance naïve and simplistic, but upon further reflection, incorporates the insights of leading thinkers of the last half-century and is non-partisan and non-ideological.

I think we must argue about spending priorities, just like the family dinner table, a small business, or the corporate boardroom. I think we must argue about a fair tax system, from flat taxes, modified flat taxes, progressive tax rates, and levels of corporate taxation. Let the debates begin in the House of Representatives where they belong, and let Congress do its job.

We also forget that decentralized administration is almost always more efficient and fairer, so it should be a long-term priority to have our states, counties, and cities receive a larger portion of our tax dollars and Washington, D.C. much less.

OK, here are three simple points that will transform our economic future, without starving anyone or leaving America defenseless.

ONE: We must achieve a truly balanced budget ASAP, preferably in the next five years, beginning with significant deficit reductions and then living within our means. What does this mean? Here are some ways forward under this heading:

  • Reduce ALL federal spending by 15-20% across the board, targeting inefficiencies, encouraging retirements, rewarding departments under budget, and placing moratoriums on discretionary spending. (Oh, and place all elected and appointed officials back in the social security system and privatize their pensions.)
  • Look to eliminate unneeded agencies, restore as many functions as possible back to state and local governments, and welcome input from business leaders on more effective administration.
  • Decide ahead of time that we must live within our means. Need more money for a particular program that is working? Then find new revenues that are not hurting the productive and perhaps cut other budgets if needed. 

TWO: We must transform our overly-complex federal tax system. We have higher corporate tax rates that many “semi-socialist” nations in Europe. The top 10% pay more than 60% of the taxes and almost half of all American pay little or nothing. Here is a pathway forward:

  • Move to a modified flat tax that is revenue neutral from the baseline of a selected year, like 2019 (when the economy was good). Start at 5% and set the cap at 20%. Do the math. There is enough money.
  • Over a five-year period, eliminate all personal deductions – yes, ALL deductions, including charity, mortgage interest, etc. If I know I will never pay more than 20%, then I am still incentivized to earn more. If I know that at least 5% will be paid, I will aim to work hard and advance.
  • Corporate tax rates must be fair and reasonable and we must stop the cronyism that exempts some elites and places the burdens on the rest of corporate America. Tax only profits after accounting for expenses, R&D, etc., and do not tax dividend, stock, and other capital gains above the lower rate. I recommend 20% as a maximum rate.

THREE: This is the hardest of all: We must stop looking to the federal government to directly solve problems best tackled by more local private-public partnerships. WE DO need the universal ethics of the federal government, but not the ubiquitous administration. For example, an FDA is good, but a government-run meat company would be terrible. Here are some first steps:

  • End all loans for education. Encourage grants and scholarships from states and private sources. Continue with scholarships for veterans and particular fields that serve the common good.
  • Streamline military and welfare agencies so that the cost of services is reduced and the frontlines are actually helped instead of everything being entangled in a bureaucratic mess.
  • NO taxes on personal inheritances. It is immoral to tax again monies already taxed.

The burden for these changes is on us, the American citizens that vote. Will we see the moral problem of spending or capitulate to fatalism and hope we get our share? Our grandchildren need our courage! And if we make these changes, our economy will again be the envy of the world.

December 3: Some Economic Proverbs

We have more tax revenues than ever…and ballooning deficits in Washington, D.C. Neither party has the courage to balance a budget and repay obligations. Here are some insights for changing the conversation:

  • Create a budget based on the real revenue of the previous year. If there is more money, decide ahead of time where it goes; if less, have the cuts ready.
  • Unregulated capitalism and bureaucratic socialism achieve the same end: a few are enriched at the expense of most.
  • Begin a process of removing the thousands of agricultural subsidies that benefit huge agribusinesses and are no longer needed.
  • Transform HUD and other agencies into efficient, decentralized catalysts for help and transformation instead of career paths for bureaucrats.
  • Cut defense spending and increase support for veterans. One less bomber means help for thousands of vets and less pork for Congress to give away.
  • Privatize all public pensions, with excellent regulations through the SEC and other agencies. Eliminate the special retirement benefits for elected federal officials and have them held to the same economic standards as all citizens.
  • Public employee unions should be able to bargain, but not hold taxpayers hostage to benefits they cannot afford. Bring all teachers and workers into Social Security and offer excellent private plans – just like the rest of the country.
  • Hold all government agencies accountable for best practices and have private-sector leaders offer insights on efficient methods and ethics.
  • Transform the IRS with simplification of the tax code and consider alternative ways of raising revenue.
  • Invigorate private/public partnerships for all kinds of infrastructure, with high standards, but honest bidding processes and a cap on “change orders” and lawsuits.
  • Stop sending tax dollars to colleges and universities for frivolous programs and lower the cost of education by demanding that teachers teach, and students work.

With courage, love and wisdom, we can change a 50-year trajectory.

“Solving” the Budget Deficit Crisis

For over 50 years, Democratic and Republican Administrations and Congressional leaders have tolerated and sometimes touted deficit spending, resulting in a huge national debt. Balanced Budget Amendments are often proposed but dead on arrival in committee because no one wants to offend constituents or appear lacking in compassion.

The fundamental flaw is simultaneously maintaining a federal welfare state and a close to wartime economy at the same time. “Guns and butter” are problematic. This does not mean we must sacrifice adequate defense and concrete compassion! What we need is a complete reprogramming of political mindsets that merely “kick the can” down the road for the next generation in order to appease various special interests.

As I write these words, tax revenues are at an all-time high. So why are deficits also ballooning? Every new President and set of Congressional leaders promise to “sharpen the pencils” and “go line by line” through the budget….and then they cave to political expediency.

Underneath the surface is even more ominous news – there are no “savings” locked away for Social Security or Medicare/Medicaid needs in the decades ahead. Since the 1970s, it is all a numbers game!

As an aside, if we managed our family budgets like our national (and sometimes local and state) government(s), we would declare bankruptcy and perhaps face serious criminal/civil charges.

So, what do we do? Here is a prescription (using the insights of many folks much smarter than me):

  • Decide to live within our means. Apart from extreme global emergencies, this is vital.
  • Privatize government pensions and benefits so that elected officials are not immune to economic realities.
  • Streamline government services with the help of ethical and efficient business leaders so that recipients get what they need, and bureaucracy is minimized. It is a moral issue when government keeps ballooning and the poor and our soldiers barely make it.
  • Simplify the tax system and eliminate the egregious loopholes that reward the crafty and penalize workers.
  • Establish priorities so that when revenues go up, there are places for the extra funds (including debt reduction). And if revenues fall below expectations, plans are in place for judicious cuts.
  • Begin debt repayment and true Social Security savings once there is a balanced budget.
  • Establish alternatives to the public employees’ unions that forget their source is the American taxpayer.

With these starting points, we can wisely confront our warfare and welfare policies and devise new strategies for defense and compassion. Compassion is best administrated locally, with federal ethical oversight. We must be prepared to confront terrorism and aggression without being an occupying force longer than needed. And our veterans deserve good care.

Every day, thousands of families happily discover debt-free living. When normal includes sacrifice and saving, stewardship of limited resources and creative budgeting, families flourish and the foundation for prosperity is assured. It is time to get the government off the credit cards and on new pathways.

Careful budgeting will not “starve the children” or weaken our military – just the opposite. Today’s discipline is tomorrow’s destiny. Imagine the USA being the largest creditor instead of the largest debtor. It is possible within a decade if we have courage and self-restraint, creativity and vision for generations yet unborn. We need no long fear being held hostage by hostile powers that own our debt.

We can do this.