- “So I can tell you how your money’s spent”
The Economy…
In this blog I have joined my cohort politicians in devising many ways to spend the government’s money. An astute reader may ask; “How are we going to pay for all this?” There is no simple answer. At this point most politicians drop back to the two favorite phrases when addressing the economy: 1) we are going to tax the rich, and 2) we are going to cut government spending. Of course neither of these is the entire answer. Firstly taxing the rich has limits. If you make the tax burden too high on the rich, they will simply move to another country…they can do that. Secondly, we all agree that there is unwise government spending, but it is much harder to get Congressmen to agree on whose pet project should be scrapped.
The problem…
But first let’s look at the problem in some detail. The national debt is currently about 9 Trillion dollars. That’s a nasty number. Let’s try to make these numbers more understandable, and personal, by looking at the per-person value. With about 300 million people currently in the US, your share of the national debt is about $30,000 (and of course an equal share for your spouse and each of your children). To add insult to injury, we are adding about another $1500 per person to this each year.
Think that’s bad? That doesn’t include the unfunded ‘entitlements’ for Social Security, Medicaid, etc. This currently totals about $50 trillion (or another $170,000 for each family member), and is rising at about $3 trillion (~$10,000 each) per year. So you can see why no one want’s to talk about how to fix Social Security, it seems pretty hopeless.
OK, relative to the entitlement programs, suffice to say that something drastic has to be done. It will probably be some combination of increasing the retirement age, increasing the FICA deductions in your pay check, and increasing the per-year maximum (the cap) that people have to pay. I hope that it also includes finding ways of eliminating waste in the Medicaid system.
In general I’m against privatizing Social Security (although some privatization of Medicaid may be beneficial). The problem with Social Security funding is not government waste, it’s government mismanagement. The government has stolen the money set aside for Social Security. In the private sector people would go to prison for that, and I believe that the same should happen in the government sector. Congress must pass strict laws which isolate Social Security funds and pay a reasonable dividend each year.
Well, let’s look for some positive news. How about getting the rich people to pay it off? Bill Gates, the world’s wealthiest man, is worth about $56 Billion, so it would take about 187 Bill Gates to pay off the National Debt, if they donated all their wealth…best look somewhere else. How about tapping the top companies in America? They have a lot of money. The total of the profit from the top 50 companies was $370 Billion in 2006. So if we took all their profits, it wouldn’t even cover the deficit each year.
Economists like to compare the National Debt to the Gross National Product (or GNP, the sum of all goods and services produced). The GNP in 2006 was about $11Trillion. It’s not clear to me what this proves; except that if we totaled everything we produced for a year it would almost be equal to what we owe. I guess that’s kinda like a credit card balance equal to your annual income.
How to collect taxes from the rich…
So how about keeping the rich happy so that they don’t fly off to New Zealand in their private jet with all their capital? To that end I suggest that we create American paradises. Places where rich people can go and spend their money in extravagant ways. Many of the extraordinarily rich have a unique problem; they have no way to spend all of the money that they are making. To help them with this we should create places where extravagant spending is the norm. We should create Monte Carlo like towns with harbors, heliports, private airfields, exclusive shopping, ski resorts, and the like. We should expand our high-end manufacturing (yachts, private jets, helicopters, luxury automobiles, etc). In short, we should cater to the rich (since they will be paying your children’s way through school!).
How to tax big business…
My proposal to address the problem of collecting taxes from corporations is to make the United States the best place in the world to live if you have a lot of money, and the best place in the world to have a high tech factory. So the problem then comes as to how to incentivize big business and the rich without spending even more money. To answer that question we need to look at what big business wants. It wants the freedom to make economic choices without unexpected results, it wants a good employee pool, it wants to be able to trust in the future, and it want’s to keep expenses low.
OK, how do we do that? Economic stability is created by having an intelligent Federal Reserve System, and stable economic policy. Right now we pretty much have that, if we can avoid messing it up. Being able to trust in the future means that we need to respect our property laws and be willing to give industry the assurance that changes will take place gradually.
The employee pool is a bit more complicated, but it rests on our educational system, our ability to negotiate with unions, and our migrant worker laws. Obviously the last of these is currently in flux, and we must find an intelligent fix to this problem as well. My favorite solution is an immediate guest worker program, which I describe elsewhere.
Keeping expenses low is another complicated dilemma. We don’t want to give in on taxes, since that was our original premise, so how else can we help business to flourish? One thing is to supply inexpensive, dependable energy, which is why it is so important to invest in an environmentally friendly energy infrastructure. Other business friendly activities are proper city planning, an efficient transportation and freight systems, good waist management, etc.
How to cut government spending…
This is harder than it sounds. Sure there is a lot of government waste, but for one man’s waste is another man’s treasure. Pet projects abound. The system in fact protects these wasteful projects by its nature. That is why every politician talks about cutting government spending, but most are unsuccessful at doing so.
There are no end to the stories, and having worked on government programs most of my life I’ve seen plenty of waste. My favorite story as of late is that of Sarah Chayes, a reporter for NPR who decided to stay in Afghanistan after her assignment to help in the reconstruction effort. She decided to build a soap factory; a place where the Afghan women and men could work, and make them less reliant on the opium trade. For 6 months she tried to get $60,000 of startup money from the US reconstruction funding. Eventually she had to give up and rely on private and Canadian funding. The sickening thing is that the US is paying about $500,000 per year for each of those contracted aid workers who turned down her proposal. To that Afghans that is saying that we are willing to pay our own people and exorbitant wage, but we are really not willing to help them. Besides being a waste of money, it is a slap in the face to one of our few allies in the area. You can read about her story at: http://www.theatlantic.com/doc/200712/afghans
This story exemplifies that we need to be more careful in writing and monitoring government grants. I think that we should look toward funding existing, proven programs over creating new ones…even if we have to give the money to the Canadians!
Another source of government waste is the ’spend it or loose it’ nature of many government contracts. I believe that if we allowed contractors to roll their funding over to subsequent years that they would be less likely to squander it by trying to spend everything before the year runs out.
Also, I believe that imposing term limits for congressmen would help reduce ‘empire building’ and PAC control over our budget.
There are probably plenty of places to cut the budget, but the key to all of this is voter support. The President cannot do it alone, no matter who he is. The voters must bring fiscally responsibly people into government to turn the economy around.
