Free Markets, Free People

entitlements

Why are we in the mess we’re in? [update]

You don’t have to be a rocket scientist, brain surgeon, or even particularly smart to figure out that this trend means entitlements, as structured, will fail:

Last week, the Commerce Department announced that the gross domestic product shrank by 0.1 percent in the fourth quarter of 2012. And the Census Bureau reported that the U.S. birthrate in 2011 was 63.2 per 1,000 women ages 15 to 44, the lowest ever recorded.

Slow economic growth and low population growth threaten to undermine entitlement programs like Social Security and Medicare. Despite contrary rhetoric, they are programs in which working-age people pay for pensions and medical care for the elderly.

When Medicare was established in 1965 and when Social Security was vastly expanded in 1972, America was accustomed to the high birthrates of the post-World War II baby boom. It was widely assumed that the baby boom generation would soon produce a baby boom of its own.

Oops. The birthrate fell from the peak of 122.7 in 1957 to 68.8 in 1973 and hovered around that level until 2007. The baby boom, it turns out, was an exception to a general rule that people tend to have fewer babies as their societies become more affluent and urbanized.

So, when will our so-called “leaders” finally  figure this out? My guess, in fact it really isn’t a guess, is they know but haven’t intestinal fortitude, politically speaking, to do what is necessary.  That is cut them, privatize them or any of a host of other options they won’t even consider.

What they will consider, of course, is raising taxes and borrowing.

The fact of the matter is that both Social Security and Medicare are based in flawed models. The original models saw the base of the those paying into the system remaining constant, despite the “general rule that people tend to have fewer babies as their societies become more affluent and urbanized.”

The numbers don’t lie. Fewer and fewer workers are available to pay into these systems and continue to pay out at the rate at which they’re paying out now. This is no mystery. This is plain old everyday economics.  It’s as plain as the nose on your face. Yet our so-called “leaders” seem unwilling and unable to face the facts.  The facts are not going to change. We’re not going to suddenly have a baby boom again.

These are the sorts of problems elected leaders are supposed to face head-on. That’s why they’re elected, supposedly. Yet we continue to let our elected officials get away with malfeasance. So while it is easy to point at them and say they’ve failed, in fact we’ve failed. We have failed to gin up the courage to do what is necessary to fix these problems. To force our “leaders” to do the right thing. We continue to claim in poll after poll that entitlements must be fixed. Yet we continue to put in office, time after time, the same people who haven’t yet mustered the courage to do that (nor fund themselves held accountable for not doing it).

Whose fault is that?

UPDATE: Here’s a perfect and timely example of part of the point:

John Kasich, the fiercely conservative governor of Ohio, announced Monday that he’s going to expand Medicaid dramatically using federal money — a 180-degree turn from what conservative groups swore their allies in governors’ mansions would do when the Supreme Court gave them an out last year.

This makes John Kasich a big, fat liar.

Republicans should be the ones circulating recall petitions. He should be drummed out of office, out of politics and never again hold any office higher than dog catcher. But they won’t, because despite this, he’s “one of ours”.

~McQ

Just in cased you missed it, our problem STILL isn’t revenue

I continue to be stunned by the apparent willingness of all involved on the left to whistle past the graveyard when it comes to understanding what our fiscal governmental problem is and how to fix it.  Here … let’s try a picture:

Oh, look … it’s spending.  Specifically, spending on entitlements and interest on the money we’ve borrowed to do so.  And what are we talking about cutting?  The military, of course.  Because, you know, it is in the blue slice of the pie.  Make sense?

Pac Man’s revenge.  By 2050, he will have swallowed all of the blue.

But, hey, it’s “absurd” to argue about raising the debt limit. By the way, does anyone remember when Sen. Obama declared that raising the debt limit signaled a failure in leadership?

Ahem …

~McQ

Entitlements: The Siren’s song

The cultural corruption of entitlements should, by now, be well known. But it also is just as well known that our current system incentivizes the “Santa Claus” form of government vs. that of the night watchman. The end state is inevitable. It isn’t a matter of “if” but “when”.

“The more government takes in taxes, the less incentive people have to work. What coal miner or assembly-line worker jumps at the offer of overtime when he knows Uncle Sam is going to take sixty percent or more of his extra pay? Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong.” – Ronald Reagan

You’d think that would be self-evident. Apparently it’s not. And if you doubt that, watch what happens next year as our “leaders” try to figure out how to get us to pay their way out of the mess they’ve made (and for which we’ve never, ever held them accountable).

~McQ

Bryan Pick’s Suggestions for the GOP

Perhaps it comes as a surprise to some of our readers, but we are not a Republican or Conservative blog. We are a libertarian, or more precisely a Neo-libertarian blog. As it happens, this puts us far closer to the conservative end of the spectrum than the liberal end in most things, so I can see, what with our constant nagging about President Obama’s policy foolishness over the last four years, why many readers would think of us as conservatives. But we aren’t really.

Maybe that’s why Bryan’s suggestions seemed so off-putting to the conservatives who regular read us here. Oh, and the fact that Bryan, while he’s had posting privileges here for, well, a long time, doesn’t post all that much anymore. I wish he posted more, but apparently, he has a life. But he’s still got his name on the masthead.  See? It’s over there on the sidebar, on the left.

It’s gonna stay there.

The thing is, if you’re a conservative—especially a social conservative, you just need to accept that pretty much all of us support gay marriage, are at least squishy on abortion law, etc., etc., so you’re not going to find this a congenial place, for the most part, on social issues.

So much for old business.

Now onto the the posts Bryan contributed over the last few days. As It happens, I have some thoughts on his ideas myself.

Immigration is a sticky issue. I think that Milton Friedman was right in that you cannot have both unrestricted immigration and a welfare state. If you try to have both, you will inevitably bankrupt the system completely. Which, now that I think about it, is at least a self-solving problem.

But that solution itself would cause…difficulty, so it’s best to avoid it.

In a perfect world, we wouldn’t have a very expansive welfare state and what of we did have would be off-limits to immigrants. That isn’t the situation we have, however, which makes unrestricted immigration difficult to deal with.

It’s even more troubling when you realize that we have a set of challenges that make any immigration difficult to deal with at the present time.

There has been a distinct cultural shift in the way we deal with immigrants, in terms of our willingness to assimilate them into the American culture. For instance, when I was a child, immigrant children were expected to learn English, and conform to mainstream American culture. Essentially, immigrants were told—often in no uncertain terms—that we didn’t care how they did things in Kaplokistan, they were in America and they would do things our way. The message, from every level of society, was that if their original country was such a great place, they’d still be there. The result was that the children of immigrants were quite keen to assimilate, and mostly did so.

But we don’t do that any more. We’re now ever so sensitive to their cultural concerns, that we don’t try to assimilate them at all. We fear offending their delicate cultural sensitivities. As a result, the assimilation takes place at a much slower rate.

For example, here in southern California, we provide official voting ballots in somewhere around 100 different languages. Let me just state something that should be obvious: If you cannot vote in the English language, you shouldn’t be voting. Or, dare I say it, even be a citizen. If you can’t even be troubled to learn the dominant language of our popular culture, how in the world can you grasp the essentials of our political culture and principles?

This is compounded by the fact that today’s immigrants come from a vastly different political culture than those of a century ago. Today’s immigrants come from countries with an explicitly socialist political culture, which is decidedly not the case of immigrants who came to the US prior to the 1920s. Prior to that time, most immigrants came from monarchies with an intensely class-based structure, no middle class to speak of, and no possibility for social mobility. They come from countries where their social status was determined by the class they were born in, and they came here to escape both grinding poverty, and a class structure that made escaping that poverty extraordinarily difficult.

Today’s immigrants, thanks to the USSR’s pervasive influence in the 3rd world in the 50s-70s, have grown up with a socialist political world-view. They will naturally be prone to gravitate to the Democratic Party. Certainly, some portion will come here to escape socialism, but most probably don’t think too deeply about politics, and simply accept the socialist view of activist government they’ve been taught all their lives. When they get here, they find a political party that also accepts that political world-view, so naturally they gravitate towards it. Prior to the 1920′s, they would not have.

So I don’t think you can point to unrestricted immigration in the 19th century and draw too many parallels to how such a policy might work today. Both the original political culture of the immigrant, and the American political culture they find on arrival here, are completely different than they were a century ago.

And, of course, I also think about how California has fared with the massive immigration, a great portion of it illegal, of the last 30 years.  The Central Valley has deteriorated almost to 3rd World status, with a permanent underclass of Mexican laborers who have essentially become modern-day helots, rampant property crime, deteriorating public services, and terrible poverty.

What lessons do we learn from all that?

I honestly don’t know how to approach entitlement reform. Maybe Bryan’s suggestion has merit, but I simply don’t know. We’ve told every person in the country that they have a defined-benefits pension, and, though people my age and younger don’t really believe Social Security will be there for us, We’ve spent all our working lives paying into it. We certainly feel we’re owed something for it.  We had a Deal. You can’t just break the Deal.

And here is the real, non-obvious reason why you can’t break that Deal: We don’t have a stable currency. As a result, we simply cannot safely save for retirement.

Let me explain.

When the US was on the gold standard, you could simply stuff money into your mattress. In fact, a lot of people did. And the reason they could was that their money retained its purchasing power. Every dollar bill was a receipt for your real money. Every banknote said, "The US Treasury will pay the bearer X dollars." If you took a dollar bill into the Federal Reserve Bank of New York, slapped it on the counter, and said give me my money, a servitor would take your dollar, nip back to the vault, and return with a little bag containing 1/35oz of gold, or 1/16oz of silver. Today, your dollar bill is a receipt for nothing. It’s worth whatever the US government says it’s worth at any given time.

And, especially since 1973, it’s been worth less and less every year. Since 1970, the price of housing has risen 1050%. A savings account at a bank doesn’t pay an interest rate that keeps up with inflation. So, with a fiat currency that is constantly debased, that leaves very few savings options.

Essentially, to make a return greater than inflation, the county has been forced into the stock market for investment.  But what happens if the market crashes? You lose a large portion of your saved investment. If you have several years to make it up, well, good. But what if it happens when you’re close to retirement? Well, you say, of course, you have to find safer investments like tax-free munies or something. And you should allocate your portfolio wisely, etc., etc.

But most people don’t want to do that. And they don’t want to learn all sorts of investment arcana. They want to save, do so safely, and not have inflation eat away all of their savings. Social Security does that, from their point of view, and it doesn’t make them live in fear that some unforeseen market event will eat up their hard-won savings.

That’s why so many people are opposed to Social Security privatization. They’re afraid of market investment, and are especially so seeing the roller-coaster rise the market’s been on since 2000.

But they have no safe option for saving that keeps pace with inflation.

Not having a stable currency forces people into riskier and harder-to-understand investments, and people don’t want to mortgage their future to investments that are risky and hard to understand.

Social Security was easy to understand, and it at least gave the illusion of security, no matter what the reality was.

A reliable, stable currency would make entitlement reform a lot easier, because it would vastly reduce the fear of inflation eating away at their retirement.

Social issues are the hot button with a significant portion of the GOP. I’m not entirely sure that if the GOP abandons social issues they’d be able to attract enough people from the Democrats to make up a viable political party, by which I mean one that has a shot at winning nationally. I don’t think that the Democrats have enough of a fiscally conservative, socially liberal electoral base to attract to the new, socially agnostic GOP.

The reality is, though, that when it comes to politics, the culture is determinative on the outcomes of social issues.

It doesn’t get much play, but, as it happens, according to polls—which as we know from the last election are pretty accurate—a slight majority of the electorate is actually pro-life. You wouldn’t know it from watching the news, but somehow, over the last decade, pro-choice has become the minority opinion in the country. Presumably, if that trend continues—and there’s no guarantee it will—Roe v. Wade will be overturned. Maybe. I mean, just because people are generally pro-life, it doesn’t mean that women don’t want to have abortion as an option. Just in case. Maybe it doesn’t get overturned at all, but abortion becomes culturally objectionable and we’ll get a lot less of it.

If Roe is overturned, then, abortion will become a state issue. Or, perhaps we’ll keep Roe, and just tighten down on abortions: limit them to the 1st trimester, and give exceptions for rape, incest, and the life of the mother, implement stricter parental controls, and that sort of thing. If it is overturned, states like California and New York will make it unambiguously legal. Some states will restrict it. Some will ban it completely.

Maybe that’s the answer for social issues. Leave them to the states, and people will gravitate to the states where the social milieu is more congenial to them. But that will be difficult to do now that we’ve cast all social issues in terms of rights.

I think that was a mistake, but here we are.

The gay marriage people say they have a right to marry. OK. Then why don’t polygamists have a right to do so as well? Once you’ve cast an argument in terms of rights, you’ve started wielding a hammer, not a scalpel, to solve your social problems. If gays have a right to marry, then why doesn’t another group of consenting adults have that right? How do you draw that line in terms of rights?

We forced the Mormon religion to de-legitimize polygamy in order for Utah to become a state. If adults have the right to order their relationships as they choose, then how was that legitimate? How is it legitimate, in terms of rights, to forbid close relatives to marry?

Rights are a pretty blunt instrument.

But how does letting gays get married somehow damage marriage as an institution? I guess I don’t understand that. I get that marriage is important, and I get why it’s important. But, it’s not so important, I guess, that we want to make divorce difficult. Which is, after all, why more than half of marriages end in it. Oh, and by the way, aren’t something like half of the kids born today, born out of wedlock?

Something’s going on with marriage today, and it’s mainly not good, but it doesn’t seem to have much to do with gay people.

Here’s a couple of realities to think about, though:

  • We’re about 30 or 40 years behind Europe in turning into a post-Christian culture. You wanna know the culture your grandkids will grow up in? Look at the Netherlands or Britain.
  • With Obama’s re-election, there’s an excellent chance that 1 or two conservative justices will be replaced by Obama. That means Roe v. Wade will probably be around for another 20 years, and who knows what the culture will think about it then?

Ultimately, the place to fight social issues doesn’t seem to be in politics, though. If you want to win on social issues, you have to to win the culture. If you can’t get a cultural consensus, you will never get a political one.

That seems to me to imply that conservatives should be battling not in Washington, DC, but in Hollywood, and in the Media, and in their local schools and colleges. The Left has made a largely successful march through the country’s cultural institutions, taken them over, and are shaping it to their liking. Conservatives have spent the last 4 decades unsuccessfully trying to take over the Supreme Court. Meanwhile, the Left has turned education into a 16-year commie indoctrination course, topped off by Continuing Education in socialism from TV, news media, and movies.

Maybe conservatives should be thinking about how to win the culture. If they do that, the politics will ineluctably follow. The reverse, however, is simply not true.

~
Dale Franks
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Why the Right Should Embrace “Fairness” in Entitlement Reform

This is a departure from my previous two posts; it’s not about a particular group that has pulled away from the GOP.  Romney pulled a slightly larger share of older voters than McCain did, even if fewer total turned out than in previous years.  That the Romney-Ryan ticket did this while proposing entitlement reform is a substantial feat, but it did involve watering down the reforms a great deal.  For example, Republicans now make a habit of promising that nobody under age 55 will be affected by their reforms.

Why make this concession when the lion’s share of the fiscal problem is current retirees and the many, many Baby Boomers who will retire soon?  Boomers vote, of course, but what motivates them?  I don’t think most seniors could bring themselves to act on straightforward greed; I think they’re voting based on a particular concept of fairness.

Specifically, they paid into the system over a long career, and they believe they should be able to get back what they paid in.  And even though current Medicare beneficiaries get two to six times as much in benefits as they paid in (if this is right), only about a third of Americans think Medicare beneficiaries get any more than they paid in.  As long as they think that way, they’ll continue to oppose means testing and raising the retirement age by wide margins.

You might be tempted to say that our task is to educate them, but it’s much easier to persuade people based on their current beliefs than to convince them of inconvenient facts first.  Republicans basically conceded that cutting benefits to older voters at all would be unfair, and pushed complicated plans that few people aside from Paul Ryan can competently defend.

But we might be even bolder if we just hugged that core fairness principle tighter.

September’s Reason-Rupe poll (PDF – fixed link) asked Americans if they’d support cuts to their own Medicare benefits “if you were guaranteed to receive benefits at least equal to the amount of money that you and your employer contribute into the system.”  It was a blowout: 68% yes, 25% no.  Three quarters of Tea Partiers said yes.

At a stroke, you could slash Medicare in half with a reform based on that principle.  (Their August 2011 poll suggested similar support for applying the principle to Social Security, but the cuts would be much more modest.)

Centering a reform on that principle achieves steeper cuts and seems easier to defend than what Paul Ryan is trying.  Because if Democrats fought us on it, they’d have to make the wildly unpopular case for entitlements as redistribution programs rather than as “insurance” or “savings.”

The kind of coalition the Right needs for sustainable entitlement reform has to include people who highly value fairness (or, as Jonathan Haidt would call it, proportionality).  If we want the project of liberty to be successful, we have to pluck on other heartstrings.

When the beast starves

I tend to be more optimistic than Dale about the near-to-intermediate future for the economy and for the culture. This may be unusual for a libertarian, but I’m heartened by many of the ways in which our opponents’ system is unsustainable.

Let me start by saying that, given a certain size of central government, libertarians could do worse than spending almost two-thirds of the budget on a few wealth transfer programs (Social Security and Medicare, both mostly funded by flat taxes, plus Medicaid, which gets much of its funding from the states) and a military like ours.  Imagine if that money was spent employing domestic police and busybodies.

But even that government is fiscally unsustainable, so we expect our government to eventually be forced to give up some of its “responsibilities.”  Assuming the country avoids a sovereign debt crisis, that adjustment might not be so bad for libertarians. Continue reading

Takin’ it too the streets!

Professor Cornel West, who most likely wouldn’t have a job if he an others weren’t able to keep race baiting going, has emphatically stated that entitlements need to be increased, not decreased.  And he’s also made the point that if they aren’t, well, those seeking to have them increased may have to take to the streets:

"I think the problem is that the poor children, keep in mind it’s 42% of poor children who live at or near poverty, it’s 25% in poverty. Our audience needs to keep that in mind." Cornel West said on MSNBC this afternoon.

"Poor children need more than just a $1,000 for their family, they need a war against poverty to make it a major priority in the way which we have a priority for Afghanistan, and a priority to bail out banks, and a priority to defend corporate interests when it comes to environmental issues," West said about more and new entitlements for the poor.

Professor West didn’t just call for another war on poverty (the first war was fought by Lyndon B. Johnson), but went on to say that the push for more entitlements "is going to be fought in the streets." West showered the Occupy movement with praise for making people aware of the issue.

"It’s a major question of priorities here. That’s why the Occupy movement is so important because some of this is going to be fought in the streets. Civil disobedience does make a difference," he said.

A few points.   Poverty in the US is unlike poverty anywhere else.   If you’ve ever traveled outside the US to a third world country you know what real poverty looks like.  The Heritage Foundation gives us a little reminder of what those who are deemed “poor” in the US are likely to have (from the Census Bureau):

  • 80 percent of poor households have air conditioning
  • Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks
  • Nearly two-thirds have cable or satellite television
  • Two-thirds have at least one DVD player and 70 percent have a VCR
  • Half have a personal computer, and one in seven have two or more computers
  • More than half of poor families with children have a video game system, such as an Xbox or PlayStation
  • 43 percent have Internet access
  • One-third have a wide-screen plasma or LCD television
  • One-fourth have a digital video recorder system, such as a TiVo

As for  the claims about hunger and homelessness:

As for hunger and homelessness, Rector and Sheffield point to 2009 statistics from the U.S. Department of Agriculture showing that 96 percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food, 83 percent of poor families reported having enough food to eat, and over the course of a year, only 4 percent of poor persons become temporarily homeless, with 42 percent of poor households actually owning their own homes.

In fact, in the US, poverty is more of a definition than a condition.   And that definition is key, because if you fit it, then you are “entitled” to taxpayer largess.  So painting a bleak picture of poverty in the US in general terms is important to any argument for increased entitlements, even when everyone should know that we can’t afford them. 

Those who’s power is based in their advocacy for the poor see that as a threat.  So they’re left with either accepting the fact that their power will be diminished or threatening to resort to “civil disobedience”.  The reason West likes OWS is because that’s the sort of action he wants to see.  Tantrums in the street designed to get what they want.

And that brings me to point two – civil disobedience in today’s parlance isn’t the same as it was in Dr. King’s day.  OWS makes that clear.   Any demonstration today, even if the intent is non-violence, always attracts a violent faction.   West’s praise of the OWS isn’t just focused on awareness.  The methods they’ve used are fine with him too.  Provocation which eventually turns to violence.

Finally … it is also about holding corporations hostage.  This was a technique refined by Jesse Jackson.  Make the villain evil and greedy corporations.  Threaten them with direct action.  Make ‘em pay.  

So what you see West setting up here is part Jesse Jackson sting operation and part poverty pimping.   As we know from the previous “war on poverty” which wasted trillions and never moved the poverty percentage down a single percentage point, government intervention has been a failure.  So unwilling to be solely dependent on government (taxpayer) largess which, given the sad state of government finances, is unlikely to be increased, West is setting up the next patsy.

The Jesse Jackson model will meet OWS and instead of taxpayers paying the price this time, it will be consumers who will foot the bill while a new generation of poverty pimps use those defined as “poor” as their means of holding up corporations.

But first, the demonization must proceed.    And if you’ve been paying attention, you know that is well underway via OWS and the Democrats.

~McQ

Twitter: @McQandO

Tipping point? Not really, but …

While I’ll be the first to acknowledge that “government handouts” are bad and at a all time high, this is more of a sensational few paragraphs than real.  It speaks to the general confusion among the mass of American voters concerning what they do and don’t want cut when it comes to “entitlements”:

Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things.

But that’s more than the $2.2 trillion households paid in taxes, an amount that has slumped largely due to the recession, according to an analysis by the Fiscal Times.

Also, an estimated 59% of the 308.7 million Americans in this country get at least one federal benefit, according to the Census Bureau, based on 2009 data. An estimated 46.5 million get Social Security; 42.6 million get Medicare; 42.4 million get Medicaid; 36.1 million get food stamps; 12.4 million get housing subsidies; and 3.2 million get Veterans’ benefits.

And the handouts from the government have been growing. Government cash handouts account for a whopping 79% of household growth since 2007, even as household tax payments–for things like the income and payroll tax, among other taxes–have fallen by $312 billion.

That is a tough feeding trough to take away from voters.

Uh, we’re into a bit of apples and oranges territory here.  Most who have paid into them all their working lives do not see Social Security and Medicare as a “handout”.  Same with veterans who signed a contract and worked for relatively low wages for the benefits service in the military would bring.   They see SS and Medicare as a “paid benefit” and those going to veterans as an “earned benefit” or contractual obligation.

Medicaid, food stamps and housing subsidies, however, are handouts.   And the case can be made that so are “extended” unemployment benefits as well.

That said, the obvious problem doesn’t change – we’re paying out more than we take in by 100 billion dollars.  But we’ve been doing that for decades overall – thus the yearly deficit and the huge debt.

There are a number of ways to change that but in general they are:  A) cut spending,  B) raise taxes, C) a combination of both.

There are advocates for each of those courses of action.  Generally Republicans favor course A.   Democrats favor course B but would probably live with course C if the cuts weren’t too deep and the rich got nailed in the tax regime.

One of the reasons I support course A first is the amount in revenue we currently have coming in the door.  It is plenty.  It is also in the 19-21% of the GDP range which seems to be the historic range above which we collect taxes.  Regardless of the marginal tax rates, we never take in more in taxes than this range.  The reason, I would assume, is there’s a point at which those being taxed begin to take action to legally avoid taxation.   And in a capitalist system, there are those who studiously comb the tax regulations for loopholes and then sell them to those who have a growing tax liability.  Thus the historic percentage.   People are only willing to part with so much of their earned money to government.

That brings us to why course B is unpopular.   Most citizens of the US innately agree that government gets plenty of revenue.  And that means most also feel that the problem isn’t revenue, but instead profligate spending.  The reason that most are not open to new taxes is they feel government gets plenty now, but, more importantly, that it spends it for any number of things it has no business involving itself in.

So what’s the answer?

Course A first and foremost.  Show us (the citizenry) that you’re seriously committed to cutting spending and all that entails (trim government size, scope and reach).  Take action now to do what is necessary to put “entitlements” on a sustainable footing.  I think it is clear that their elimination is not something which is in the cards at this point, but there is much that can be done to make them viable.  And yes, that may mean privatizing portions of them.

Then and only then, when the citizenry is convinced government has been reduced to an appropriate size and all the spending that can be wrung from it has been wrung from it will they finally be open to the possibility of increasing revenue – but again, only if they see it as necessary.

I’m not sure why the left doesn’t get this.  Maybe it is just me, but this seems as clear as the nose on your face – it is spending which has gotten us in this mess, not “lower taxes”.  The fact that spending has outstripped revenue is not the fault of tax payers.  The fact that government is in areas never envisioned by the Constitution or founders is not the fault of the taxpayers.   The fact that Congress and various presidents have mortgaged the future of our republic and billed our grandchildren and their children is not the fault of the taxpayer.

So why must the taxpayer foot the bill?

That’s the ideological fight we face.  It has to be made clear that we’re not willing to give them more until there’s real and huge progress in reducing spending and with that a commensurate reduction in the size of government.

Without that, “no new taxes” is as valid an argument as any out there and Republicans shouldn’t cave on that principle regardless of the pressure to do so.

~McQ

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Entitlements–the elephant in the room

As Republicans and Democrats jockey for political position in the upcoming budget fights, entitlements should loom large as programs that must be addressed and addressed quickly.

Instead, as we see so many times, the tendency to avoid the problem – to kick the can down the road- often becomes the chosen path.  Majority Leader Reid, for instance, has made it clear he doesn’t want to deal with Social Security at this time.

But, as we watch the deficit grow and debt pile up to unprecedented levels, most of us have come to realize there isn’t anymore road down which we can kick the can.  We’re at a dead end.  And the problem with entitlements still persists and has gotten worse.

Which brings me to the cite “elephant in the room” pertaining to entitlements.  Note the word – entitlement.  It connotes something which is owed without exception or change, something which is sacrosanct, something which can’t and shouldn’t be touched.

But Sal Bommarito at PolicyMic points out something which, despite all the rhetoric to the contrary, we should all realize:

Abrogation of existing entitlements is an arduous process as the roar of liberal lawmakers and civic leaders is much louder than the proponents of the fiscal conservatism side. Often, a sense of entitlement can overwhelm such debates. However, the most important thing to keep in mind is that an entitlement is only valid so long as it earns the approval of the people. Changing economic prospects could increase or decrease our nation’s propensity to be altruistic. In essence, entitlements are “people-given,” not “God-given”.

There is no “right” to “people-given” entitlements.  They are a privilege we choose to bestow when we can afford it.

Some will argue, rightly, that not all of the entitlements are bestowed.  That in fact, by legal mandate, we’re required to send Washington a portion of our income they demand for programs such as Social Security and Medicare.

But in reality, while that argument is valid, it isn’t valid for spending above and beyond what the programs take in.  The fact that government has badly mismanaged programs into which we’re legally obligated to pay doesn’t mean the programs should be left untouched.  Bommarito then addresses the elephant in the room, the argument those wanting entitlement reform to bring those programs to an affordable and sustainable level (or, elimination) should cite each and every time the subject is raised:

The legitimacy of the programs should not be based upon emotional responses to poverty — by Congress, society, and/or the media. If our government has the economic wherewithal, the effective transfer of money to those less fortunate should be law. However, the financial stability of our country is paramount even if this has become harder to achieve in recent years. And so, Congress and the president may have to rescind entitlements in response to bad times even if the beneficiaries will suffer greater hardships.

The absolute and primary priority for our national government should and must be the “financial stability of our country” – period.  That priority should never be held hostage to emotional appeals about the result of cutting or changing programs we obviously can’t afford.  We should never allow unsustainable spending on entitlements to threaten that top priority.

And of course the end state of 2 courses of action tell you why that priority should be paramount as Bommarito states.  Course A – do nothing.  We essentially bankrupt the nation with continued unsustainable spending and entitlements become null and void anyway.   Course B – we address the problem head on and do what is necessary to make entitlements viable and sustainable.   Some entitlements remain in force, even if at a lesser extent than before and we preserve the fiscal stability of the country.

President Obama, in his speech addressing the budget last week, essentially said we could have our cake and eat it too.  He declared that the other side’s claim that we couldn’t “afford” much of the welfare state was just pessimistic and wrong.  And of course, he then put forward a plan that would eventually raise taxes for everyone to pay for the profligacy of past (and present) government.

Bommarito has stated the primary reason entitlement reform must be a primary concern of the next budget cycle. Why not addressing those programs and doing what is necessary to reform them and make them sustainable or eliminate them is an abrogation of the primary priority for this government.  Entitlements are a “people-given” choice which should and must always be secondary to the overall financial stability of our country.

It is time we addressed this elephant in the room properly.

~McQ

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Budget battles–the same old stuff from Obama

Tomorrow night President Obama will address the nation in an “important” speech – or is it “major” speech – about how he thinks we ought to cut both the deficit and the debt.

Clue:  It involves raising taxes.  

Yeah, the backhanded way of saying, “our problem is one of not enough revenue instead of too much spending”.  And how does the President plan on selling this?  Well if his spokesman, Jay Carney is to be believed, an old bromide is the answer:

“You can’t — you can’t simply slash entitlements, lower taxes and call that a fair deal.”

Everyone,” he said, must “share in the burden of bringing our fiscal house into order.”

You could spend all day on those two sentences alone.  Yes, Mr. Carney and Mr. Obama, you can “simply slash entitlement, lower taxes and call that a fair deal”.  Despite rhetoric to the contrary, our problem is growing government and out of control spending.  Slash both the size of government and severely limit its ability to spend more than it takes in and you’ve taken a major step in “bringing our fiscal house into order”.  That’s what’s fair.

But of course, that assumes you don’t by the implication that this problem we suffer under is one of all our making.  Because if you do, then you buy into the assumption that we must all “share in the burden” of fixing it.  No sale here.

First, we don’t all agree that it in order to fix what profligate and incompetent legislators have done over the years we must give them more money to waste.

No matter how many times they say it, it doesn’t make it right.  They have more than enough revenue to properly fund the Constitutionally mandated government.  What they don’t have enough revenue to continue carrying on is the extra-Constitutional nonsense called entitlements.  That means entitlements must be “slashed” to the point that they’re self-sufficient and don’t add to either the deficit or the debt.  Additionally, once those are addressed, government should be trimmed of all the bureaucratic fat it has built up over the decades.  If there’s a problem with morbid obesity in this country it is found in the size of government.

Oh, and don’t forget that the guy who is going to lecture us about fiscal responsibility on Wednesday night has doubled the debt and is running a deficit this year over a trillion dollars (drinking game – knock it back every time he pawns all of that off as an “inherited” problem), not to mention adding a huge new … entitlement program.

The budget deal just negotiated take a first tentative swipe at the size of government.  No, it’s not what I’d prefer, but then given what it could have ended up being, I’ll take it.  Here’s a rundown of some of the cuts.  Ed Morrissey has a few more:

The CR terminates funding for more than 55 programs, for a total savings of well over $1 billion.  In addition, the bill terminates two programs funded in ObamaCare (the Consumer Operated and Oriented Plan (CO-OP) and the Free Choice Voucher programs).

The CO-OP, according to some critics, is nothing more than a stealth public option.  But to the point – 55 programs is 55 programs.  We could probably easily eliminate 5,500, but that’s not the point at the moment – a journey of a 1,000 miles begins with the first step in that direction.  That’s what this should be considered and we need to encourage (and reward) this sort of thinking and action.

Another I like:

The legislation also eliminates four Administration “Czars,” including the “Health Care Czar,” the “Climate Change Czar,” the “Car Czar,” and the “Urban Affairs Czar.”

That’s why you have Department Secretaries, although I’d love to see some of the departments eliminated as well.  Speaking of those Departments:

  • Agriculture: $3 billion cut from FY10 level, $3.2 billion less than Obama budget request
  • Commerce/Justice/Science: $10.9 billion cut from FY10 level, $7.1 billion less than Obama request
  • Defense: $5 billion increase from FY10
  • Energy/Water: $3.6 billion cut from FY10, $1.7 billion less than Obama request
  • Financial Services: $2.4 billion cut from FY10, $3.4 billion less than Obama request
  • Homeland Security: $0.784 billion cut from FY10, $1.9 billion below Obama request
  • Interior: $2.62 billion cut from FY10, $2.8 billion below Obama request
  • Labor/HHS/Education: $5.5 billion cut from FY10, $13 billion below Obama request
  • Legislature: $0.103 billion cut from FY10
  • Military Construction/Veterans Affairs: $0.6 billion increase over FY10, $3.4 billion more than Obama request
  • State/Foreign Operations: $0.504 billion cut from FY10, $8.4 billion below Obama request
  • Transportation/HUD: $12.3 billion cut from FY10, $13.2 billion below Obama request

Like I said a first tentative step, but definitely a step in the right direction.

Meanwhile, I just can’t wait to hear what Mr. Deficit Hawk has to say Wednesday night.  In a sad sort of way, it ought to be a howler.

~McQ

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