The fourth principle is:
Each unit of government must
operate within its means; deficit spending must be avoided unless pressed by
(actual) wartime conditions.
Policy consequences: The entire federal budget must be reduced by
50% as soon as it is practically feasible, say within a maximum of 3 years.
Governing consequences: Tax
cuts/reform at tied at the hip to spending cuts/efficiency reform. Or put it
another way, revenue is one of half of the same coin as expenditures.
Explanation:
At the moment the 2012 federal
budget is ~$3.8 trillion, about $1.3 trillion of that is deficit spending.
Deficit spending is just another way of saying that the US government
is burrowing (or printing) that money to pay for the services it is
running. Meanwhile, we have a national
debt of about 15 trillion dollars, and about 84 trillion dollars is held in
currently unfunded liabilities connected to Social Security and Medicare. Put bluntly, this financial situation will,
if not brought under control very soon, bankrupt the United States and it simply cannot
be sustained. It, also, cannot be
corrected simply by raising taxes. The federal government must cut its budget
drastically and do it soon or the United States
is going to end up like Greece.
The
three largest parts of the budget at the moment are Social Security, Medicare
and the Department of Defense (DoD). Together they make up about 60% of the
federal budget. We are not going to
solve this problem unless the DoD Budget is cut substantially (40+%) and Social
Security, Medicare need to be reformed.
Social Security is fairly easy to handled by ending universal Social
Security for everyone below a certain age (say 45 years old) and transforming
it into a much smaller targeted welfare program for people below the age cut
off (as well as continuing universal Social Security for the people over the
age limit) Medicare is a harder nut to crack because of so much of its cost is
tied to healthcare cost in general, but there’s a lot of thing the federal
government can do to free up the healthcare market that should help in lower
costs, such as allowing people to purchase health insurance across state lines
and other deregulatory measures that make healthcare a freer market. The bottom
line through is SS, DoD, and Medicare are the three big ticket items of our
budget and those are the three that need to be brought under control first.
Now,
there are a lot of other areas that can be cut and streamlined that would
really help with the budgetary problem.
There is room to collapse multiple departments (Education, Health and
Human Services, and Housing and Urban Development for example) into a single
one if we just remove the fat and redundancy.
Let me give you a concrete example of this, right now the Department of
Agriculture has two offices whose job is to inspect livestock, grain and other
farm products production to make sure they are produced up to the mandated
standards. This is ostensibly done to
protect consumers. Meanwhile, the FDA (in the Health and Human Services Department)
inspects meat, and other foodstuff to make sure they are safe. Again, ostensibly this is done for consumer
protection. The difference as far as I can tell is that the FDA makes sure the
product is safe, and the Department of Agriculture makes sure the production of
that product is safe. That’s just
stupid, it is waste of money to, in essence, inspect the product twice. What should happen (at a minimum) is the
Department of Agriculture’s regulatory and inspection apparatus should be
entirely done away with and let the FDA do its thing. (I realize that the FDA inspection is still
an intervention into the marketplace and this can increase the price, but I am
perfectly fine with the government creating“baseline” outcomes for certain
things, I will be explaining this point in more detail later) There are many,
many examples of this sort of thing throughout the federal government. In the remaining Statements of Principles I
will discuss other areas of redundancy
Let me be
perfectly clear about the tax point, the US government’s budgetary problems ought
to be solved 99.99% of the time by spending cuts, but nonetheless there must be
a discussion about how tax cuts exacerbated the budgetary problems and tax
reform (including possible increases on wealthy individuals) needs to be on the
table. This is because it is reckless
to separate spending and taxes given how closely related they are. The Bush Tax Cuts compounded our financial
problems and they shouldn’t have been done unless spending cuts went along with
them. You cannot cut taxes while
maintaining spending at the current levels, or worse yet increasing spending
(as Bush did because of the Iraq
and Afghanistan Wars)
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