Putting America Back on Track
Restoring Fiscal Responsibility
by Curtiss Wikstrom
The following steps will bring the federal
government under control, restore solvency and fiscal responsibility, take
the enormous burden off the shoulders of our grandchildren, restore individual
liberty and freedom of choice, and once again free up the spirit of enterprise
We need to stop spending.
Many in the federal government got the crazy idea that they could stimulate "aggregate demand" by spending money, or causing more money to be spent. They argue that the new spending will put lots of people to work making new things. This has never worked in the past, and it didn't work this time. In fact it has always made things worse. They have been "stimulating" us to death, with one thing after another, year after year. They don't have enough common sense to understand that if there were any merit to the "stimulus" theory, they have gone far beyond the point that it can possibly do any good. It has gotten so far out of control that we now have a federal debt so huge that we can never pay it off except through the inflation tax, which destroys the value of our money and our savings. Since the government can't afford to pay interest on the debt, the federal reserve has set the interest rate artificially low so we can't even earn anything on our savings any more.
No matter how incompetent the government, we need to keep working and providing for our families. So what remains of the free economy is always trying to recover, and always trying to get back to work. It is quite disingenuous for the President to claim that he is responsible for whatever job growth that there is. Any job growth that we have is in spite of his efforts to destroy us, not because of it. The green energy businesses that he threw money at are going bankrupt. The new jobs are being created in areas that he neglected to "stimulate", so were overlooked by his wrecking ball.
It is high time that we have a President and Congress who get the government under control, and get their incompetent hands off the free and voluntary part of our economy.
The only solution is to stop spending so much. Taxing more won't do it. The taxes Obama is proposing only make a dent in the deficit. $150 billion per year is only 1/6th of the expected $1 Trillion+ deficit. But it will be an additional $750 billion if he gets his new proposed "stimulus" package. Taking $150 billion out of successful businesses while putting 5 times that much into businesses that are so risky that people won't voluntarily invest in them is not a recipe for economic progress. It is recipe for more losses and more debt. We need to stop spending, and stop "stimulating".
We need to stop promising.
We have unfunded liabilities so large that they can never be honored. While our nominal debt stands at about $15 trillion, the net present value of our unfunded liabilities, or promises to pay people in the future, are between $65 - $80 trillion dollars, and growing rapidly. $70 trillion divided by 300 million people is $233,000 each. or close to $1 million dollars for a family of 4. It could not be paid off if we took 100% of the wealth of every single person in the United States. The only solution is to stop promising so much.
Discipline for Government
The solutions to these problems are not much more complicated than the budget of a family household. The big difference is that the federal government doesn't have the same sort of discipline. We need to create that discipline and institutionalize it. We need to take their credit cards away, and we need to take their power away.
Requiring a balanced budget
We need a balanced budget amendment that says in effect that neither the President or Congress can serve another term if they don't spend and promise less than they take in during any 2 year congressional session. And we need to put a cap on what all government agencies as a whole can take from any one individual person. This is necessary to confine the federal government to its proper purposes.
All Promises must be funded concurrently. No Congress should be permitted to obligate future generations. Pay must be kept to what is affordable and within the budget, and all pensions must be funded concurrently. Long term projects should be saved for, not borrowed for. The revenue taken in by the federal government each year is so huge that there is absolutely no excuse whatsoever that they borrow money for projects.
Legitimate government employee pensions must be defined "contribution" plans, paid in for the year worked, owned by the employee, and included in the year's budget. Pensions should no longer be debts on the next generation. Several states and local governments that are required to have balanced budgets have approached bankruptcy in the past few years because they simply can't afford to pay the pensions that they promised. The pensions were open ended, and there was either no money, or not enough money set aside to make the payments. Private businesses who had "defined benefit" plans ran into the same problems, especially those who based their plans on payments from the business. The obligations got so high that they simply didn't make enough profit to pay for them. So they had no other choice than to declare bankruptcy and go out of business. There were pilots from some of the airlines who's pensions went from a couple hundred thousand a year down to little or nothing. The pilots unions simply demanded and got promises that were unsustainable.
Social Security Reform
Social Security should be converted to defined contribution plans. Required employee payments should go into a qualified retirement plan of their choosing that is in their name and owned by them. They should be permitted to put more into the plan than required, or have additional plans. A couple that averaged a modest $60,000 a year together over a lifetime from ages 25 to 65 would put in a minimum of $7,440 per year on average, and accumulate $560,985 by age 65 at the real rate of interest of 3%. That will give them 37,707 every year until age 85. Or 32,216 until age 90. If a couple would put in an additional 5% of their earnings above the required 12.4%, they would have 787,189 at age 65, and receive 45,207 per year until age 90. Of course if one didn't draw all of that down, one could live much longer, or leave the remainder to one's children or grandchildren (or great grand children). With social security, if we die prior to, or just after retirement, we get little or nothing, and leave nothing to our children or grandchildren but our debts.
Social security for those who retired years ago came out well, because politicians increased their benefits far above what they paid in. But for today's worker, social security is a rip off. And the funds have all been spent. All social security has now is a claim on our grandchildren's future. That is immoral. The moral way to retire is to retire on our saving. It is also the most financially sound way to retire.
Those who object claim that we can't count on the nation's businesses in the future. But if the businesses aren't making profits in the future and hiring people, they won't be paying taxes into a government social security plan either. Either way, the retirement plans will rest on the health of businesses in the future. Under individual retirement plans, we will own the businesses. Under government social security, we will have nothing but one vote to try to convince congress to squeeze as much out of our grandchildren as possible. It doesn't say much about our public schools if our children don't learn enough math to make the above calculations and see what a rip off social security is. We should retire on our savings, not on our grandchildren's backs.
Our future and our retirement depends upon sound money. Since our debt and liabilities are completely out of control, the federal reserve has forced interest rates down to below the real rate of return. We need to get pensions under control, stop spending so much money, and get the government out of our lives and off of our backs. Only then can we ever hope for sound money. Then we can start earning money on our savings again, and building a future for ourselves and our grandchildren. When people better understand that sound money is important for their retirement, they will start to vote against the spendthrifts that they have been putting in office. If we never stop spending more than we take in, we will never have sound money, no matter how many times the regulations or rules are changed.
Get the federal Government out of Education
The billions of dollars that the federal government spends on education is worse than a waste of money. It is harmful and tyrannical. The federal government contributes about 5 or 6 percent to our local schools, but the cost of the mandates that it puts on the schools is that much or more. Our schools would be better off without the money, we would have more local control as a result, and the federal government wouldn't waste so much money.
Those who object will say that the state and federal control assures standards. That is completely misguided and misinformed thinking. The fact is that public schools are failing in many areas of the country. They are as much out of control as our federal government, despite all of the state and federal interference, and in most cases because of it. More money is not going to help them. The problem is that they don't have the discipline of the free market. Businesses that can't make a profit and keep the customers coming back have to close. Schools need this same discipline.
Stop meddling in absolutely everything
The federal government has employees interfering in absolutely everything we do, from who we hire to what light bulbs we can use. There are hundreds of thousands of people who produce absolutely nothing, but spend their time harassing and second guessing our businesses and institutions. They get paid more than we do, and get pensions that are obscene.
As long as we have the free and unobstructed right to start and run a business, when people are laid off or fired they can go get a job somewhere else, or start a service or business of their own. If someone doesn't like us for some unfair reason, we can go work for someone who likes us or appreciates our contributions. We need to have a voluntary society, with voluntary associations, and a minimum of social engineering. Then we will assimilate and learn to accept and respect others. So long as the government neither prevents us from associating with others, or forces us to associate with others, we will learn to get along without big brother. It is time these social engineers go out into the world and actually produce something or provide some service for their pay. These busybodies cost us hundreds of billions of dollars every year. We can't afford them or the damage that they do. The evidence shows that we will do quite well without them. See the works of Thomas Sowell. http://www.tsowell.com/
End Welfare and restore Charity
The social fabric of our nation has seriously declined because we destroyed charity, and put welfare in its place. Where once churches were active and thousands of volunteer organizations took care of the poor, the sick, and the hungry, now the government does it. And it does it at an enormous cost. Instead of volunteers we now have highly paid social workers with benefits and big pensions. It is costing us a fortune.
Interpersonal love, discipline, and accountability have been replaced with subsidies, regulations and counselors. As a result we have an enormous burden on our governments to handle the results of crime, sexual immorality and broken families. When young women had babies out of wedlock years ago, they had to get married or be taken in by their parents. They and everyone around them were well aware of the cost and heartbreak of the mistakes that they made. So they made fewer of them. Today a young woman gets money and special benefits from the federal government, and free contraceptives and abortions to encourage her in her folly. We give them food stamps so they can use their money to buy drugs. And instead of addressing the social problems that result in drug use, we hear arguments to legalize drugs and make them as free as water, further increasing the social cost of our foolish policies.
Responsibility should be returned to Churches and Charities. To make sure the safety net re-develops adequately the local government can support these institutions when necessary with contributions or alternatives, followed by the state, and at the very last, followed by the federal government. After a voluntary system is working again, the federal government should get out of it completely.
Stop manipulating the States
End all block grants and let the states spend less money. States get money if they do what federal social engineers want. So they end up spending money that the people otherwise would not vote to spend. Local people are much more frugal and responsible when they know what is happening and what it is really costing them. When their money goes to Washington, DC, then back to the state government, then back to the local government, the benefits are disconnected from the costs, so the people are fooled into thinking they are getting something for nothing. They are really paying much more.
Stop paying people for not working
Employees should pay into a savings plan that is owned by them. When they are not working, they can draw from it, and when they are working again, build it up. When people know it is their own money that they are using, they won't be so prone to abuse it as now. Many people draw their unemployment benefits down completely before even seriously looking for more work. And many will not take temporary work, waiting for something better.
When unemployment "insurance" is socialized, the discipline is removed from it. Giving people back the ownership of their own earnings will make them much more responsible, and reduce the social costs, and the financial costs, considerably.
Repeal Obama care, and put nothing in its place.
Would you give up your insurance and buy an insurance policy from a man named Jack if you learned that his insurance company could never balance its budget, was getting deeper and deeper in debt, and was losing money on everything that it has invested in. What if you further learned that the company would have complete control over everything that you did, that you couldn't get any treatment without their permission, and you would never be able to quit paying them and go buy insurance from anyone else once you agreed. Would you give up your insurance and buy insurance from Jack? Would you change your mind if you found out that Jack's real name was Obama?
The cost of Obama care will be several times what Obama told us it would be, and will further increase our debt. That is always the case with promises from corrupt and arrogant politicians. And it will give bureaucrats in Washington complete control over our health care, depriving us of the right to make those decisions. It needs to be repealed. But we need to defeat Obama in the next election to do that, and replace the Democrats in the Senate, so they can't block the repeal.
Restore the Discipline of the Free Market
A free market has a discipline. A free business must give us good service or good products to keep us coming back and doing business with it. We have a choice as to who we do business with. We can buy insurance from those who give us a plan that fits our needs, and we can make sure that they have some real assets backing up their promises.
If a free business doesn't control its costs and make a profit it will eventually go out of business, and someone more competent will take its place. We need to allow them to fail and maintain the discipline. If we bail them out, we destroy the discipline, and interfere with the natural process of change from incompetent to competent management, or from old to new technologies. When we bail out a failing business, we may actually destroy the chances of a much more competent competitor, who does a better job.
Government bailouts also encourage and finance corruption. Many of those who supported Obama's election were from the businesses that he helped to bail out.
It is not possible to have a wise and frugal government that gets its incompetent hands into things where it has no business. Neither Presidents nor government bureaucrats can run the economy, no matter who is in power. When they take over businesses and monopolize them, they completely remove the discipline of the market. They can be incompetent, corrupt, and arrogant, and no one can replace them. When they fail they don't go out of business, they just continue to raise our taxes. We are no longer free to get our service from someone else or do it ourselves, and they are no longer accountable to us. We have to do what they tell us and wait until they get around to us. We are no longer free.
These reforms would get us out of the enormous mess that we are now in and restore hope for the future. Are we willing to elect a new President and Senate that have the courage to make the changes? Will we support them through the violent resistance, hostility, and hatred that they will have to endure in order to restore our republic of limited powers?