Posted by: theoptimisticconservative | December 1, 2010

Debt Reduction Versus Government Reduction

It isn’t surprising, when you think about it, that the president’s debt-reduction commission has come out with a plan that proposes to inflict the greatest pain on contributor benefits (Social Security and Medicare), household budgets, and national defense. The commission was asked to propose ways to reduce debt. It wasn’t asked to rethink the size, scope, or charter of government.

If the latter had been its assigned objective, the panel might have come up with proposals that don’t concentrate most of the pain of sustaining our current level of government on middle-class household budgets and small businesses. There is no question we need to deal with our spiraling debt, but what the debt-reduction panel has published today is a good example of an outcome based on biased assumptions.

The panel was obviously willing to rethink some assumptions: those about the economic lives of American households and small businesses. Eliminating the mortgage deduction – even just for mortgages over $500,000 – and raising the gas tax by 15 cents per gallon will have their biggest impact on middle-class households. So will delaying eligibility for Social Security, and means-testing to determine the level of benefits. So will taxing employer-provided health insurance as income. So will reducing Medicare benefits. Each of these measures by itself digs deeper into a household’s current income; added together they are likely to begin limiting many Americans’ lifestyle options, in such basics as the ability to own a home and send children to college while saving for retirement and medical expenses. They have the power to change what it means to be “middle class” in America.

This is a great deal to ask of the people. It would be one thing to ask it while reducing government, its role in the people’s lives, and its role the U.S. economy as a whole. More Americans every day, for example, are willing to consider restructuring Social Security: to eventually phase it out or make it entirely a means-tested program for the lowest-income retirees. But the “government-restructuring” aspect of debt reduction clearly came in for almost no rethinking at all. The debt-reduction panel proposes mainly to cut federal spending to pre-2008 levels and set spending caps for the federal agencies, at least through 2020. It also suggests eliminating agricultural subsidies. I can support both these recommendations, but they don’t go far enough.

Virtually all the federal agencies would remain in place. Entities like the Environmental Protection Agency, the Departments of Education and Health and Human Services, and the Food and Drug Administration would retain their current portfolios to regulate, litigate, and spend federal tax dollars in ways not envisioned by their charters from Congress. Ukases from the federal regulatory agencies have a significant and growing impact on the people in their economic lives, something small businesses have dealt with for years and individuals are now beginning to understand.  Declining to eliminate or restructure them is a decision about economics – and it will affect the willingness of the people to suffer in tackling federal debt.  And it should.

A debt-reduction proposal that will make it difficult – perhaps impossible – for many people in their 20s and 30s to buy homes, while leaving them to contemplate how federal regulators are driving their utility and health-insurance bills up, is not a proposal likely to keep Americans feeling positive about their estate as citizens. The model of government by which federal agencies prescribe to us what a middle-class lifestyle consists of, and confiscate from us whatever we have above and beyond that, is only a philosophical half-step away at this point. The people are absolutely right to view this prospect with disapprobation and resentment.

Members of the public who object to the proposed measures will be denigrated as whining and irresponsible. Some of them probably are. But that’s not the point. The point is that, in the debt-reduction panel’s plan, gouging American households to pay down the debt is being done instead of reducing the size of government.  We should eliminate whole federal agencies and many pounds of regulatory tomes before we ask Americans to choose between saving for retirement and buying a home, or between paying for medical care and sending kids to college.  Life by itself imposes choices on us; but when government gets into the business of picking and choosing, or forcing canned choices on us, the silly, subjective question of who’s “being a big baby” actually starts infecting our political decisions.  That is 100% detrimental to communal life.

Our contributor benefits are unsustainable. But they are part of a larger problem of unsustainability created by holistic, prophylactic government. We could actually afford both Social Security and Medicare a lot better if government regulation weren’t actively suppressing business formation today; if government regulation didn’t drive every aspect of the cost of medical practice up; if government regulation didn’t drive consumer prices up and make COLAs necessary; and if government regulation didn’t divert so much worker compensation from worker income to employers’ other mandated, per-worker remissions (non-Social Security/non-Medicare) to the government.

A presidential debt-reduction panel should not be proposing to us that Americans accept a reduced lifestyle so that the current footprint of government doesn’t have to change. As we say in the military, that’s bass-ackward. It’s what this panel has just done. I’m sure the panel did what it was asked to do, but it was asked to do the wrong thing.

J.E. Dyer blogs at Hot Air’s Green Room and Commentary’s “contentions. She writes a weekly column for Patheos.


Responses

  1. Government knows only one direction. It wishes to become our master and dribble out small pieces of candy to buy our allegience.

    What a shame.

    Perhaps we all need to brush up on our Jefferson.

  2. more than 50% of the budget and most of the people on the federal payroll?

  3. Attempting to rein in the federal monster is futility. The best thing we can do is encourage it to metastasize as rapidly as possible so that we can be living witnesses to its eventual self-destruction. Dealing with half measures, attempting to restrain the growth of budgets of departments that shouldn’t even exist is a fool’s errand. The substantial percentage of the population that sees massive government as the answer to every problem and the effective counter to the excesses of the supposed free market will learn in no other way than first hand experience what it means to be dramatically in error. Unfortunately, many others that know better will also suffer the consequences. In the end, however, everyone will be better off.

    • Yes, the government will most likely metastasize and collapse, but that shouldn’t be encouraged, because if we are to survive the collapse it will be because, in the course or resisting and warning about the growth of the state we will start suggesting and trying out alternatives based on voluntary agreements among individuals and corporations. Perhaps the best thing to support now is the possibility of states de-linking from the federal government–I heard a couple of days ago that the Republicans in Congress were thinking about pushing a Constitutional amendment allowing a certain number of states (a majority? containing a majority of the population?) to opt out of federal laws (and regulations?). Has anyone else heard about that–it’s a very good idea, or would be a very good start.

  4. In the end, however, we’ll be dead and not that much concerned with whether we’e better off.

    Do you envision not having a massive government when we have a massive population with a massive economy conducting business and more throughout the whole massive planet?

    • Yes, I envision it. There is no pre-set proportion between the size of civil society or any of its institutions, and the size of government. As for the massive planet, the tendency of other parts of the state to grow along with the military is a troubling one–that will be an important problem to solve as the decrepit welfare state proceeds to self-dismantle.

      • “the tendency of other parts of the state to grow along with the military is a troubling one–”

        Do you mean that the trouble is a state that produces a huge military must inevitably produce a huge growth in government or do you find only the non-military growth troubling?

        The opticon seems to advocate a gigantic, world-dominating military that is somehow supported by a limited government that collects and spends little of the nations wealth in taxes.

        • I’d like a military big enough and scary enough to deter potential attacks, prevent any other powers from keeping us out of other parts of the world, secure the international market, and protect Americans abroad. That means a military much stronger than Russia and China, and stronger than both combined. I don’t really see two questions in your either/or–I’m afraid of the non-military growth that seems likely to follow the size of the military. I’m hoping that a combination of high tech weaponry and shields, elite combat forces and judicious but ruthless application of force can give us a lean and mean military without too much spillover.

          • the continuous, and it must of necessity be continuous, development of the advanced weaponry needed to keep a lean, mean war machine equipped to overawe the military of an advanced and vastly more populous China (as well as Russia? not India?) calls for an allocation of a heck of a lot of money and trained talent…..and a large and powerful group supervising the collection of the money and talent and overall effort.

            Military domination of the planet requires a military society or an equally awesome consumption of resources by a large civilian bureaucracy.

            All the complaining about spending money and collecting taxes on Social Security and other civilian federal programs is never anything but a rude noise as long as the opticon or anyone else wants to advocate a nation that maintains military dominance over the world.

            Unless, of course, maintaining a rough democracy isn’t high on the list of priorities.

            • What we have been leaving out is the system of alliances necessary to military preponderance–a system of alliances that should include a hopefully increasingly strong, rich and influential India. In fact, it wouldn’t be going too far to say that the future of the world, not just the US, depends heavily upon India becoming a central player on the side of freedom and democracy. Fortunately, strengthening our relationship with India seems to be the one genuinely bipartisan policy of the past couple of decades.

            • If I can ever find enough other countries willing to be a benign empire as opposed to an aggressive one – I am all with you. Back when an ocean actual allowed you some sense of protection perhaps you could skimp a little bit. But those days are well past. So providing for the common defense takes a little bit more than it used to – although you know that as well as I do.

              The Dept of Education on the other hand is a more recent creation whose accomplishments are next to nothing, but when the progressive (their word, not mine) political philosophy began to take hold the idea of an activist government taking an active role in the managing of daily affairs it seems to be sacrosant.

              The size of the government worries me much less than what it is actually trying to do. Do I like courts, food safety, health departments; mostly yeah. Do I like copious federal grants to NGOs who can then agitiate for govt action, the Dept of Energy and Education and HHS and the EPA – not so much.

  5. This is the Federal-sized equivalent of School Board budget cut games.

    First, the School Board proposes dropping extracurriculars such as football, swimming, soccer, (etc.)

    The population revolts at those “cuts.”

    End of budget-cutting exercise, full speed ahead. Damn the torpedoes taxpayers.

    • Good capsulization. Watch for the proposal to shut down the elevator in the Washington Monument, close all exhibits except the Ant Christ movie in the National Gallery and limit the operating hours of the lights on the, er, Winter Solstice tree on the Mall.

      Every long profitable corporation in the country that has hit on hard times has found it can cut 15 or 20% of the staff without very noticeably impacting operations. Obama’s 2 year pay increase moratorium is a good start and should be encouraged. Getting into the spirit Congress should send him back a bill requiring 20% downsizing of administrative staff in all government departments immediataly when it convenes in January. This should not be done cruelly. Give the laid off workers one week of severance per year of service.

      • Can’t keep up the wars if we cut 20% of State and DoD.

        And it ain’t real convenient to attempt to stop fighting now or in the next few years.

        • How does State help us fight wars? Cut State, cut the CIA–but obviously the main thing is entitlements. We need to come clean on the Ponzi schemes and acknowledge the promises of Social Security and Medicare will not be met for much longer. I don’t see a politicisn brave or stupid enough to do that, so I think some kind of collapse is more likely.

        • Considering the usefulness of the so called allies the State Department has accumulated and massaged at great expense over the past 60 years I think there’s a good argument for shutting it down completely.

          And based on the Wikileaks cables they don’t know how to keep secrets, they can’t tell the difference between the titillating and important information, and they don’t write much better or more informatively than I do when I’m first draft speculating for free.

          Cut the State Department back to a Secretary and a few secretaries like it was in Jefferson’s day and tell other countries that if they want to communicate with us they should send us an email or a tweet; or just give the message to Assange directly and we can read it in the Times.

  6. I’d like the federal govt to even get out of the administration of health care and social security. Such a change couldn’t be an immediate one, but a slow gradual process. It’s better for the republic to have individuals be responsible for themselves. We managed as a country before the New Deal and Great Society. It’s a myth that we now need the govt to run our retirements and health care for us. I’m not against a mechanism to assist those that are unable to assist themselves, but all others should be able and expected to fend for themselves.

    I’m with adam on how I’d like our military look. I see no reason why we can’t have a dominant military with a limited govt. The Dept of Education, HHS, EPA (to name just a few) were not around when we fought WWII. We could dispense with them quite productively and not diminish our military at all.

  7. I still want to know what our gracious and wise hostess thinks of asking the Saudi Princes to go first when we attack Iran. It might even save us a pretty penny if we are persuasive enough for them to agree.

  8. There’s certainly the potential for major cost reductions in the military. Why do we need four different air forces? The military is top-heavy with administrative duplication in research and development, procurement and logistics. Consolidation should have been done years ago. But congressional priorities get mixed into the deal. Closing a base has a negative effect on the local economy.

    There’s no longer a need for a Dept. of Agriculture. All the information that farmers need is easily available. And their subsidies must be eliminated. The Dept. of the Interior is basically a duplication of the USDA. Get rid of one or both. What real role does the Dept. of Commerce fulfill? I’ve never met anyone that’s ever talked to someone from there. If aliens abducted every Commerce Dept. employee, how long would it take before they were missed? The Dept. of Education was a mistake from the beginning. When the Congress makes a mistake, do we have to live with it forever? And the EPA is a power-mad bureaucracy from some dystopian movie like “Brazil”. Cut them down to an office in a strip mall somewhere.

    • Rather than coughing up $12.95+tax for the Nov.-Dec issue of “Foreign Affairs”, pedal over to your local library and read the article therein entitled “American Profligacy and American Power, The Consequences of Fiscal Irresponsibility”, by two high-powered figures, including the head of the CFR. If these guys are worried and pessimistic, maybe we all should be a little concerned.

  9. […] Dyer, posting in the Green Room over at HotAir (cross-posted here), on the misplaced priorities of the Presidential Debt Commission, in an article titled: Debt […]

  10. […] that vein, J. E. Dyer blogs, Wednesday, at Theoptimisticconservative’s Blog, in the wake of the […]

  11. I like them all! Heck folks, we have this all fixed, now off to the beach!

    • Better hurry to the beach before they lay off the lifeguards and the EPA makes it illegal to swim in the ocean because it disturbs the sea life.

      • Oh – right.

        I forgot about that. Can I just sit quietly in my room and not bother anyone?

        • I think that’s still authorized; but you may want to get OSHA to check out your chair and usual sitting posture. And it wouldn’t hurt to get the EPA to do an air quality and turnover rate check and the DOE to certify the insulation and the energy efficiency of the lighting.


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