Hit the Pause Button, But Get Ready to Hit Play
President Obama and the Republicans avoided the fiscal cliff. Taxes were raised on the wealthiest 1 percent and spending cuts were delayed for another two months.
Was the tax cut fair? Every worker faces higher taxes because the social security tax holiday is over. Corporations got $20 billion a year in tax breaks. You decide.
Republicans have one talking point: “Spending is out of control.”
What is out of control is aging and healthcare, and no one knows how to deal with that.
More than 75 million baby boomers are waiting in line for government healthcare. In the 1960s, healthcare was 2 percent of government spending and people lived to age 70. Today, healthcare is almost 30 percent of government spending and people are living to almost 80.
No one has offered a solution to that problem. Even Paul Ryan’s plan to shift more healthcare costs to seniors didn’t begin for ten years. After all, he wanted his 78-year-old mother to vote for him.
Here’s the real problem: Americans like what government does. They just don’t like to pay for it, especially since borrowing has, thus far, been painless.
Government spending in the U.S. is different than in other countries. The U.S. doesn’t own airlines and factories. The government buys from the private sector.
If the defense department buys fewer airplanes or battleships, will airline companies and cruise lines buy more? Highways are built by private sector companies with government contracts. Do we want more crowded highways with more potholes?
Eliminate Fannie Mae? Will banks make mortgage loans without government support and guarantees? Eliminate the Education Department? Will banks make student loans without federal guarantees? Can local school systems compete with Japan and Germany? Do we want our great universities to rely even more on foreign students if Americans can’t afford tuition?
Eliminate the Department of Commerce (and save less than 1 percent of government spending)? That means eliminating the Census (which determines how many dollars and votes each state gets) and the Patent and Trademark Office. Eliminate the SBA? Will banks make loans to small businesses without government guarantees? Stop protecting our water and air? Close the national parks? (Or charge admission and watch them fall into disarray like the Transportation Museum in Spencer?)
Eliminate any national energy policy or the Environmental Protection Agency? Just tear up the environment with no regulation? Eliminate welfare? That would save about $250 billion which, of course, the poor use to buy food, housing, and heathcare in the private market. And there would be other costly repercussions.
Eliminate foreign aid and save 1 percent of federal spending? Will Americans buy more tractors and food since those countries are required to use those dollars to buy American goods?
Eliminate the Congress and the Presidency? That would save 1/10 of 1 percent of federal spending. Not much, but perhaps what we really want.
Costs won’t disappear. If government pays less, Americans pay more. Sounds like a tax. Times up. Release the Play button. Let’s get on with the show.