Okay, I know it has taken me a long time to get here, but I needed to set the ground work. But now that the groundwork is set we can begin to talk about how to improve the economy (i.e. get rid of the socialistic element). Now I want to say upfront that even if every one of these programs was put in place today it would still take years for the economy to start fully recovering. Further even if everything I suggest were put in place, and it was followed by a second, and a third and a fourth round of capitalistic reforms leading to pure laissez-faire capitalism (which by the way doesn’t mean no government intervention, it only means proper government intervention) then you would still have recessions. The only difference would be that they would be light and short. Major recessions and depressions are the result of government interference, but even a fully functioning system requires periods of rest and culling of the herd.
So I propose two way
s to improve the economy (1) remove the socialist elements and (2) introduce the reforms that capitalism requires but have not been put in place. Each will be given its own blog post. I will start with getting rid of the major socialistic elements.
(1) Anything Obama has pushed through needs to be overturned. The man has not done a single intelligent thing when it comes to domestic policy. This is just a given.
(2) Every employee of the government (federal, state, county, city) take a 15% cut in pay, benefits and 30% cut in future pensions. This just has to be done. I actually would like to make it more, but military personnel and various jobs like FBI agent don’t deserve that (they actually have a real function and do their jobs admirably, but if you start putting in exceptions, then everybody will get an exception and it loses the impact it need). But the fact is that most civil servants are paid better than their private sector counterparts for inferior work. That’s not so much of a servant, as it is of greedy task master. Government work shouldn’t be a life- long job, it shouldn’t be desirable and it should be competitive with the private sector. Oh and all elected officials need to take 50% pay cut and lose all pension funds. After that there needs to be a 10 year freeze on all salaries (that does not mean you don’t get a raise if you get a promotion, it just means the amount for each pay grade will not increase for any reason).
(3) After the pay cuts, every single department from top to bottom needs to cut its budget by another 15%. Given government waste this should be easy.
(4) After that, Congress, state legislature, city councils, need to cut another 10% by killing useless programs. Knowing some of the worthless crap the government pays for I have absolutely no doubt it really is as easy as Kevin Kline made it look in Dave.
Those 4 were no brainers. And anyone with a brain (clearly not any elected official currently in office) can see that given our debt that is just the icing on the cake. I have heard rumor that Gingrich plans a new contract with America, he should make those 4 the first points because they are beyond obvious. Now lets get into some of the harder cuts and policy changes.
(5) Welfare needs to be put on a five year plan to be completely turned over the states. Not a cent will be collected by the federal government for welfare and not a cent will be distributed. This has a two-fold advantage. One this will reduce a lot of federal overhead. But the second advantage is that the states will not all choose to implement their welfare programs in the same way. There will be 50 little experiments (okay more with the territories) on how best to run a welfare program and the best (most effective at least cost) plans will win out. Eventually I’d love to actually put welfare in the hands of county governments. Why because when people can see that their taxes for welfare are going not to some nameless person on the other side of the country, but to someone they could literally run into they will demand efficiency and standards. You will see that email that we’ve all received about drug testing put into place. You will see education encouraged over simple entitlement. You will see deadlines on entitlements. And you will see less fraud, because its not a nameless and slow federal system, it’s county employees who may actually know you by name. Further as the county will be more responsive in terms of taxes people will be more able to see how charity and involvement in outreach programs has a more immediate effect on them causing them to actually do things and push those around them who are on welfare, off it.
(6)Social Security. It’s a failed program. It cannot sustain itself, it never could, it is a black hole that if allowed to continue indefinitely will destroy this country no matter how many adjustments you make. And while I would love to just kill it, I know that is not a pragmatic solution. But we can begin to reform it in a way that will lead to its eventual demise. So in addition to the 15% cut in benefits from point 3 we need to make some other important changes.
From now on there will be no cost of living adjustments. There will however be a need to cut benefits by 1%-5% every year.
If you under 60 right now then your retirement age is 70. If you’re under 50 then you’re retirement age is 75. If you’re under 40, well you’re looking at 80.
From here on in anyone can opt out of the system. We will not take anymore of your money, but what we already took is lost. I think everyone under 40 will probably opt out. Now the complaint about this point is that there will be no money to pay for those who stay in. But there was no money to pay for them anyway. I’d rather just end throwing more people into the system (and thus extending our loses), and just cut it off we’ll pay off the rest through our taxes which we were going to have to do anyway. At least this way there is an eventual end to having to pay this debt off. Grandma, Grandpa, I hope you can live with yourselves given that your stupidity and inability to plan has left your children and grandchildren to pay for you inability to plan for retirement (I can’t image the kind of karmic burden that comes with, but I can almost guarantee that a lot of people are getting reborn in third-world countries).
One last point anyone under 40 who stays in will not get paid a single cent that they did not put in. However, if they die before they get all their money back, we will cut their family a check.
This is harsh, but somebody needs to touch this third rail. If we don’t it will destroy us.
(7) Medicaid and Medicare. Well you need at least another 10% cut on these. Then given that a massive amount of the costs to these programs comes from fraud, the punishment needs to be made so that crime is not worth it. And given that defrauding the government is really defrauding 300 million taxpayers, each act of fraud from Medicaid and Medicare should be treated as 300 million separate acts of theft and fraud. Thus being caught one time means life in maximum security prison. Is that harsh (and possibly a little extreme). Yes, yes it is. But right now we need to cut costs and get a 13 trillion dollar debt paid off, people who are costing us billions of dollars, don’t deserve mercy at this point in time.
(8) All loans and grants that the government gives out need to be cycled back over the next 10 years to nothing. Yes that includes student loans. One of the reasons that college tuition has jumped over the last few decades is because the government kept increasing the amount it was willing to pay students, and amazingly college tuitions tended to rise by about the same amount. This will result in a year or two low attendance at colleges followed by a price collapse similar to the housing market. The good news is that after the market takes over on determining prices more people will be able to go to college. Will quality suffer, probably for a while, but it will balance out in the end.
(9) All funding for the arts dies. I don’t care if you like PBS or NPR. They are drains on tax dollars and if they’re so good then they can put in a few commercials. It won’t save a lot but right now every cent that goes to the debt.
(10)The so called Bush tax cuts stay, because getting rid of them isn’t continuing a tax cut, it’s a tax increase which is the last thing we need right now. I would love to cut taxes, but until we can get the debt on other side of $10 trillion, it’s just not pragmatic. That debt is an albatross around our collective neck and it needs to die.
(11) Kill the Department of Agriculture. It servers no function. I have a lot of other parts of the government I would like to cut, but of all of them the Department of Agriculture is the worst.
(12) No subsidies, no research funding, no tax breaks for special programs. We are not giving money in any way shape or form to the private sector except for direct exchange for services or product. The government next to never makes appropriate investments in the economy and their infusion of funds in the end always messes things up more than it fixes.
(13)And this one may be hard to do but there has got to be an attorney general out there just crazy enough to try this. Anyone who has been paying attention to the news knows that a lot of our problems in budgets come from civil servants guaranteed pensions. Some these people retire at 50 and get paid 90% of their last salary until they die. It’s insane. And it’s costing states astronomical costs that they can’t possibly meet and it’s what making all of these states (especially California) consider bankruptcy. And while bankruptcy would allow the state to renegotiate the pensions, the mere fact that they declare bankruptcy would cause far reaching economic problems that might take decades to repair. Thus I have a solution so crazy it just might work.
These pension are just insane, they’re quite frankly criminal. They were negotiated behind closed doors between unions and public officials who were paid through campaign donations by those unions. That’s bribery of a public official and conspiracy. The details of these pensions were never made known to the public, or at least they were never widely publicized. That’s conspiracy to defraud the public. The payments are made to people for not doing work. That’s theft and misuse of public funds. For retiring usually at an age younger than a private citizen. That’s a civil rights violation. And the funds for all of this were held in a communal fund (the state treasury). That’ a RICO case! (No lets be honest here, a pension system like this if done by a private company would immediately come under scrutiny for corruption if that company was using public funds to pay off their employees). I say charge everybody: all state officials who signed off on it, all the union officials, and everybody collecting their pensions. (And as icing on the cake, a private attorney should also sue everyone who gets charged in a class action lawsuit for the all of the funds they have defrauded the public of). But my intention isn’t to throw a lot of old people in jail. We offer everyone a deal, they will be left out of the prosecution and lawsuit if they agree to take only 30% of what they were previously living off of (if you’ve seen what most of these pension are you’d realize someone could easily live off of 30%)
Like I said this is a really crazy idea. And it would take an attorney general who is willing to fudge some of the usual definitions for these crimes, but if it gets through in just one state in the union, the rest will very quickly follow suit. And really it’s my crazy idea or California, the 5th largest economy in the world declares bankruptcy and then redoes the pensions anyway…which do you think will have worse long range consequence?
Assuming no increases in spending, I think a conservative estimate would put us at about 300 billion a year surplus. Granted that’s not going to pay off the debt immediately, but it might get us to the other side of 10 trillion within a decade. And this needs to be goal number one. All federal, state, county and city debt needs to be reduced. As long as the debt exists the dollar is unstable and low in value, as long as the dollar is worthless economic growth will be difficult at best. Now I believe that with these cuts in addition to what I’m going to suggest in the next post, much higher tax receipts will be possible, and from there paying off the debt will be faster. Once the debt is on the below 10 trillion, tax rates can come down which will spur even more growth.