I meant well.

Regarding your comment:
“The federal deficit nominal dollar amount is a record, but as you pointed out it is a much smaller share of GDP than it was in the 1980’s when we were told we were owned by Japan.”

That sort of reminds me of my first real civillian job in the late 80’s when a colleague filed for bankruptcy. He had over $10K in crdedit card debts, incurred in customizing his bigfoot wannabe 4×4. At the time, I remembered think “wow”, how could he let himself get into this mess, or more appropriately, how could the cc companies let him incur that debt with only a $25-30K income, depeding on OT.

Then as I got to know most of the workers, altho they were all making good bucks, yet living paycheck to paycheck — keeping up with the Jones syndrome.

Yet 15 years later, it is not uncommon to find people with $20k+ in debt. If anything, their personal debt load is higher than back then.

So yes, it does strike me as ignorant when people wail & rail about the deficit when all the while they’re busy racking up personal debt. Before they expect the govt to restarin themselves, they should probably start with themselves. Especially if they would realize that “furriners” also own a portion of their personal debt.

The federal deficit and national debt are items a lot of people fail to properly understand, so politicians take advantage of this to the detriment of us all.

It is true that the federal deficit is at a record level. It is also false that the federal deficit is at a record level.

The federal deficit nominal dollar amount is a record, but as you pointed out it is a much smaller share of GDP than it was in the 1980’s when we were told we were owned by Japan.

I would submit that the biggest challenge facing the federal government entitlement program funding process today is finding a solution to make these programs self-sufficient because the dirty little secret is that wealth redistribution programs overlaid onto a market economy eventually destory the economy because they eat up an ever-increasing share of national wealth due to a lack of competition.

Indeed, it could be the death of the Democratic Party (they’ve embraced the socialist approach without wavering), but fiscal sanity and abject poverty will eventually force us to do what we’ve known for a long time – the only way out is to privatize these programs.

The question is, who will have the courage to get on with doing it? It doesn’t look like the current crop of Republicans in Congress have the sand in their pockets to stand up and do anything of courage – they are leaving it all to GWB and that is not the way a team (or a party) is supposed to get the job done.

The way the govt handles its books, so as to make the true cost of operation difficult to sudd would be downright criminal if we were to run our businesses that way.

OTOH, the federal deficit ain’t so bad in relation to GDP and certainly better than most people’s own debt to income ratio. And certainly the National Debt Burden is better than it was thru most of the Clinton era, let alone WWII when it spiked up to just over 120% of GDP. Our NDB is also better than compared to Germany, France, Japan to name a few.

I’m sorry you are upset about these issues, but not having the depth of knowledge that I do can be frustrating for people – explaining this in a way people can understand is hard, but I’ll try to help you out and then you can decide all over again (if you like) about how you feel about the solutions to the problem.

First of all, you have to understand that the reason the free market exists is that it provides the most cost-efficient means of governing the allocation of capital resources (investment) and governing the competitive forces that create the benefits you enjoy every day. Federal government entitlement programs that, to one extent or the other, redistribute wealth (i.e.: education, welfare, and health care to name the main ones) are currently constructed to operate outside of the free market system.

Now, how many times have you complained about standing in line at the Department of Motor Vehicles or dreaded having to go to the Social Security office?

Like most people, I’m sure you have complained your fair share of times because the service quality isterrible.

Now why is that?

The service quality is terrible because there is no incentive for the workers, management, or the owners of the system to improve service quality because there is:

a) no competition for capital investment resources; and

b) there is no competition for the particular service they render (the government does it all).

When these conditions exist, it is no longer possible to effectively control expenditures because there are no checks and balances in the system and the system is still subject to the laws of mathematics (mathematics will become more important in a moment). The lack of checks-and-balances automatically removes the benefits of economies-of-scale from impacting the program in a beneficial manner. Indeed, the economies-of-scale end up working against you. An example of this that is easy to relate to is the current employment crisis in France. To address this issue, the government imposed artifical standards on top of the free market (i.e.: they arbitrarily reduced the work week for workers to 35 hours per week). Not only did this not fix the current problem, it made it worse (unemployment climbed, GDP dropped, and jobs were moved out of France).

Now let’s look at our situation. Social Security, education, and health care account for over 40% of the federal government budget and also represent some significant assets owed by the government that PROVIDE NO ECONOMIC RETURN AT ALL. So the assertion that the plan has very low administrative costs is right and wrong. It’s right in that for a plan of its size, they are doing as good of a job as they can, I’m sure. It’s wrong because when we look at the overall costs of the plan compared to those costs (and benefits) created by the private sector, Social Security is a financial failure.

Now why is it a financial failure?

You’ll have to read our policy paper (”The Fix For Social Security”) to get all of the answers, but the biggest are the lack of current funding (meaning it is an unfunded plan – something NOT allowed in the private sector) and that it provides no substantive return for the investment compared to the private sector.

Finally, let’s address your comment about what I’ve been smoking. I take no offense, as a lot of people feel the same way you do because they do not have a comprehension of the complete universe of solutions available to use to fix this problem.

One of these “fixes” is the “Royalty-Based Structured Finance Business-Combination Transaction Model” (or as it is commonly known, the “royalty limited partnership” or “RLP”). The RLP is a bankruptcy proof business organization approach that is virtually immune to investment failure. It creates the highest amount of theoretical and practical financial investment leverage possible for a business operating in a free market context, so its “guaranteed” returns are 12 to 18 times what we now get from Social Security. I know this is tough stuff, but I hope you can stay with me to the end, here.

If you completely privatize education, the sell-off of government controlled assets would net the federal government (it’s share of the proceeds) somewhere around $167 billion. If these funds were then reinvested back into the newly privatized education system thru RLP’s and allowed to grow, the math works out to paying off the $11 trillion Trust Fund deficit within 10 years.

Again, please read the position paper and check the math. If you have problems with the math or the concepts, please feel free to contact me via email.

Hang in there, kiddo. This is going to only get better for us all.

With regards to 11 trillion in 10 years, that’s not unreasonable should the brakes of taxes and certain regulatory restraints be taken off. Especially since a significant chunk of our “deficit” (approx $1.7trillion) is a paper deficit created by the current pay as you go shell game.

If by “red engine of liberalism” you are suggesting that American liberalism is tainted by communism, those oats have been through the horse one time too many. Liberals are not communists. Period.

“Borrowing our way of this mess” is exactly the plan of President George W. Bush. Our federal deficit outside of Social Security is $600 Billion — that’s more than $2,000 for every man, woman, and child, every year. And his plans to reduce that deficit are based on assumptions that nobody believes, such as allowing the tax cuts to expire.

You speak of “cost controls and economies of scale” as an argument for de-federalizing some program (you don’t say exactly what, but imply it is Social Security). Actually, whatever the faults of federal programs, in many cases cost controls and economies of scale are advantages.

Social Security is extremely efficient in terms of administrative costs. Whatever criticism you may have for the the present Social Security system, administrative costs are far smaller than they would be with any privatized system. As for miraculously creating $11 trillion of new wealth in 10 years without raising taxes or reducing benefits, please share with me whatever it is you are smoking!

Sincerely,

Excuse me, but didn’t we try and try and try (like the little red engine of liberalism) to make these federal entitlement programs work using the tried and true socialist approaches of increasing taxation and reducing benefits?

Didn’t we try borrowing our way out of this mess?

The fact of the matter is that the current crisis is but a symptom of the larger problem – the federal government is operating these programs within an economic system of its own construction and not within the context of the free market.

When they decided to do this (dumb-dumb donks), they “conveniently” forgot (ignored) the fact they would be automatically removing the benefits that only the free market can provide. Benefits like cost controls, operating economies-of-scale, efficient allocation and utilization of capital resources, and improving service quality.

By electing to operate these entitlement programs within a quasi-socialist/command economic structure they “baked in” the seeds of these programs’ own demise (budget busting, low service quality, no capital return, no economies-of-scale).

Sooner or later we will ahve to face the reality that unless we want to become another version of the Dutch socialist paradise we will have to privatize them.

Look on the birght side though. If we privatize them now we can eliminate the current $11 trillion Social Security shortfall and the entire federal budget deficit within 10 years.

All without raising taxes ever again or reducing benefits.

Please visit our website and download “The Fix For Social Security” if you want to see the numbers and the entire program proposal legislative summary.

May I toss in my two cents from a slightly different perspective?

Modern political regimes rest on a very conscious separation between the state and civil society, the state and the economy. This sharp separation does two things. On the one hand, it makes the state an independent actor in a way that it never was in pre-modern times. On the other hand, it makes the state and civil society competitors.

You see where I am going with this: it’s inherent in the way modern political regimes are set up that there should be a tension between the desire to use the power of the state for the social good and the fear that the power of the state, even if set in motion for the social good, will end up encroaching on civil society.

Personally, I think that governments have responsibilities to help needy citizens who aren’t being helped in other ways. In that sense, I agree with Anomalocaris, on the level of principle.

The problem, though, is that, given the structure of our system, the state can’t help the poor, etc. without tending to REPLACE civil society, which means: what is left of the more local community structures that should be there to offer the first and most substantial help on the ground.

In this sense, I agree with La Shawn, Andy, Nardo, etc. that, whatever good federal welfare does in individual situations, its net effect, for poor blacks and poor whites, has been far from 100% positive. But I would put the problem like this: the welfare state has also been a dis-incentive for the renewal of local community structures that could and should be doing most of the helping on the ground—and it’s those structures that are going to make the most difference between poverty (which in this country is often an inner, cultural matter) and participation.

In other words: the way to go at poverty is neither to make the government the dispenser of aid nor to throw everything on private charity—neither collectivism nor individualism—but to revitalize local communities FROM BELOW, so that the state is not the only trans-individual agency around to help people.

Adrian

I agree with you, you can do only so much when working with a hostile government. But, where that is a problem, there are sometimes ways around it. For example, aid can go directly to civil society organizations working on disease control, and avoid hostile or corrupt governments altogether.

I fear that dollars/food/drugs from government or private sources are not enough to help people living under regimes that do not allow people to live productive lives and do not let relief get to the suffering. I certainly support helping people in emergency situations, but you can only do so much when working with a hostile government.

You said “the govt is not an individual and as such is wholly incapable of charity.” I don’t quite catch the logic there; are you saying that two or more people cannot band together for charity? But never mind the logic, I take it that you opposed federal asstance to New York in the wake of the attacks of 9/11/2001 and federal assistance to Florida in the wake of a series of tropical storms in 2004?

Your example of the tsunami is interesting. What’s interesting is that people are all terribly aware of the awful distruction of December 26, 2004 — a tsunami that destroyed homes, hospitals, boats, cars, schools, and farms, and took the lives of well over 200,000 people. But how many people who know about the tsunami realize that over 200,000 children under age 5 die every week, most of preventable causes? It’s a moral disgrace that over half a million kids every year are still dying of measles, a vaccine-preventable disease.
Private charity alone is not up to the task of addressing the magnitude of this problem. Foreign aid is everybody’s favorite target of disdain, but it’s the smallest slice of the federal budget, and humanitarian foreign aid is controlling disease and providing self-help opportunities for millions.

I can see it now, everybody jumping on this post about why America should send hard-earned taxpayer dollars down a foreign aid rathole. Well, diseases such as TB and polio are communicable, remember? There hasn’t been a case of polio in the U.S. in years, but it until we wipe it out everywhere, we have to continue to immunize ever American child. It actually costs less to wipe it out internationally than to immunize our own population forever. As for TB, it’s the number one infectious killer of adults. a third of the world’s people are infected, and of those, 10% will eventually come down with the disease. It can be cured for just $10 worth of drugs, and it’s spread by coughing or just breathing. We can’t control TB in our own country unless we control it internationally. That’s why there is strong bipartisan support in Congress for maintaining international TB control as a component of U.S. foreign aid.

Private charities are great, and I contribute what I can to the charities of my choice. But they have been insufficient to the magnitude of the problem.

Respectfully,

Personally, I think that by getting out of the management of social services, the govt would get out of our pockets. As the Tsunami has shown us, more $$ were donated by the private individuals than by the govt. Volunteerism and giving to charity is affected by the notion that the average citizen doesn’t need to donate since the govt is on the job.

If there were no govt involvement, 1) people would keep more of what they earn, and, 2) people will donate more as various charities make their appeals on a case by case basis. Bottomline, the govt is not an individual and as such is wholly incapable of charity. For them, cgarity is a business unto itself.