Sunday, February 4, 2018

At some point, the music must be faced

The recently passed tax-reform package was, in and of itself, a great piece of legislation, and it's having immediate effects all over the country. Bonuses, pay raises, capital equipment expenditures.

But it can't be considered in isolation. Its beneficial effects coincide with this:

It was another crazy news week, so it's understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump's first full year in charge of the budget.
That's almost double what the government borrowed in fiscal year 2017.
Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.
I'll cut to the chase: Nothing changes on the debt and deficit front until and unless this nation changes its view that government ought to be in the business of providing "services." And no one has a good suggestion for putting that horse back in the barn.

Ted Cruz made the most admirable effort I've seen in years, perhaps ever, in 2015, when he issued his Five for Freedom, listing the IRS and the departments of Education, Energy, Commerce and Housing and Urban Development as cabinet-level entities he'd get rid of. That's the first of his five initiatives. the others are as follows:

Second, besides these unnecessary cabinet agencies and the IRS, we will sharply reduce the agencies, bureaus, commissions, and other programs that are harming American households and businesses — including the Consumer Financial Protection Bureau. Together with the four departments and the IRS, our conservative estimate of the effects of these eliminations and reductions is a savings of over $500 billion over ten years. And that’s just a start. The true savings — of scaling down the scope of the federal government, of restoring to the states their rightful authority, and of unleashing the people’s ingenuity — cannot be measured by a number. We are uprooting the centralized power that we have lived under for far too long.

Third, we will bring back a proven approach from the prosperous days of the Reagan administration: a private-sector panel to assess federal spending levels and evaluate areas of waste and fraud for removal. At President Reagan’s behest, the Grace Commission recommended 2,478 “cost-cutting, revenue-enhancing” suggestions, without raising taxes, weakening defense, or harming social welfare. It was a major success among other policies that created a great economic boom, and it deserves a reprise.

Fourth, we will hold Congress accountable; it too often delegates its authority to unelected bureaucrats. We will enact a strong Balanced Budget Amendment. And, by enacting the REINS Act, we will require that a majority of members approve any major, cost-inducing regulations.

Fifth, we will put in place a hiring freeze of federal civilian employees across the executive branch. For those agencies in which it is determined that a vacant position needs to be filled, I will authorize the hiring of a maximum ratio of one person for every three who leave. And rather than automatically increasing federal workers’ pay annually, workers will have more opportunities for merit-based pay increases.
What a national treasure he is - and we could have had him as our president.

He's spot-on with regard to what needs to happen with Social Security as well:

we need to honor the promises made to our seniors. But for younger workers--look, I'm 44 years old--it is hard to find someone in my generation that thinks Social Security will be there for us. We can save and preserve and strengthen Social Security by making no changes for seniors; but for younger workers, gradually increasing the retirement age, changing the rate of growth so that it matches inflation and critically allowing younger workers to keep a portion of our tax payments in a personal account that we own, we control, and we can pass on to our kids. We can do both.
And recall that he was at the forefront of the push to use defunding as a way to repeal the "Affordable" Care Act. It's safe to say that it's too late to look at that now. The program is too well entrenched. It will just have to die of its own accord, leaving more upheaval in American lives in its wake than would have been the case if we'd defunded in 2013.

Look, the point here is not to engage in a tribalist yay-rah about Ted Cruz. He's great, but it's because he's been such an articulate spokesman for freedom and fiscal responsibility.

But demagogues abound, and in this age of coarse dismissals of defenders of freedom, and emotion-based appeals ("government made us promises, and now it by golly needs to figure out how it's going to honor them!") we don't proceed in a clear-headed, principles-driven manner.

But to say these great tax cuts shouldn't have happened because the debt and deficit continue to balloon is disingenuous. We all know in our heart of hearts what needs to happen, and it's not government seizing even more of our money at gunpoint.




7 comments:

  1. So I want to experience my own personal economic boom as a New Year's resolution. I sit down with myself in December and I cut my income here, there and everywhere I can. OK, that's done, I quit my day job, sell my house and all possessions I don't need and party hardy on New Year's eve. Then the sun rises on the new year and I'm giddy with anticipation. Oh, I still got to buy groceries, fuel, save for retirement, all that other stuff. Ooookay, I aint got no income so now what do I do? Man it would be disingenuous to conclude I shouldn't have cut my income. Now what do I do?

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  2. Just look to the present reality for a clue why the Cruz personal empowerment method for retirement savings won't work.



    The Champions of the 401(k) Lament the Revolution They Started

    www.wsj.com

    "The dominant vehicle for retirement savings has fallen short of its early backers’ rosy expectations; longer life spans, high fees and stock-market declines."

    https://www.wsj.com/articles/the-champions-of-the-401-k-lament-the-revolution-they-started-1483382348

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  3. The WSJ article is behind a paywall, but I dod find an interview with Timothy Martin at NPR that gets to the heart of his position.

    https://www.npr.org/2017/01/03/508075236/retirement-account-pioneers-regret-what-they-started

    No one predicted that the 401(k) would sort of underperform or underserve, you know, a mass range of workers. I don't think anyone would've signed on. You know, one sort of mistaken perception heading in - these people all thought Americans would see it in their best interest to save as much as they could for retirement. And what we've learned in recent decades is that more people are willing to spend, or want to spend, rather than save.

    Well, whose fault is that? An individual human being is a free agent. He or she may not deem it in his or her best interest to save, but he or she is going to have to bear the consequences of that.

    No entity - certainly not government - can guarantee us a smooth, secure future. We shouldn't want any such entity. It turns us into cattle.

    I'll repeat what I've said around here a few times: a stock portfolio, over the long term, outperforms any other investment instrument in terms of return.

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  4. And yeah, your attempt to draw an analogy between an individual household deciding to forego income and the federal government's situation is faulty in the extreme. Government, according to the framers of the Constitution, has a few very circumscribed functions. It would not take much at all, comparatively speaking, to fund them. The rest? It needs to go. Now.

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  5. We love and revere our framers but we the people had to go on with our democracy and I think they understood that.

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  6. We’re not a democracy, we’re a republic. Big difference- as the framers explained in The Federalist Papers.

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  7. In a democracy, a faction can morph into a mob and impose stupid ideas on society. A republic is designed to keep that tendency in check.

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