Thursday, December 2, 2010

On Deficit Reduction

The bipartisan commission is meeting and news reports today reported dissension among commission members. The two co-chairs released some preliminary ideas a few weeks ago, but the problem is that among the members themselves there are active politicians, and politicians these days lack the political courage to do anything meaningful about runaway spending. Just think back to the recent campaign; every time a journalist asked a Republican what he proposed to cut, the politician would never give a straight answer. Now that is true cowardice.

The rules are that any proposal needs 14 votes (out of 18 total) to be issued. This will never happen, but it's irrelevant anyway since Congress never will find the will to enact legislation involving tough choices.

The good news is that the ideas from the co-chairs made it clear that the "sacred cows" previously deemed untouchable are on the table for discussion. (I swear, I am going to puke if I ever again hear the words "non-defense discretionary spending" as the only things on the table. Everyone knows true savings cannot be achieved if the cuts are limited to that relatively small category of spending.) The four sacred cows are social security, Medicare, defense, and the interest deduction for mortgages. I don't know much about Medicare, but I will deal with the others.

First defense. Having our military personnel stationed in over 100 countries around the world is just ludicrous. It engenders much resentment toward the U.S., and on balance probably makes us less safe rather than more. We should close all our bases on foreign soil and bring the troops home to the U.S. If the military wants bases on U.S. soil, like Guam and American Samoa, this is acceptable, but we should not have bases on foreign soil, any more than we would allow foreign countries to have bases on our soil. (For an example of the resentment caused by our presence, look at the Japanese Prime Minister having to resign because he couldn't get rid of our base on Okinawa as he had promised.)

Certainly our navy should retain the right to operate in international waters, and by so doing the U.S. could retain a significant presence around the world, without violating other countries' sovereign space.

We should also call a halt to the runaway spending on new weapons systems, which are being bought as if there still was a cold war going on. We have plenty of weapons already.

Next social security. Obviously changes must be made to keep it viable. Politicians get asked "would you cut social security?", and are afraid to even bring up raising the retirement age because they are afraid that journalists will paint this as a "cut", even though it really is not. Ideally the retirement age shoud be pegged to life expectancy, just like the monthly checks are now pegged to the cost of living. As life expectancy goes up, obviously the retirement age should go up as well. This seems so obvious that it is inexplicable why the resistance to this is so high.

Next the interest deduction. This is bad public policy in the first place. It is based on the myth that every family should live in a single-famly house with the yard and picket fence, etc. Because of the interest deduction, people spend more for houses than they are worth, artifically propping up the housing market from where it should be based on normal economic realitites. The housing market should be allowed to function free of this artificial stimulus, and then maybe homes would become affordable for first-time buyers with young families. But also, people would be more encouraged to live in alternative settings, like apartments where utilities are lower and energy usage is conserved. Perhaps people would realize they don't need to live miles and miles away from where they work, thereby wasting hours a day in commutes, and polluting the atmosphere with their vehicles. Perhaps liveable communities would arise.

Tax cuts on the rich need to be allowed to lapse as scheduled. Much savings can be had here.

It's not that any of this is rocket science, it's just that we don't have Congressmen with guts and vision like we used to have. Initially Congress was supposed to be the main branch of goverment, and in the 1800's it contained great men like Clay, Webster, and Calhoun, who were better known and more respected than many Presidents. But now, a Congressman is little more than an errand boy for his constituents, doing them favors and doing his best to "bring home the bacon" for his district. This is one instance where the "good old days" really were the good old days.

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