A provocative Forbes Blog article was referenced by Maggies Farm Blog: Why The GOP Will Never Cut The Size Of Government by Rick Unger. The article rightly observes that if you “[a]dd the 42 percent for Social Security and subsidized health care and the 23 percent for other entitlements and net interest […] you get to 65 percent- or roughly two-thirds of our total federal expenditure.” The author then concludes that the American public, including tea party participants, won’t ever let these entitlements be significantly cut, so the federal budget is permanently stuck-on-overwhelming. We’ve got our fist in the belly of the tar baby.
The magnitude of the entitlements, not even including the looming trillion-plus dollar addition of Obamacare is an unavoidable fact. It is also an unavoidable truth that a large portion of the U.S. citizenry has paid into these (social security and medicare) programs and relies on them. But it is also an unavoidable truth that these programs are fiscally unsound if not already bankrupt. So any way you parse it, something has to be done. If we leave things as they are, taxation and borrowing will inevitably be unable to sustain the burden, and the entire economy of the country will collapse.
But first, let’s look at the one-third of the budget that is not entitlements. Within this portion of the budget are most of the liberty-nicking and draining, annoying and harmful regulatory measures that make government increasingly odious and the private economy and life in general increasingly burdened. The vast majority of these bureaucracies produce absolutely nothing of value for individual voting citizens. (I dare you to take an inventory and list Federal Government activities that actually benefit you personally.)
For an interlude we may be able to ignore the entitlements mess and direct our attention to reducing the intrusiveness of government into our every-day lives. We may be able to celebrate and encourage individualism and self-reliance by drastically reducing or better yet, eliminating departments of government like Education, Commerce, Labor, Energy, Transportation, EPA, HHS, and other burdensome, expensive and useless bureaucracies. (I wrote about this here, here, and here.) That would distract some of the attention from entitlements, as millions of bureaucrats would have to find civilian employment. Just removing these people from the future retirement cost burden of the government and reducing taxes needed to pay and equip the bureaucracies would have a major stimulating effect on the economy. And that’s even before the economic and spiritual uplift from tax reduction and elimination of red tape, regulation and harassment that would follow.
After successfully hacking back the federal bureaucracy and regulatory apparatus, thereby stimulating the private economy and renewing a sense of can-do private initiative throughout the country, it would then be possible to think seriously about the problem of entitlements. The first thing to do about this is to allow younger people to opt-out of these government programs, with a final drop-dead date for phasing them out completely. This reduces the future entitlements problem, but pops the Ponzi-scheme that allows current and near-term eligible people’s benefits to be paid from revenues collected from new participants. We’re then left to rely on the so-called “trust funds” which the government has already looted, leaving behind government IOU’s. Here is where some pain comes in. The pain will be apportioned mostly to the younger generation who will have to pay for their own private retirement and medical plans, and will also bear the tax cost of redeeming those government IOU’s. A newly buoyant economy will help, but it will still hurt. The irresponsibility of generations of politicians and voters has a cost — no escaping it.
Then, after four to six presidential election cycles have passed, assuming that the will to reform can be sustained — as it might be through evidence of progress and success — the country can emerge from its encounter with the entitlements tar-baby, stronger, better, and more self-confident than it has ever been before. And the best of it is that we’ll preserve our freedom.