20 July 2012

In this inaugural installment to this blog, in the runup to the 2012 election, it is appropriate to reflect upon the current state of our nation. I don't know about you, but I think this beloved country of mine is in deep trouble.

The root of this trouble is easy to see. We have strayed from our founders' American vision of liberty, limited government, free enterprise, and personal responsibility and are infected by a new Utopian vision that denigrates these values, demonizes the entrepreneurs, profit motive, and free markets largely responsible for our past economic success, blames successful Americans for the lack of success of other elements of society, and institutionalizes the notion that we have a collective responsibility, acting through the state, to spread the wealth and guarantee a healthy and prosperous life for all citizens. An insidious premise in my view ... even if it were remotely possible to accomplish this latter end! And a fundamental misreading of the state's constitutional power to tax in order to promote the general welfare and provide for the common defense!

Unfortunately, this new vision, buttressed by an activist/progressive academy and media, exploited by politicians recognizing the value of a good pander, and empowered by the support of a sizeable underclass ever eager for handouts (note that we are all receptive to handouts, which is why they are so dangerous!) and of an aging population alarmed at the burgeoning cost of healthcare, has gradually gained acceptance over the past half century and more. As a consequence, a very significant fraction of the electorate is now dependent on government for healthcare and other direct financial support. And that dependence is, in turn, rapidly bankrupting us.

Also this vision has corrupted the way Americans look at their lives and at one another. We have become resentful, blaming others for our inability to individually prosper, and passive and dependent, expecting someone else to care for our needs, where in a relentlessly hostile world we need to be self-reliant and independent!

Yes, other recent events have also contributed significantly to the financial hole we find ouselves in, i.e., the Community Reinvestment Act and resulting housing crisis (to which flaws in the structure of the banking industry also contributed), the wars in Afghanistan and Iraq, the bank bailout, the (non)stimulus, the current administration's anti-business and anti-fossil-fuel environmental and energy policies, and its utter failure (refusal) to cut spending and balance its budget. The resulting explosion in the national debt has significantly shortened the time scale of the impending fiscal collapse and heightened the need to act quickly.

No, we cannot get out of this hole with punitive taxation of the wealthy. That is certainly insufficient and is, most likely, seriously counter productive. Yes, we should try to increase tax revenues, but primarily by reviving the economy (to grow jobs and the tax base). To accomplish this revival, we need to reform current regulatory constraints on business (including eliminating constraints that prevent or inhibit domestic energy production), and we need to reform the tax code to encourage business and create jobs. Yes, additional revenues can come from closing illconsidered tax subsidies and loopholes.

More importantly, and as rapidly as possible (without shocking the economy into severe recession), we must cut back the size and scope of government (to reduce spending). Yes, this cutback will be painful, but it is absolutely essential to reversing the nation's slide into insolvency. We must bring the budget into balance (surplus), start paying down our debt, and, over a period of (not too many) years, reduce this debt to a manageable level.

In short, we must stop spending money we don't have. Never again should our debt be allowed to threaten our fiscal stability.

An important element in this effort to cut back the size and scope of government will be to reform major entitlement programs such as Social Security, Medicare, and Medicaid. Current proposals for reforming Social Security are well known; it's primarily a matter of summoning the political will to enact them. (Gradually raising the retirement age of future enrollees will not provide a fundamental solution to the problem, but it can bridge the gap while we consider more substantive proposals, including privatization and/or an eventual phasing out of the entire program.)

Healthcare is more difficult. Medicare and Medicaid are very large programs whose exploding costs are almost impossible to predict, much less to contain. On this basis alone, I question whether government should be involved. Moreover, third-party-payer systems are intrinsically wasteful (particularly when government is the third party). Healthcare decisions should be between doctor and patient, with costs determined by a competetive free market. Insurance should be patient based, with the patient choosing among multiple insurers and primary health providers, offering a variety of coverages and health services. (Employer based insurance unnecessarily complicates the healthcare transaction. It is inefficient and discriminatory. And employers will be happy to be rid of it.)

Obamacare is grotesque, illconsidered, and unaffordable. It needs to be repealed quickly before it has a chance to do lasting damage. We need to then carefully review the entire panoply of existing healthcare issues and reconsider the role that government should or should not be playing in addressing these issues.

Welfare programs should be reformed (workfare, not welfare!), downsized, and restricted to those who are truly in need of them.

Primarily, we must recognize that, whatever we may think of the Utopian vision and its underlying motivation, this vision is untenable. Government simply cannot be and should not be all things to all people. The state has grown too large and is trying to do too much. As a consequence, it is about to collapse of its own weight. Before it collapses (and before we go down with it), we need to reverse course, reform (eliminate) the fiscally ruinous programs this vision has engendered, and rededicate ourselves to a different vision, the American vision of our founders.

It is true that some of us are not able to care for ourselves, whether permanently or temporarily. But such care is better delivered voluntarily by family and friends, or by local charitable institutions. State welfare programs are costly and are too often abused by recipients who choose to be dependent rather than fend for themselves. It is a disservice to such recipients (not to mention to the rest of us) to allow them to so abuse these programs. And it is not a good idea to allow such programs to threaten the fiscal health of the country.

On assuming the reins of government in 2009, Mr. Obama and his administration have acted utterly irresponsibly. Instead of attacking the existing fiscal crisis by attempting to reform entitlements and otherwise reducing federal spending, they seized upon a temporary majority in the house and senate to push through a monstrous, unbelievably sloppily crafted, and ultimately unpopular new entitlement, the so-called "Affordable Care Act" (Obamacare), which entitlement is now estimated to cost almost three trillion dollars over the next decade. Meanwhile, they have recklessly spent even more money, adding five trillion dollars to the current debt in the past three and a half years. And the Democrat controlled senate has not passed a budget in over three years. This fiscal record is, simply put, scandalous.

The Republican party is not totally immune from criticism on this score. Mr. Bush was not exactly a small government conservative. He did not balance his budgets, his "compassionate conservatism" added a new entitlement to the ledger, and his response to 9/11 was costly. On the other hand, he tried to reform Social Security and he had no choice but to respond to 9/11. Indeed, he responded aggressively, and, ultimately, he accomplished something. At the very least, he liberated Iraq from Saddam Hussein, severely damaged Al Qaida, and shook up the Middle East, generally. (The Arab Spring is traceable, at least in part, to his actions.) But the jury is still out. We will have to wait to see just what it is that Mr. Bush ultimately accomplished and whether it was worth the cost.

Mr. Romney is also not a small government conservative. I worry that he will not do enough soon enough to scale back existing entitlement programs. At least the Republicans are talking about a safety net rather than a hammock. Mr. Ryan seems to have Mr. Romney's ear, and he has thought a great deal about bringing the economy back, and about fixing entitlements and the debt problem in sustainable fashion. Ryan makes sense and is a good communicator. I'd like to see Mr. Romney choose him as VP.

In any event, the choice is clear, whatever your particular point of view. Assuming you want this country to survive the next four years, you cannot vote for Mr. Obama. His reelection will mean a continuation of the disastrous economic policies of his first term and will almost certainly lead to an imminent and catastrophic fiscal collapse. With Mr. Romney and Mr. Ryan in charge, there will at least be a chance to avert this collapse.

The recent bizarre and convoluted betrayal of his conservative roots by the chief justice of the supreme court means that, if Republicans hope to get rid of Obamacare (and meaningfully address the country's fiscal problems), they must not only win the presidency in the coming elections, they must win both houses of congress. Vote Republican in November! Hold your nose, if necessary, and vote Republican!

There are other issues in the campaign, but, in my view, they pale in comparison with this issue. (These issues do not threaten us so immediately, so incontrovertibly, and so seriously as does this issue.)

Cheers,

Russ