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I'm not going to slam Obama for anything, for better or worse, he's my president. The most remarkable thing, to me, is that he's about to take office with an incredibly solid majority in both houses, and virtually every major FDR New Deal program has collapsed under its own weight or is on the verge. I seriously doubt that they can use their legislative power (and no veto) to apply band-aids to the gushing wounds caused by those programs. He's got to be pragmatic about leading his party to implement things that aren't the finishing blows on the nation as we know it.
Fannie Mae was established in 1938. Now look at it. In fact, look at the entire banking sector which has been heavily managed and regulated. FDIC, FSLIC, HUD, FHA, Fannie, Freddie, et al have all failed their core mission - to prevent exactly what has happened and has been happening for decades. Let's throw in the SEC and the Fed, too, which have had enormous power to regulate the economy and markets, most of which seem to be on the verge of collapse (the stock market has already had a massive crash). The FDR programs were supposed to prevent these things!
The managed economy in the manufacturing sector has led to outsourcing and driven the largest (historically) companies in the economy to borrow themselves into oblivion. I happen to be pro union in some form, but not in the current form by any stretch. The "system" is so entrenched in the way those companies can address the expense side of the P&L equation, that their only choice has been to ride with the companies into the ground. "Concessions" in dire times don't cut it, if there were an actual free market for goods and services, the companies might be able to get quite creative in their compensation models. Like paying for some part of the employees' wages in the form of ownership (e.g. stock as capital). It's looking to me like the taxpayers (making $20/hour or whatever) are going to have to foot the bill at a cost approaching the Iraq War costs (per year) just so Detroit can continue to pay auto workers $78/hr.
The effect of a similar managed economy can be seen in the nature of public education. Tenure rules instead of skills at teaching kids. Wages are dictated by unions whose interests are in job security for their members (fine, that's their role) and those interests are in direct opposition to the interests of the children. The results are all over the public record in terms of our kids' ability to read and add numbers or rank well in achievement tests compared to lesser (powerful/rich) nations.
Social Security has been in deep trouble for a long time if you care to look at even the simplest of projections. Most people don't understand the concept of looking at projections 5 years out or longer... Just because it's been solvent as it's headed for a massive crash in a few years doesn't mean it's working! The liabilities for the govt. have always been huge and soon they will be coming due. When it was founded, there were like 30 workers for every retiree, now it's down to 2 workers per and it'll be 1 worker per. That's a huge red flag that it's doomed, folks. When it does become insolvent, the govt. will repeatedly be doing $700B sized bailouts EVERY year to avoid screwing over the people who paid into the system for 45 years or more. The effect will be that this $700B won't be available to build roads or bridges or finance the big kinds of projects only govt. is good for.
Medicare is in even worse shape than Social Security. The liabilities for that program are off the charts. The piper must be paid eventually, and "eventually" is in my lifetime. I'm one of the oldest guys posting here, too. It's going to affect the younger crowd for most of their lives.
Most of these programs are simply bad ideas in the first place that are so entrenched in the way the nation works that we haven't had the willpower to put an end to them and put something together that makes sense for 2009 instead of for 1939.
But at least the lights are on in Appalachia!
In various forums, I've been making the same kinds of proposals for the past 20-30 years that I'm about to make here.
First, Reagan was right - the govt. should be our safety net. What is a safety net by definition? INSURANCE. If the light bulb hasn't gone off yet, I suggest the govt. should become little more than an insurance company. Yep, they should offer fire insurance, homeowners insurance, malpractice insurance, health insurance, etc. Not exclusively though - they should compete with any private companies (blue cross, for example) who want to offer a better service (govt. service sucks!). Offer to insure peoples' bank accounts, too, for a monthly fee. Offer, even require, that people buy an annuity to replace Social Security.
Second, since people would be paying premiums to buy their various kinds of insurance, we won't need to tax the way we do. A sales tax nails everyone who buys anything (but food and medicine) be they rich or be they illegal aliens. If the rich spend a lot of money on big ticket items, they pay big tax. The govt. adds no value by knowing everyone's books (right down to the families). Taxing consumption encourages savings, which is a good thing.
Third, govt. should forget about the idea of Welfare, e.g. direct payments to people based upon qualifications. Pay EVERYONE equally a dividend as any insurance company would. If the govt. takes in $2T and pays everyone $4K, it's progressive! The rich get a pittance compared to the checks they typically write, while the poor might get 4 months of extra pay.
Fourth, if we are going to continue with an income tax, make it flat and also have a flat tax rebate. The flat tax is regressive, the rebate is progressive. It follows what I wrote above about the rich/poor getting $4K.
Why do we still need some sort of tax? The govt. does have to fund infrastructure programs and the space program, the military, and other smaller things typically funded by taxes today.
Last point before I get off my soapbox. I said I'm pro union, but not in the sense that they exist today. I have zero issues with collective bargaining or the people having the right to assemble. Unions, in theory, provide certain benefits for their members: insurance, higher wages, safer workplaces... The only real issue I have with unions as constituted is that participation is mandatory (forced assembly is not right to assemble).
Fannie Mae was established in 1938. Now look at it. In fact, look at the entire banking sector which has been heavily managed and regulated. FDIC, FSLIC, HUD, FHA, Fannie, Freddie, et al have all failed their core mission - to prevent exactly what has happened and has been happening for decades. Let's throw in the SEC and the Fed, too, which have had enormous power to regulate the economy and markets, most of which seem to be on the verge of collapse (the stock market has already had a massive crash). The FDR programs were supposed to prevent these things!
The managed economy in the manufacturing sector has led to outsourcing and driven the largest (historically) companies in the economy to borrow themselves into oblivion. I happen to be pro union in some form, but not in the current form by any stretch. The "system" is so entrenched in the way those companies can address the expense side of the P&L equation, that their only choice has been to ride with the companies into the ground. "Concessions" in dire times don't cut it, if there were an actual free market for goods and services, the companies might be able to get quite creative in their compensation models. Like paying for some part of the employees' wages in the form of ownership (e.g. stock as capital). It's looking to me like the taxpayers (making $20/hour or whatever) are going to have to foot the bill at a cost approaching the Iraq War costs (per year) just so Detroit can continue to pay auto workers $78/hr.
The effect of a similar managed economy can be seen in the nature of public education. Tenure rules instead of skills at teaching kids. Wages are dictated by unions whose interests are in job security for their members (fine, that's their role) and those interests are in direct opposition to the interests of the children. The results are all over the public record in terms of our kids' ability to read and add numbers or rank well in achievement tests compared to lesser (powerful/rich) nations.
Social Security has been in deep trouble for a long time if you care to look at even the simplest of projections. Most people don't understand the concept of looking at projections 5 years out or longer... Just because it's been solvent as it's headed for a massive crash in a few years doesn't mean it's working! The liabilities for the govt. have always been huge and soon they will be coming due. When it was founded, there were like 30 workers for every retiree, now it's down to 2 workers per and it'll be 1 worker per. That's a huge red flag that it's doomed, folks. When it does become insolvent, the govt. will repeatedly be doing $700B sized bailouts EVERY year to avoid screwing over the people who paid into the system for 45 years or more. The effect will be that this $700B won't be available to build roads or bridges or finance the big kinds of projects only govt. is good for.
Medicare is in even worse shape than Social Security. The liabilities for that program are off the charts. The piper must be paid eventually, and "eventually" is in my lifetime. I'm one of the oldest guys posting here, too. It's going to affect the younger crowd for most of their lives.
Most of these programs are simply bad ideas in the first place that are so entrenched in the way the nation works that we haven't had the willpower to put an end to them and put something together that makes sense for 2009 instead of for 1939.
But at least the lights are on in Appalachia!
In various forums, I've been making the same kinds of proposals for the past 20-30 years that I'm about to make here.
First, Reagan was right - the govt. should be our safety net. What is a safety net by definition? INSURANCE. If the light bulb hasn't gone off yet, I suggest the govt. should become little more than an insurance company. Yep, they should offer fire insurance, homeowners insurance, malpractice insurance, health insurance, etc. Not exclusively though - they should compete with any private companies (blue cross, for example) who want to offer a better service (govt. service sucks!). Offer to insure peoples' bank accounts, too, for a monthly fee. Offer, even require, that people buy an annuity to replace Social Security.
Second, since people would be paying premiums to buy their various kinds of insurance, we won't need to tax the way we do. A sales tax nails everyone who buys anything (but food and medicine) be they rich or be they illegal aliens. If the rich spend a lot of money on big ticket items, they pay big tax. The govt. adds no value by knowing everyone's books (right down to the families). Taxing consumption encourages savings, which is a good thing.
Third, govt. should forget about the idea of Welfare, e.g. direct payments to people based upon qualifications. Pay EVERYONE equally a dividend as any insurance company would. If the govt. takes in $2T and pays everyone $4K, it's progressive! The rich get a pittance compared to the checks they typically write, while the poor might get 4 months of extra pay.
Fourth, if we are going to continue with an income tax, make it flat and also have a flat tax rebate. The flat tax is regressive, the rebate is progressive. It follows what I wrote above about the rich/poor getting $4K.
Why do we still need some sort of tax? The govt. does have to fund infrastructure programs and the space program, the military, and other smaller things typically funded by taxes today.
Last point before I get off my soapbox. I said I'm pro union, but not in the sense that they exist today. I have zero issues with collective bargaining or the people having the right to assemble. Unions, in theory, provide certain benefits for their members: insurance, higher wages, safer workplaces... The only real issue I have with unions as constituted is that participation is mandatory (forced assembly is not right to assemble).
Meaning, you should sacrifice some of your worldly goods to help others. The charity would pay the sales tax, BTW, when they spend your money on goods.