Monday, October 30, 2006

Return the Power of the Purse to the People

A very enlightened article from the Canadian press (interestingly not very well published in the US) covers some of the looming problems for our economy.

"There are serious problems and no easy solutions - and the hard solutions include raising taxes and cutting benefits, the kind of talk that can doom a politician's career. "

I've been saying for some time now that the three big issues facing us as a country over the next 15-30 years are: Social Security, Medicare and Taxes.

Social Security needs to be adjusted. You'll note that I said adjusted not privatized. You will have to pay in more, get back less at retirement and probably defer retirement until you are 70+. Social Security is the easy one to fix.

Personal income taxes need to be raised on those making over $500,000/year. Maybe the number is $750,000 or $1,000,000 but the top tax rate needs to be edged up to help offset the surge of spending since 2000. I know one day when I'm running for a Senate seat in 2018, this post will come back to haunt me, but you have to face facts and the current tax rate for high wage earners is too low to support our spending. Raising taxes is hard but doable.

Medicare is a mess. I don't know how to fix Medicare and I'd love to hear a good idea on how to fix Medicare.

Oh and by the way our interest payments are increasing every year and we can't refinance with Ditech.com.

The problem with this sort of big picture thinking is that it requires someone to look beyond the current election cycle. This is where I think we need to propose something bold. Something almost radical. Let's take the power of the purse away from Congress.

Congress should continue to legislate, but it seems that all of the corruption, scandal, waste and mismanagement in Congress seems to be tied to their ability to dish out pork. Well, if we take that role out of their hands, Congress should immediately improve in its ability to legislate.

I propose that the next President (Republican or Democrat, it makes no difference) should establish a bi-partisan group of business leaders, accountants, finance professionals to serve terms of 15 years. They will control all spending during this period and determine real financial and tax policies to right this ship. Without a bold move like this I don't see how we'll ever make the necessary changes needed to improve our financial outlook before it is too late.

Below are a couple of quotes from the article that might jolt us into action.

"Their basic message is this: the U.S. national debt is currently US$8.5 trillion and it could reach $46 trillion or more over the next few decades, adjusted for inflation, if the status quo doesn't change. That's almost as much as the total net worth of every person in the U.S. - Bill Gates, Warren Buffett and those Google guys included.

And every year that nothing is done about it, Walker says, the problem grows by $2 trillion to $3 trillion."

Pass this on to Senator McCain, Senator Clinton, Senator Obama, Governor Richardson, etc, etc. If you can think of a politician with political aspirations in 2008 mention this idea. Maybe, just maybe, they'll wake up before it's too late.

Recommend this post to DIGG, FARK and Delicious. Maybe the power of the web will make someone notice that the acme anvil is falling off the cliff and our foot is still tied to it. Beep, Beep!

9 comments:

Anonymous said...

I have been reading your blog for quite some time. Am a former northern NYer and your topics are relevant and interesting so thought I would give it a go. Today I am not so sure that the time has been worth it.

You write that because of the corruption etc, the Congress has shown itself incapable of handling the spending functions of the government and therefore want to turn it over to a panel of "businessmen, accountants, and financiers" established by the president. Isn't that the same as turning it over to the paymasters of the current corruption?

What altruistic and honest people would serve on this panel? Arthur Anderson, Alan Greenspan? McKinsey? Mort Zuckerman? Perhaps the head of Exxon, Citicorp, Disney and GE?

They already "write" the laws to their advantage and now should be given the power to directly spend tax-payer money, cutting out the middleman?

What you describe is an uber-plutocracy taking over from a plutocracy.

Anonymous said...

Don't know what to do about Medicare. Medicare is the easiest of all these problems to solve (except politically).

look here ( Healthcare Costs) Many countries get better results at half the cost. Lots of fat here go after.

The Artful Blogger said...

Thanks for the feedback. Perhaps it was the 1am time of the post that lad to some confusion.

I wouldn't recommend corporate leaders per se, but the the Federal government is a $2.8 trillion dollor entity that is allocating resourses without any true financial minds in the room.

Would you elect a town mechanic to fix your car is he/she was a really good lawyer?

In 1910 the total outlays by the Federal Government were $694 million (it's almost quaint). We're operating under different circumstances today and something has to be done.

Someone without fear of losing the next election (like the head of the GAO) is needed to make these hard choices.

Thanks again for the feedback.

The Artful Blogger said...

I understand the desire to operate (no pun) a more efficient healthcare system like those in Europe.

Unfortunately, the standard of care has been so high for so long in the US I don't know how we can change it. Maybe we should inquire as to the satisfaction of countries with their healthcare system at a lower cost?

I'd also argue that many countries see better life expectancy results because they lead better lifestyles (no Applebees double fudge brownie or Costco size ice cream).

Thanks for the feedback.

Anonymous said...

Did you miss the second part of the graphs. Life expctency in the US is 27th. "the standard of care in the US has been so high for so long...". You mean that you believe the propaganda. There's no substitute for results.

I live in Europe, but I was in Clayton 2 weeks ago, and I can assure you the care is the same here and here it is not just for the rich.

BillGalt

Anonymous said...

I wouldn't hire a lawyer to fix my car, nor would I want an accountant to decide on the advisability and feasibility of a multi-billion dollar weapons system.
A strengthened and de-politicized GAO-OMB, comprised of engineers, economists, accountants, military and city planners, career civil servants, looking at pre-and post allocation might work, ideally. But the influence of lobbyists and money for special interests and big business is so pervasive, it is difficult to see a resurgence of "common good".
It seems an impossible task to oversee the giant allocation-shakedown-money laundering scheme Congress has become much less the supplemental and secret allocations of the DOD.
Perhaps the answer is to turn off the faucet of money printing at the Federal Reserve and let the crash happen and start over.

Anyone interested in Healthcare quality in America might want to Google Infant Mortality Rate Comparisons.

The Artful Blogger said...

Two final comments on healthcare in the US. I'm no fan of single variable analysis. Life expectancy is higher in various parts of the world for many reasons including quality healthcare.

However our country includes such a huge and diverse population, over 3% of our deaths are caused by vehicles and firearms (dramatically lowering our average life expectancy), and our country continues to eat its way to an early grave. All of these factors are major contributors to lowering our life expectancy.

Re: Infant mortality - I'd say again that the diversity of our population makes for a blended average that hurts our score. It is comparing apples to oranges to compare the US to Sweden. If you took the statistics for middle class, Northeastern US professionals vs Sweden I assume you'd find a comparable statistic.

Also, the average age of a first time mother in the US is now 25, up 4 yrs in the past 3 decades. While this sounds like a healthy stat, if you realize 10% of new moms are between 15-19 (notorious poor at prenatal care) and the spike in over 40 moms (almost 3%) you get a feel for why so many pregnancies are challenging in the US (nearly 4 million births/year vs Sweden's 90,000).

Anonymous said...

Sweden is not the first country I would pick for comparison, but your statements are telling. Only US middle class should be compared with Sweden? And why is it that Swedes, including its "diverse" segments are middle class?

You are clearly implying that the "diverse" segments of the American population have worse healthcare or worse education with respect to health and diet.

Population of Sweden is 9 million and your figures calculate to 1 birth per hundred. Death per hundred is .28.

Population of US is 300 million with 4 million births is 1.3 per hundred. Deaths per hundred is .65.

We are off topic, but felt I must respond to your post. Thanks

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