Tea Party-Two Party

Guilder’s Guide to Greatness: Part 1

February 24, 2010
2 Comments

Hey readers, this was originally part of my post on the budget freeze, but I decided to post it separately to keep things short enough for one sitting. Hopefully you will see that my perspective is not that of a mere “ivory tower” theoretician, but someone concerned with the effects of policies on the day-to-day lives of average Americans.

Social Security Reform

Our current Social Security practices are quite frankly asinine. Our “pay-as-you-go” framework is glaringly vulnerable to population fluctuations, as the current baby boomer crisis has shown. Now that there are more seniors retiring and fewer working people to pay their Social Security dues, the system is becoming insolvent, and a generation of workers will be compelled to fork over unprecedented levels of income to the government in order to pay for a flawed system. Why? Because they happened to be born after the Great Society hysteria of the LBJ administration, the period during which the belief that the government could magically erase problems with giant, fiscally draining programs abounded.

A much better alternative to our system would be to expand our current 401k system, in which individuals are responsible for their own savings. The government’s 401k program works by automatically deducting a percentage of you paycheck into a tax-exempt savings fund. If the government offered a voluntary, expanded 401k system, it would not have to tax Peter to pay for Paul’s retirement, as each citizen would be responsible for their own savings. Those that chose not to opt for the system could save privately, but society would not be expected to support them if they neglected to save. The main advantage of an expanded 401k system is that it would be MUCH cheaper to maintain than the current Social Security System, as individuals would earn their funds over the course of their lives, rather than having them supplied by other taxpayers. For all the whining I’ve heard from liberals about Obama’s cuts for programs for the poor, education, etc., I’m irritated that they don’t realize that their policies (government intervention in the economy through bailouts/stimulus packages, and fiscally unsustainable programs like Social Security) have put us in this situation in the first place. It irks me when liberals refer to conservatives as being the voice of “No” when they plainly reject all alternatives and assume that anything that gets done is their own idea.

Continue to Part 2


Ice Ice Baby: Budget Freeze Part 2

February 21, 2010
1 Comment

Check out Part 1 for an introduction and Guilder’s argument.

FLORIN: Guilder argues that those big programs shouldn’t exist anyway, but since they do, it would be impossible to reform the system to compensate if they disappeared. Despite inefficiency, they do provide incredibly important services that can’t be cut. Imagine the furor that would arise if Medicare was ended. Obama’s plan will affect too many essential programs on a scale sure to affect the economy. If you look at what he’s cutting, it’s pretty terrifying: education for the disadvantaged down 32%, lots of welfare programs out anyway from 10% to a massive 50%, and the public health and social emergencies fund is down 81%. Defense, however, is another story. Even though it is technically considered discretionary spending, it isn’t being touched by the freeze. Yes, there’s a war going on, but there are definitely aspects of the defense budget that could be cut without affecting strategy. What’s happening is that the budget freeze is affecting the wrong things.

John Maynard Keynes was a massively influential economist who basically suggested the theory that it’s good to stimulate the economy through quick and major government action. Yeah, it’s OK, I don’t really understand Keynes either. However, Nobel Prize winner Paul Krugman definitely does: as a dear disciple of Keynes, he writes that the freeze is going to hurt the economy, not help it. Not only are jobs going to go out the window, the freeze is “bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead.”

The government holds a social contract with the people: in exchange for essential services like healthcare, Social Security, and protection, citizens pay taxes and obey just laws. Obviously, Guilder disagrees with the need for these programs and dearly desires a cut in them, but consider a world without such protection. Life expectancy? That’s out the window. This fundamental disagreement isn’t what our debate is about, however—we’re focusing on the differences between our opinions of the budget freeze. In general, it’s not really pleased anyone. Guilder talks about a mounting deficit and how it will harm the government, but how does cutting jobs and preventing any end to unemployment help? How is taking away necessary programs, especially for the disadvantaged, going to be beneficial? Look at it from the point of the average citizen, not a theorist up in an ivory tower, and you’ll see how the budget freeze is coming at exactly the wrong time.

CONCLUSION: It’s clear that we disagree a lot, but that’s not really a new concept. We do (finally!) agree on the fact that the budget freeze appears to be completely the wrong idea, but aside from slashing defense spending, there’s a clear ideological difference. See Guilder’s follow up post for his solutions to the budget freeze. Make up your own minds, and agree with, confront, laud, comfort, yell at, and give gold stars to us in the comments!


Ice Ice Baby: Budget Freeze Part 1

February 21, 2010
2 Comments

JUST THE FACTS:

  • If you take a look at the numbers, shown in this pretty little infographic, we can see that the mandated programs like Social Security and Medicare are the biggest budget drains.
  • President Obama’s $3.83 trillion budget will have a $1.56 trillion deficit.
  • The deficit alone will be larger than individual and corporate income taxes combined.
  • The freeze would affect about $477 billion in money available for domestic agencies whose budgets are approved by Congress each year. It’s a relatively small portion of the federal budget and is considered discretionary spending.
  • Fact Check takes a look at some of the optimism coming out of the White House

GUILDER: Barack Obama has just unveiled a $3.83 TRILLION (that’s 8 zeros folks) federal budget for 2010 with a 1.56 trillion dollar deficit (That’s over 40% of the budget financed by debt and inflation) For all the political kudos Barack Obama has been getting for making a “politically risky” choice in his proposed cutbacks on discretionary spending, his budget will do about as much freezing to our deficit as a blast furnace would to an ice cube. In all honesty, when I first heard Obama mention his budget freeze in last month’s State of the Union Address, I was convinced that he was making real reforms: as he mentioned behemoth programs such as Social Security, Medicare, and National Defense Spending, I thought he was going take some genuine steps toward fiscal responsibility. That was, of course, until he told the nation that those programs were NOT to be included in his budget freeze. I’ll gladly launch into a debate on the principles behind why increased government spending is less efficient than comparable private sector spending, and why borrowing from other countries and having inflation is bad for the economy, but I’ll save that for comments to keep this short. In the meantime, check out these statistics compiled by DownsizeDC.org.

  • “The deficit alone will be larger than individual and corporate income taxes combined
  • The cost of the federal government will be over $36,000 per family
    of which $17,000 will be new debt
  • The cost of the federal government is vastly greater than the benefits it provides. And the American people don’t want such a bloated budget.
  • According to a January 29 Rasmussen Report, 53% of likely voters now believe that decreasing the level of government spending will help the U.S. economy, and they’re right.
  • Numerous studies indicate that growth in government spending harms the economy and increases unemployment. Nations such as Ireland, New Zealand, and Slovakia experienced tremendous growth once they slashed the size of government.”

Essentially, Obama’s proposed budget freeze solution ignores the biggest sources of our deficit, not including the stimulus measures. Though many of these programs are labeled as “mandatory” or “non-discretionary” spending, all of these budgets could be easily reduced. Of the thirty-one listed spending areas for Barack Obama’s 2010 budget, seven programs, Social Security, National Defense, Unemployment & Welfare spending, Medicare, Medicaid, and “Off-budget Discretionary Spending” (i.e. the CIA budget) make up 78.45% of the budget, according to my calculator. It’s laughable to think that all Defense spending is mandatory when we have at least 700 hundred military bases in 130 countries, while fighting a two wars. Social Security is essentially a giant Ponzi Scheme that never should have been created in the first place. In short, I oppose Obama’s budget because it continues to fully support, rather than begin scaling down, programs that constitute our largest fiscal drains while continuing an imperialistic national defense policy.

Check out Part 2, with Florin’s response and a conclusion.


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Two schools of thought. One intellectual barfight. Contact us at teapartytwoparty[at]gmail[dot]com.

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