Today's post cleans up some loose ends and lists out some other opportunities to reduce government spending that were not covered in the previous, focused discussions of spending cuts. The first set listed below are explicitly outlined in the book, "Love My Country, Loathe My Government:"
- Step 9 - this step would terminate traditional government pension plans for all newly hired Federal government employees going forward. Very few Americans hired into the private sector of the economy are eligible for any type of traditional pension plan. They are forced to plan their retirement along the lines of tax free investment programs (e.g. IRAs and 401k plans) along with the hope that Social Security will still be available. It is not fair or financially viable to force these private sector employees to continue to finance something for Federal employees that they themselves are not capable of participating in.
- Step 13 - this step would stop using Federal taxpayer funds to fund for any aspect of Presidential political conventions by the two major parties. If they want to have a four or five day bash to celebrate themselves and their Presidential nominee, then they can pay for it themselves. This ban would also include security costs (e.g. Secret Service), no taxpayer funds for any aspect of political conventions.
- Step 26 - this step would do a ground up analysis of our failed "war on drugs," doing a comprehensive review of its effectiveness, its costs, and the ramifications of doing something different. The long term objectives of such an effort would include reducing the government costs of law enforcement, incarceration, and treatment while balancing the needs of crime reduction, personal freedom, and addiction reduction.
- Step 36 - this step would require all members of the political class to take and pass a course on basic economics in the hope that their future behavior would include an understanding of the economic ramifications of their actions. Today, lack of this basic economic understating almost always results in wasteful and ineffective government programs.
- Step 37 - would base annual pay raises for members of Congress on the quality of their performance. Lousy performance = lousy, if any, pay raise.
- Step 41 - I recently came across a list of the ten richest politicians currently serving in Congress. These ten richest members all had a personal wealth valued at over $100 million each. Thus, their annual government salary of about $170,000 a year or so is an infinitesimal nit relative to their overall wealth. If we still believe that serving your country is the highest calling, then these obscenely wealthy politicians should have no trouble foregoing their salaries for the good of the country. In fact, Step 41 would prohibit any politicians with personal wealth exceeding $3 million from drawing a Federal salary while in office.
- Step 42 - this step sets income and wealth levels for ex-Presidents that once exceeded, require these ex-Presidents to start paying for their own government services and Secret Service protection.
- Step 46 - this step would require that all government functions, including Congress, be submitted to the same intense accounting and financial reporting scrutiny that the private sector is subject to under the Sarbanes-Oxley law, enabling an in-depth audit function to constantly ferret out waste and fraud in all government operations.
- Step 49 - this step would cap the amount of an employee's compensation that a corporation could claim as a Federal tax deduction at $3 million. For example, this step would not prohibit a company form paying an executive $10 million a year in compensation. However, on their tax return, that company could only claim up to $3 million as a tax deductible expense. It is time that the American public no longer subsidize out sized compensation plans for executives and sports stars.
- A February 25, 2011 Associated press article reported that government controlled home mortgage giants, Fannie Mae and Freddie Mac, each posted multi-billion dollar losses for the last quarter of 2010, combining to lose $3.8 billion. For all of 2010, their combined losses were $41.5 billion.
The article points out that while these losses were smaller than in previous quarters, they are expected to start growing again as the number of home foreclosures a is expected to grow again throughout 2011. So far, the American taxpayer has paid over a quarter of a TRILLION dollars to keep both organizations afloat.
Thus, the Federal government has proven that it cannot manage any aspect of home mortgage financing without a major hit to the taxpayer. An exit strategy needs to be implemented that extradites the Federal government from ANY financial exposure in the housing market (recently released plans aim to reduce, but not eliminate, all taxpayer exposure) and allow the private sector to experience the risks and rewards of lending money for mortgages without government and the political class meddling in the process.
- Politico ran an article on February 24, 2011 that described how some members of the political class are calling for the termination of the Home Affordable modification Program (HAMP), a Federal subsidy program that was supposed to help homeowners avoid losing their homes to foreclosure along with other such programs. Why cancel the program? Maybe following had something to do with it:
- Democratic Senator Spencer Bachus stated: "These programs may have been well intentioned, but they're not working and, in reality, are making things worse."
- Only $840 million of the allotted $29 billion for the HAMP program has been spent for a utilization percentage of less than 3%.
- The re-default rate for those in the program has been extremely high.
- The HAMP inspector general found that some people in the program ended up in worse financial condition then before they entered the program, claiming that "The Treasury's claim that 'every single person' who participates in HAMP gets 'a significant benefit' is either hopelessly out of touch... or a cynical attempt to define failure as success."
Once launched, it should have had break points installed much sooner to identify problems and failure before over $800 million was spent. This program and others like them throughout the Federal government need to be kept on a much tighter leash or launched in a test mode first in order to not waste any more taxpayer money. Those responsible for their failures need to suffer the consequences of the failures just like workers in the private sector do when their failed program waste shareholder money and value.
- A subtle form of waste, as outlined in Step 1 of "Love My Country, Loathe My Government," comes from the realm of higher education. Harvard University sits on tens of billions of dollars worth of endowment funds. Step 1 shows that even if the university invested these funds very conservatively, they could completely finance the costs of each Harvard student's tuition, room, and board each year and still grow the endowment.
It makes no sense that Federal taxpayer money should be used to help a student finance their education at Harvard and other endowment rich universities. Thus, going forward, no student loans and grants from the Federal government should be made to students attending universities such as Harvard and the savings from this reduction should help pay down the deficit.
Obviously, Harvard would howl at this perceived discrimination but by putting this ban in place, Harvard would have to face a hard economic decision: do they allow valued potential students to go to less wealthy institutions where they would receive taxpayer assistance or do they they drop their prices and/or hand out more money from their endowment to equalize the playing fields? In either case, the American taxpayer wins.
While this is just one small example of government frugality, this is the type of thinking that must start to pervade our spending mindset. It is a type of thinking that must be installed in all facets of government spending. We cannot afford everything that we would like. We need to reduce government spending in such a way that those that can afford to pay, continue or start to pay, while we try to protect out limited resources to help out those in need and to provide for an economical but effective national defense.
This does not mean a wholesale raping of the wealth and income of more affluent Americans. It means that politicians and the government stop their wasteful spending ways in a manner that protects the earning power and freedom of each American while providing necessary help for those in need. As we see in so many examples , e.g. failed government mortgage entities, failed economic programs such as TARP, economic stimulus, and HAMP, antiquated defense deployments, etc., the American political class is not capable of managing large and complicated enterprises. The nature of politics dooms their participation to failure from the start. Better to reduce the responsibilities of the government and the political class that drives that government to a reasonable and much reduced portfolio that maybe, just maybe, they can handle effectively.
Worst case, even if they cannot handle a reduced set of responsibilities that focus on protecting the needy, at least their wasteful ways will not bankrupt and destroy the country. Any dummy would welcome that trade off.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment
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