Saturday, April 10, 2004

Now all I need is a green eyeshade

Ooh. A 2004 federal government budget simulator. Care to balance the budget? I tried, and it came down to cutting Social Security and Medicare benefits (by a fifth), significantly raising taxes, or devolving (cutting half federal funding in a single year) many federal programs to the states. (The last option would doubtless cause state tax increases.) No wonder neither presidential candidate is promising to do more than cut the deficit in half. Even a politically suicidal president would have to work with Congress, so I don't see how to really cut the deficit in the short term. There are reasons the biggest spending categories got so big.

All I can really say is "stop digging." We can't instantly fix S.S. & Medicare. But we can start long-term reform right now. Our primary goal must be the privatization of both of these programs and the removal of government disincentives to properly save for one's old age, to the point where government's (ideally state and local governments') role is just to help the truly destitute. The federal government is overseeing a massive intergenerational transfer of wealth that used to be done privately, i.e. children supporting their parents in their old age. Before the new deal, most old people who couldn't take care of themselves were cared for by their children, and the remainder relied on charity from the local government (poor houses) and/or from local private charitable groups (churches). To my mind, the pre-New-Deal system (combined with present-day technology, of course) would be superior to our current system in every respect.

If you'll permit me to speculate, I'd also claim that a return to the pre-New-Deal system would lead to a small increase in fertility, something that various European countries, which are literally dying out, could use. The idea is simple: just as welfare for poor single mothers and their children makes the state the father in many respects, so does government-financed care for the elderly makes the state the child in many respects, taking up yet another familial financial duty. One selfish reason for a person to have more children is to ensure he'll be cared for in his old age. When a person is guaranteed to have a child as wealthy and as generous as the state, then the financial incentive to have more children correspondingly diminishes.

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