Friday, July 29, 2011

Resolving the U.S. Debt and Deficit Difficulties

by Richard Crews
While waiting to earn my Boy Scout Merit Badge in Punditry (when, at the last minute, President Obama eloquently declares that the Congress is intransigent and he is "forced" to invoke the 14th Amendment to abolish the debt ceiling and save the nation), I have been contemplating just what steps the government should take to balance the federal budget and reduce the nation's debt.

The first few of these are short-term stimulus measures to reinvigorate the nation's recovery from the Great Recession. For example, the current payroll tax relief which is due to expire at the end of this year should be extended at least one year if not two. Programs to support state governments should be robustly fortified so that states do not lay off tens of thousands of workers--people such as teachers, police, and fire fighters as well as those in less politically hot-button clerical and administrative jobs. Programs are also important which invest in clean energy (solar, wind, and geothermal) and 21st century infrastructure (high-speed rail and mass transit rather than one-passenger superhighways, fiber-optics rather than wires, and a "smart grid" to distribute energy efficiently).

While these may seem like expensive government programs, they would, in fact, strengthen the economy which is the best source of deficit and debt reduction in the long run.

The feds should abandon the imaginary "War on Drugs" ("Prohibition" didn't work either) and release the 80% of the prison population who did not commit violent crimes--release them to programs for rehabilitation, job training, and social reintegration. (Note that the U.S. incarcerates a far greater percentage of its citizens than any other country in the world--ANY! including China, Russia, and Iran.) Along these lines, the U.S. should outlaw solitary confinement which is currently used for tens of thousands of prison inmates; solitary confinement has been ruled internationally a form of "torture" but it is invoked as an "administrative measure" so it is not unconstitutional as "cruel and unusual punishment." In addition to being barbaric, with regard to the topic of this essay, solitary confinement costs the government $40,000 to $50,000 a year per inmate, so eliminating it would save several billion dollars per year.

For savings that are more long-term, the government should reduce military expenditures by 50% ($350 billion a year) over ten years. This includes closing bases in such places as Germany, South Korea, and the Philippines where we haven't been fighting wars for years.

The Income Tax laws (14,000 pages of "institutionalized corruption") should be revised and simplified, eliminating special favors for tax havens and subsidies for ethanol, farm products, oil, etc. The Bush-era tax cuts for the wealthy should be eliminated. A Value-Added Tax should be enacted; almost every advanced, post-industrial country other than the U.S. has a VAT.

The FIFA contribution income maximum should be raised from $109K to $180K.

The U.S. should establish universal medical care with competitive generic drug use, limited malpractice liability, and salaried (not fee-for-service) pay. The Social Security retirement age should be raised to 70--gradually, over 15 years; the population has aged considerably more than that years since the Soc Sec retirement age was installed.

The federal government should reinstall campaign-finance reform (thrown out last year by the Supreme Court in the "Citizens United" case). And it should strengthen lobbying supervision and reduce conflicts of interest. This would reduce wasteful pork-barrel spending.

In addition, the federal government should develop meaningful regulation of Wall Street (for example, regulating derivatives, eliminating obscene pay, and tying incentives to long-term performance--they're working on this, the so-called Dodd-Frank legislation, but it is not going well).

Finally, the federal government should divest itself of much of the U.S. land area that it owns (in some states the U.S. government owns MORE THAN HALF of the land area of the state), thereby recovering both equity and tax revenues. This is a complicated problem with many facets--commercial, environmental, political, etc. But it is worth a long, hard look.