Politics, Government & Public Policy: February 2011 Archives

Ezra Klein properly categorizes the modern federal government: "An insurance conglomerate protected by a large, standing army".

Two of every five dollars goes to Social Security, Medicare or Medicaid, all of which provide some form of insurance. A bit more than a buck goes to the military. Then there’s a $1.50 or so for assorted other programs -- education, infrastructure, environmental protection, farm subsidies, etc. Some of that, like unemployment checks and food stamps, is also best understood insurance spending. And then there’s another 40 cents of debt repayment. Calvin Coolidge once said that the business of America is business. Well, the business of the American government is insurance. Literally. If you look at how the federal government spends our money, it’s an insurance conglomerate protected by a large, standing army.

Professor Bainbridge draws the right conclusion.

At some point, we're going to have to suck it up as a society and decide that the ever-growing "insurance" sector has simply gotten too expensive to be sustainable.

If the purpose of the government is to take wealth from the top X% and redistribute it in the form of insurance policies to the bottom (100-X)%, I bet there's a more efficient way to do it. How about if we gave people insurance vouchers that they could use to purchase retirement/health/unemployment/food insurance from private companies? Use the government to collect and redistribute the funds, but have the actual services be provided by for-profit companies?

Dramatic Federal Spending Cuts

Rand Paul outlines his ideas for dramatically cutting federal budget.

According to the Congressional Budget Office, this will be the third consecutive year in which the federal government is running a deficit near or greater than $1 trillion. The solution to the government's fiscal crisis must begin by cutting spending in all areas, particularly in those that can be better run at the state or local level. Last month I introduced legislation to do just that. And though it seems extreme to some—containing over $500 billion in spending cuts enacted over one year—it is a necessary first step toward ending our fiscal crisis.
My proposal would first roll back almost all federal spending to 2008 levels, then initiate reductions at various levels nearly across the board. Cuts to the Departments of Agriculture and Transportation would create over $42 billion in savings each, while cuts to the Departments of Energy and Housing and Urban Development would save about $50 billion each. Removing education from the federal government's jurisdiction would create almost $80 billion in savings alone. Add to that my proposed reductions in international aid, the Departments of Health and Human Services, Homeland Security and other federal agencies, and we arrive at over $500 billion.

It sounds like a lot of cuts, right? But even a $500 billion cut would only reduce our deficit by half. Yes, that's how screwed we are.