Some Random Ideas on the US Federal Debt Mess

            Most of us when driving a car along the Interstate at, say 70 mph, and observing a large oak tree stretched across the highway in front of us would slam on the brakes and change our direction to the maximum extent possible to avert the approaching disaster.

But “most of us” are not sitting in Washington. Sitting up there are a group of folks, apparently all well liked by their own constituents, who believe that you can just ignore the tree stretched across the road in front of you; don’t slow down; don’t slam on the brakes; don’t change directions dramatically; some how it will all be OK.

            If you look around the world today, you see half a dozen countries embroiled in some type of civil war, whether instigated by terrorist organizations or not, the world is now decidedly a very dangerous, unstable; and for Americans, a very unfriendly place. To ensure our protection, we need a fiscally sound and strong national government just in case we have to fight terrorism for many decades to come.

            Look further and you see three countries already bailed out financially in Europe, two more teetering, and all in danger of collapse. Our largest banks are knee deep in “Collateralized Default Swaps”, CDS, betting on the sovereign debt of these weak countries. One of these Euro babies fails and our largest banks will be back at the U.S. Treasury begging for your dollars to keep them afloat. We need laws to protect/restrict our banks in the ‘payments system’ and let the others do as they dare, but no bailouts. Why this problem? Because some sovereign states were run for too long on budgets that far exceeded their income. Just like we are today. To a politician there is no more powerful elixir than “spending other peoples money”. Meanwhile Social Security, Medicare, and Medicaid have some long-term survivability issues.

For Social Security the Republicans want to raise retirement age, slow down COL increases, and maybe even do means testing. The Democrats at this point don’t want to do anything because it is turning into a great political campaign issue for 2012.

As for Medicare, Obamacare removes $500 million from it to fund health care for up to 30 million new folks, some few who might actually be citizens or here legally. There is no Democrat plan to save it as we know it today which means that their ultimate goal is for Medicare to crash and burn and thus force a universal health care, single payer system.

The Republicans want to send Medicaid back to the state with money and have the states manage it and when the money runs out, well manage it better. The Democrats have no plan.

Actually the Democrats do have a plan. Their plan is to keep running annual deficits and keep raising the debt limit until we hit the large oak tree. At that time only full-scale socialism can save us. Their thought, not mine.

Good citizens, common sense dictates that we must do something to reign in federal spending and start to reduce the federal debt. And do it now, not in some vague future when “the economy is healthier”. Now! The “ship of state” is heading for the reef, we must change course NOW!

The Republicans have a plan; many hold it distasteful. The Democrats have no plan, many constituents hold this appealing since they won’t have to sacrifice. Sort of like the ostrich putting its head into a hole in the ground so that it will not have to witness the coming carnage by the approaching lion.

So what to do? Some random ideas:

1. Move Social Security funding to a national sales tax. Everyone pays, not just workers.
2. Move Medicare funding to a national Sales Tax. Everyone pays, not just workers.
3. Go back to a more graduated income tax rate. But all members of Congress, Senate, and all elected officials to be taxed at the highest bracket. Also all those retired ex-elected elite to be taxed at that rate; after all they got us into this mess.
4. Cap all federal spending at 2008 level until budget balanced. If some social area seems to be especially good this year, take money from other programs. Don’t raise spending total.
5. Reduce Federal programs and jobs by 20% across the board.
6. Use all excess federal income to pay off the federal debt, not new spending.
7. Set salary caps on all Federal jobs below private sector pay for comparable work. Stop making millionaires in Freddie and Fannie.
8. Don’t increase the Federal Debt ceiling unless spending reverts back to 2008 cap.
9. Only increase the Debt cap by $500 billion at a time.
10. Pass a “Balance Budget Amendment” and until budget is in balance, all Congressional and elected officials salaries reduced by 10% annually until budget balanced.

Obviously each of these ideas needs to be ‘fleshed out’. I’m available, please call or write. (No Shirley these are not all of the problems nor all the solutions, but we have to start somewhere.)