Silly Season Returns
It seems like the campaigns just ended. Now they are once again revving up to spew out garbage into the eyes and ears of the American people. So let us prepare for another eighteen months of this.
But let us also start revealing some truths that politicians like to obscure:
Education
- Federal funds for education always come with strings attached.
- Funds are raised from all local communities around the nation, and collected in Washington, DC. At least one highly-paid program administrator is hired in DC to run the program.
- That program administrator requires staffers to oversee funds disbursement, collecting reports from states and school districts about the need for the money and the uses to which the money is put, and to conduct audits and site visits to measure the effectiveness of the program and the schools it targets.
- Each state will then have to hire its own program administrator and support staff for all the same purposes and reasons that the federal program administrator and staff exists.
- Each district then has to hire expensive administration staffers to manage and support the program.
- Finally, a trickle of those funds may actually reach the classroom in some schools.
Did you see that? How many $100K and up administrators with their staffers does it take to gobble up a billion dollars of education spending? There is a better way, and it has the advantage that it will also help reduce the federal deficit. Get the federal government out of K-12 education.
But … but … that’s cruel and selfish! How is it cruel and selfish to cut out millions or even billions of dollars paid to unnecessary administrators and push school funding and control closer to the actual classrooms where it is needed? How is it cruel to let the parents have more of a say in the running and funding of their local schools? After all, if a student fails to learn enough to be employable after high school or college, whose couch do you think he / she will sleep on? For parents, this is high stakes, get-it-right-or-suffer-for-life, not we-lost-the-campaign-but-we-have-a-juicy-lifetime-pension.
In other words, local school districts and the parents and teachers in those districts are better equipped to figure out what our schools need than any number of bureaucrats in Washington.
Social Security, Medicare, and Medicaid
Medicare
I recently read an opinion piece that claims that Medicare isn’t the problem, but instead it is the solution. That betrays a woefully inadequate understanding of the medical payments system. Medicare actually causes all others who receive medical treatment to pay elevated prices. This is because Medicare is able to force health care providers to accept payments far lower than anyone else pays. Next, of course are private insurers, who do the same thing, without having quite as much leverage to squeeze prices. So when you walk into a medical treatment facility and slide your Visa card, you are subsidizing every insured patient and every Medicare patient.
Since the fact that you’re sliding your card means you are most likely working for an employer that does not provide medical coverage, I can confidently say that the working poor subsidize all other patients’ healthcare.
Like Social Security, Medicare has its own payroll tax and trust fund. This, of course is merely an illusion, as I explain below. It is expected that Medicare will soon be paying out as much or more than it takes in each year in taxes. If the trust fund were really a vault full of money somewhere, this would be okay for several years. As it turns out, there is no such vault, so eventually taxes have to rise to cover "paying back" funds owed by the general fund to the trust fund.
Medicaid
Medicaid is similar to Medicare, but it is provided based on means-test criteria. That is, Medicaid (MediCAL in California) only covers people who are poor. It also does not have its own payroll tax and trust fund, so it is clearly and unambiguously paid out of current tax collections.
Social Security
Social Security is a sacred icon in our national thought process. "I worked, I contributed. That money is mine." Yes, you did work and pay Social Security taxes. But those taxes were immediately spent on other government programs, such as maintaining military bases in Europe and the Pacific, weapons programs, full body "nudescan" machines in airports and other places, corporate welfare (remember how many of the largest corporations were able to avoid paying even one dollar of income tax last year), roads, schools, prisons, and traffic light cameras. The Social Security trust fund holds bonds (IOUs as President Bush Jr was honest enough to call them), not money. At some point in the future, our children’s taxes will have to be raised in order to pay them.
Now, let me interject here that a trust fund in government accounting isn’t put into a separate vault and kept until it is used for its intended purpose. A trust fund is merely an accounting entry. The actual money goes into the main pot, while the claims upon the use of that money are documented on the accounting books, for future use. That means that if the US runs a deficit (as it has every year since at least 1960, with possibly one year of surplus during the Kennedy administration) it spends trust fund dollars first, then turns to the bond market. When the trust fund needs its money back, taxes must rise to enable the general fund to "repay" those obligations.
What all of this means is that Social Security is almost 100% guaranteed to fail. Raising the SS tax rate and removing the cap on the maximum amount of tax an individual will pay will delay the day of reckoning, but demographics tell us that at some point there will be 3 people working and paying taxes for every 2 retirees. Collecting more money from them will cease to be an option. The government will have no choice but to cut benefits, raise the age of eligibility, and possibly even renege on its promise of retirement benefits for all workers.
Defense, Intelligence, Security
These are some of the largest departments in the government. There is just no possible way to cut the deficit (and in the future balance the budget) without substantial cuts to those departments. (Disclosure: my current main employment is within an agency that is part of Homeland Security. And, no, I’m not volunteering to lose my job for the sake of the budget.) No matter what the Republicans and the Tea Partiers may think, there will have to be deep cuts to the military, including ending at least one of our current three wars. If it doesn’t happen,
The Budget
In the context of the current budget battle, what does all of this mean? Not much. Despite the uselessness of most of the Department of Education (USED), most of the department and its programs will be funded and remain. The National Endowment for the Arts may suffer some funding cuts, but NEA’s budget is far too small to make a difference. Same with the Corporation for Public Broadcasting (although I must agree with the right-wingers that CPB-assisted NPR, at least the stations themselves, act as a mouthpiece for the extremist wing of the Democratic Party). The truth is, without substantial cuts to HHS (the department of Health and Human Services) and the Defense-Intelligence-Security sector, and possibly shedding most of USED, a truly balanced budget is not likely in the next decade.
With the President and other Democrats saying that there can be no substantial cuts to social programs and the Republicans saying that there can be no substantial cuts to defense & security programs, it looks like we’ll stop piling up debt only when the Asian nations that buy most of it refuse to buy more.
