I have been giving a lot of thought regarding the economic doldrums that our nation, and many of the nations of the world find themselves in. Deficit spending and large debts have finally caught up not only with our government but also many of our state governments.
Why has this suddenly become a problem? Washington Post columnists Steven Pearlstein has offered perhaps the best explanation of our current situation and how we arrived to where we are today. He offers some solutions, which I will amplify on later on in this discussion. In short, we have failed to rein in deficits because entrenched special interest and partisan ideology have prevent our national leaders from having an honest discussion with the American people.
Let us be honest, since the 1980’s there have been two conflicting theories of financing government. The first, put forth by those on the progressive side of our political spectrum; argue we should raise taxes for all, but especially the rich in order to pay for existing and expanded entitlements. The second, put forth by those on the liberal economic side argue that by cutting taxes, you can raise government revenues, raise the standard of living for all, and have enough money for everyone pet rock.
The problem with both sides of the argument is they are both disingenuous and do not level with the American people. The arguments of both are designed to appease their core believers and to sound plausible enough to the average voter that their respective candidates get elected.
What we need are politicians who are honest with the American people. We need politicians who are willing to lay out the choices we are going to have to make. First, taxes are going to have to go up. Simple fiscal prudence says if you are spending more than you are making you have to either cut spending or raise revenues. For the government it is going to require both, spending cuts and raising revenue. Second, every Federal Department must share in deficit reduction—that means as Secretary of Defense Robert Gates has said, the DoD must find ways to save money. Third, Congress must show restraint. Individual members of Congress must resist the temptation to bring the Bacon home for their constituents. Fourth, we need Congress to take the lead in eliminating or reducing Federal programs and entitlements that are no longer required. Fifth, we must consider serious adjustment to the Tax Code to include consideration of a Flat Tax and the elimination of all deductions, the imposition of a Value Added Tax. Sixth, the American people, all of us, have to be willing to make sacrifices and to consider that our individual selfishness about what we believe are our entitlements, contributes to our budget woes. Until we each individually are willing to give something up we as a nation will not solve the problem.
Let me give you an example. I am a military retiree (33 years if you want to know.) I earn a good pension for my service and both my wife and I have a good job. When I entered the Armed Services, there was an expectation that I would receive free medical care. That provision was put in place in an age prior to World War II when there were few military retirees, who retired at an older age, and who did not live many years beyond their retirement. At the end of World War II because of the threat of the Soviet Union rather than downsizing our military as we had done in past wars, we maintained a much larger standing active military force. The net result, there were greater number of retirees, who because of personnel policies placed into effect in the post World War II years, retired an earlier age and who lived longer. According to one article I found today here are 2 million military retirees in the United States. That is there are as many military retirees as there are members of the active Armed Forces. Depending on where you live as a military retiree you may use a military medical facility (very limited) at no cost to you; participate in Tri-care Standard or Prime. The difference is Tri-care standard you choose your own doctor and pay co-pays; whereas with Prime you pay a certain rate each year but must use a military care facility or an approved physician. The differences are marginal, but with Tri-Care standard I would pay nothing, null, zip, zero.
My wife and I pay $460 for the both of us for Tri-Care Prime. Next year we are going to Tri-care Standard and I am going to start using the group health policy of my wife’s and I employers. This is the right thing to do. Will my action save DoD whole lot money no, but it will save a few. Yesterday the wounded warriors came through the Pentagon. These are men and women who have been wounded in either Iraq or Afghanistan. Some are missing legs or arms. Some have traumatic brain injuries. They more so that I who managed to serve my 33 years relatively injury should, and must receive free medical care for the rest of their lives. For they have paid a price with blood.
Approximately 30% of the DoD budget goes to personnel and that percentage is rising. Included in the personnel cost are retired pay and medical benefits. The cost of retiree health cost has expanded in recent years. So what is my point. First, most retiree can afford to pay more for their retired military health care. Second, military health care should be their secondary and not primary means of getting care for the majority of military retirees.. Third, while admittedly the military is a strenuous life there needs to be a serious discussion regarding retired pay computation and other benefits one receives when they retire. The retired benefits for our military are generous and should remain generous, but should it be as generous as it is at 20 years of service (approximately 50% of based pay at 20 years)? Should retirement be computed differently that it is today? These are question we need to ask?
Likewise does the age of retirement for maximum Social Security be raised? Do we need to reconsider Social Security? Is it time to consider private savings accounts?
We need to cut the Federal Budget. The question is how? The special interest will be lined up to protect the entitlements. AARP will say cuts his but never mine. The Military Officers Association will say never cut the military benefits but cut someone else’s.
We the American people are going to have to give up something. There is great stock among many American’s that the problem is the politicians. It ain’t. To quote that great American philosopher Pogo, “I have seen the enemy and the enemy is us.” The enemy is us the American people who want fiscal prudence’s and programs reduced as long as it is not the one near and dear to our heart’s. (To be continued.)