From: ipser@solomon.technet.sg (Ed Ipser)
Subject: Re: Would that really be such a bad thing? Would it?
Organization: TECHNET, Singapore
Distribution: usa
Date: Mon, 25 Jan 1993 02:54:40 GMT

In article <C16HF1.1xwy@austin.ibm.com> alan@auntbea.austin.ibm.com (Alan R. Weiss) writes:
>In article <C134I0.D5y@newsserver.technet.sg> ipser@solomon.technet.sg (Ed Ipser) writes:
>>In article <C12pF1.1Iy4@austin.ibm.com> alan@auntbea.austin.ibm.com (Alan R. Weiss) writes:
>
>Ed, I had to think about your message for awhile before responding.
>Here goes ....

Believe me, I do appreciate it.

>>Perot was not the first nor is he the only
>>one with a Plan (TM) to save the country from ruin.
>
>Which part of this is "absolutely false?"  I surmise that you disagree
>with the last sentence.  Still, you have not really promulgated a
>Plan (tm) for dealing with the deficit and debt other than defaulting.

Ok, I'll spell it out:

  1) Eliminate all federal programs not explicitly provided for under
     Article I, section 8 (and similar clauses) of the US Constition and
     apply spending cuts to the deficit;

  2) Sell off all assets related to programs no longer supported by the federal
     government including, and especially, the national parks and apply proceeds
     to retirement of the debt;

  3) Scale back all nuclear forces in keeping with Start II et alia
     (but no further);

  4) Scale back all non-nuclear forces save what is necessary to protect
     the US from the militaristic regimes of Canada and Mexico;

  5) Cut federal taxes accross the board, to the bone;

  6) Where the above has not eliminated both the deficit and debt make
     still further cuts in remaining federal programs and privatize the
     remaining debt.

No doubt, you'll dismiss the above as politically impossible but it is
a viable plan which I hereby promulgate in lieu of a default and I am
certain that it would work better than Perot's plan.

As for defaulting, I would prefer it to new taxes if the choice is that
simple. I'm serious.

>>Most plans revolve around two features:
>>
>>  1) cut the powers and authority of the federal government back down to
>>     those granted in the US Constition, apply all resulting reductions
>>     in spending to deficit reduction;
>
>No, only the Libertarian Party plan does that, to my knowledge, not
>"most plans."

In fact, the Republican Party has long advocated, at least
rhetorically, a restoration of the Tenth Amendment and even Clinton
campaigned on a theme of reducing federal programs (with careful
excections like socialized health care). Now you and I both know that
no Democrat is going to scale back the federal government but he did
promise to.

>>Personally, I would be willing to take on my share of the national debt IF
>>AND ONLY IF I knew that there would be no further bills. But, as things 
>>now stand, any additional monies sent to Washington, DC are not going to 
>>be applied to the deficit but to new "social" programs.
>
>$16,000 for youself, plus $16K for each of your spouse, children, etc.
>I'm not so willing!

I don't understand you. You're willing to accept higher taxes but not
the actual debt to which you want the taxes to be applied? I'd be
willing to pay $50,000 per person in my family if I and, more
importantly, my children could be freed from Social Security and other
"benefits" of federal government.

Of course, the $16,000 is based on the paper debt, alone, and does not
consider the assets held by the federal government which are not 
inconsiderable.

>>>>  b) Since the turn of the century, the federal government has taken
>>>>     on a great number of obligations and burdens which are simply
>>>>     unconstitutional. By shedding some of these responsibilities, the
>>>>     federal government could ease much of the fiscal drain on its
>>>>     balance sheet.
>>>
>>>Fine.  What is the instrument that will cause this to come about?
>>
>>Frankly, the only instrument that I believe will be effective is the
>>singular threat of insolvency.
>
>Hmmmm ... maybe.  But I doubt politicians realize this.  I think
>they only react to political pressure.

This gets to be a bit convoluted, but more-or-less by definition,
politicians do what will get them re-elected, i.e. they respond to
political pressure. Are we to assume, then, that Americans favor
bankrupting the federal government? Certainly, a case can be made
in that direction. And I can't really see how this is an irrational
choice. I mean, if the federal government is a non-performing asset,
why NOT liquidate it?

If we were talking about GM instead of Uncle Sam, we certainly
wouldn't get teary-eyed at the prospect of paying out dividends in
excess of net revenues if we had already decided that our money could
be better invested elsewhere. (Oh, I know, Perot doesn't like the
downsizing of venerable American corporate giants, either.)

Finally, it seems pretty clear that in the absence of a fiscal crisis,
the politicians will not fail to do anything but spend our money to
get themselves reelected. The tax/borrow-and-spend culture is systemic
to democracy, itself. One need only read a little Plato to see that
the Demopublicans have invented nothing new.

Remember. Right now the interest rates on T-Bills are VERY cheap. In
other words, the market considers them to be an extremely safe
investment.  To judge by the market's reception of federal debt, there
is no crisis on the horizon. If the markets don't see a problem and
the voters don't see a problem, why should the politicians?

>>No. I don't want to see the federal government go bankrupt. I would
>>really like to see a simple reduction in its authority. In a post-Cold
>>War world, the federal government should be operating at a fraction of
>>its current budget.
>
>Yes, we agree again.
>
>>But the only mechanism I can see which will scale back the federal
>>government (short of armed revolution which would be a REAL
>>catastrophe) is the genuine threat of bankruptcy. At some point, we
>>have to say: "Hey, you've got all the money you're going to get."
>
>They'll never recognize it as a signal.  They haven't until now!

Oh, I don't mean it as just a signal. I mean to take the federal
government right up to the edge. I don't expect that any politician
will make the hard choices necessary until they have absolutely no
choice in the matter. Until the day comes that they have to choose
between defaulting and cutting they will continue to spend our money
freely and to demand more.

>Raising taxes has been a political pariah for awhile now in
>Washington, but they STILL haven't acted to fix the deficit/debt.

A "political pariah"? George Read-My-Lips Bush gave America its
biggest tax increase in history and the deficit promptly went higher.
There are those who say that no Democratic president could have gotten
away with such a tax increase. I hope they're right.

>>Ok, so give me my family its portion of the debt and absolve me from ever
>>paying for services I don't want from the federal government.
>
>Interesting.  Again, I can't afford it.  I didn't WANT them to
>spend all that money, so I'm not "guilty."

You can afford the $16,000 better than you can afford new taxes. Its
really pretty simple math. (Unless you are advocating higher taxes
on "the other guy".)

If you paid off that $16,000 with your Visa credit card, that would
be, say, 20% interest a year or $3,200 a year if you don't pay down
the principle. I don't know about you but most Americans pay a good
deal more than $3,200 a year per person in federal income taxes alone.

>I voted Libertarian, so I'm doubly not guilty.  Maybe we just
>make the Democrats (social programs) and Republicans (military)
>pay?

That would be my first choice for deficit reduction but that would
still leave the debt unless you had the government run a surplus which
would be just asking for trouble.

>>The point is that I see no evidence, whatsoever, that this will come
>>about.  However, we have already seen Slick Willie using Perot's name
>>to advocate the introduction of a VAT or a gas tax which we all know
>>will be applied not to the deficit but to new "social" programs.
>
>Has Clinton advocated a VAT, yes or no?  I know he's considering
>a gas tax, but hasn't publicly said he is for it.
>Be specific here.

The scuttle-butt is that VAT-scratch-fever is raging among the
Clintonites.  I haven't heard anything official yet, but Perot's name
was used by Clinton when he suggested "considering" a VAT. Something
like: "Well, Perot got so many votes and he advocates higher taxes
so lets just forget about that silly promise to give the middle class
a 10% tax cut and raise them, instead."

>>>>The federal income tax was instituted for the purpose of closing a 
>>>>budget deficit of a few million dollars. It is the very nature of the
>>>>welfare state to be perpetually underfunded; there will always be more
>>>>socialist "good deeds" to be done than dollars to do them with.
>>>
>>>The income tax is an abomination.  I would just like to fix one
>>>menacing problem before taking on another.  If we don't fix this
>>>problem, we won't have the luxury of debating the rest.  IMHO.
>>
>>But you're fixing the wrong problem first. You CAN'T fix the deficit
>>first. Its like fixing a sneeze on your way to getting rid of a cold.
>
>Maybe.  But if the nation collapses, I assert we will be in worse
>trouble -- and the States will NOT pick up the slack.  They too
>are run by politicians no more prescient than those in Washington.

The states will pick up the slack when the federal government drops it
and not a moment sooner. States which fail to do so will be punished
by their own circumstances until they do (assuming that the slack is
not taken up by private institutions which is really the better
solution, anyway).

Moreover, unlike Washington, DC, the states are more limited in their
scope and must compete with one another. States which impose DC-like
burdens will find their residents voting with their feet. (Texas
has been a major recipient of relocated easterners fleeing oppressive
taxes.)

>>>>In short, it does not follow that we have a stake in avoiding a
>>>>collapse of the federal government. Indeed, the real question is whether
>>>>we should throw good money after bad.
>>>
>>>Yes, that is a valid question indeed.  But what are the alternatives?
>>
>>Hold out for genuine reform. Don't throw good money after bad. Balance the
>>budget through spending cuts, exclusively. Implement the reforms necessary
>>to accomplish this. Don't even THINK about new taxes. If you are genuinely
>>worried about the debt, divide it up and pass it out. (Privatize the debt.)
>
>Problem is, we can't do it just by cutting government any more.

Nonsense. This is defeatist talk and plays right into the hands of the
enemy.

>Its $4 trillion, and growing.  I mean, we CAN do it with just
>cuts - a Libertarian style cutting system.  But, realistically,
>this will NOT happen.

Realistically, get ready for the big crunch. I'm not kidding. The federal
government is well beyond maximum tax revenues on the Laffer curve not
to mention the political payoffs required to soothe vexed voters. If the
federal government raises taxes, we'll get another recession and a higher
deficit.

(On the other hand, the Democrats might well surprise us all and do the
right thing. When Bush dropped the ball on supply-side tax cuts (which
were originally a Democrat idea stolen by Kemp and then Reagan) he
handed the initiative to the Democrats. Even opponents of tax cuts agree
that they will at least raise revenues in the short run.)

>>>>I am saying that we should be fixing America! Not Washington, DC. Let
>>>>Washington, DC go to hell.
>>>
>>>You can't seperate the two, unfortunately.  You can't extricate Washington
>>>from America, because its tendrils are everywhere.  Unfortunately.
>>
>>Lets start slicing some tendrils.
>>
>
>Fair enough.  Perhaps a Republic of Texas isn't a bad idea
>after all ....... ;-)

The Ides of Texas are upon us.

Keep your powder dry.
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