Thrawn Rickle 25

A SIMPLE SOLUTION TO THE BUDGET DEFICIT — AND WHY IT WILL NEVER HAPPEN

© 2003 Williscroft

Our nation is facing the largest national debt in its history. Our annual budget deficit is overwhelming — we’re swimming in red ink. From time to time, when the Democrats control things, Congress imposes new taxes on Americans in a demonstration of “fiscal responsibility.” When Republicans control, they reduce taxes to “stimulate” the economy, in order to lower the deficit. Why? What’s really going on?

The late J. Peter Grace, Democrat Industrialist, was commissioned back in 1984 (ironically) by the Reagan administration to study this problem closely and develop a workable solution. His commission subsequently proposed a series of spending reductions that would have balanced the federal budget in three years — with no tax increase at all, and with no meaningful reduction in any essential government services. Simply stated, this commission eliminated the waste, the redundancies, and the genuinely unnecessary expenditures.

When Grace found his information falling on deaf ears, he went directly to the public. Until his death on Apr. 19, 1995, Grace lead a grass roots effort to make the public aware of the simple solutions his commission developed. As I have said before, problems with solutions don’t bother me. In this case, however, the problem is pervasive; solving it once will not make it go away. What is the underlying solution?

Lewis Lapham, long-time Harpers Editor-in-Chief, and a man with whom I rarely agree, has put his finger squarely on the source of America’s fiscal problems.

Writing back in 1993 about the Savings & Loan fiasco, he said: “The operative economic principle was socialist, not capitalist; the money came and went for reasons that were political and ideological, not because it obeyed the rules of supply and demand.”

According to Lapham, the federal treasury supplies 45 percent of the nation’s income. He says that nearly one-third of American households receive direct payments from the government, and nearly one-half of Americans work for enterprises directly dependent upon federal handouts. We subsidize agriculture, housing, and road maintenance. We grant “free” (virtual subsidization) licenses to broadcast stations, and we lend commercial banks money at rates well below prime.

Lapham insists that American politicians really are in the business of brokering the tax revenue. They specialize, he writes, in redistributing the national income to their constituents, clients, patrons, and friends. The theory of the free market works at the margins of the economy, he explains, for small business owners who mistakenly borrow $20,000 instead of $20 million. The central pillars of American enterprise, however, rest firmly on the foundation of state subsidy. According to him, the national economy really depends on “...systematic price fixing...noncompetitive bidding [and]...the guarantee of government intervention.”

Lapham concludes his remarks by observing that Americans really prefer the “...rigged price, the safe monopoly, and the sure percentage.”

The problem, then, is not the president — he doesn’t create the budget. Although the congress does write the budget, and — at least technically — bears responsibility for deficit spending, it is not really the problem, either. Who reelects more than 95 percent of incumbents? Who benefits from their “redistribution” efforts? Who refuses to accept responsibility for living in a truly free market economy? Who keeps voting for the people who structure our economy so that “free market” remains an unattainable myth?

Ask yourself these questions the next time you look in a mirror — and the next time you vote.