There are two ways to resolve the budget problem: cut spending and increase revenues. In the best of worlds you do both.
The cuts are obviously necessary. There is no reason on the face of the earth why the federal spending rise from $2,879 billion in 2007 to $3,618 billion in 2010 can’t be slashed back to the 2007 number. The increase bought us nothing. Would we really miss it?
The increase in revenues is the part that is critical. The current administration ignores history and seems to believe that increasing taxes will raise revenues. Perhaps it might in economic boom times like the birth of an entire new way to do business (the Internet and computer boom) during the Clinton administration. Has anyone in the White House noticed that these aren’t boom times? They’re bust times, fellas. What worked for JFK, Reagan, and George W. Bush to get revenues to rise in tougher times? Tax cuts!
But it goes beyond that. To increase revenues, you have to have a vibrant and productive private sector. All of the revenue comes from the private sector where the wealth is created. This administration seems to be doing everything possible to hamstring the private sector with regulations, an anti-business bias, and general uncertainty.
How much more revenue would be generated by taking the lid off of energy production? Not green technology (though that can and should be in the mix), but drilling for oil and natural gas, and building refineries. Simply keeping our petrodollars in the country would make an impact. Employing thousands of people would make an impact. There’s a vast reservoir of money in oil company vaults that leftists complain about while not allowing oil companies to spend it productively. Do they not understand that if the government disallows the spending of money on R&D and building and labor, the money that a company makes will inevitably sit in a vault (if it’s not distributed to “fat cat” investors the government also hates)? Profits are so high because expenses are so low. Low priced energy is good for both consumers and businesses. Somehow our educated elites can’t seem to wrap their minds around the concept that energy production is a win for everyone, including them because it helps provide the revenue they so desperately need.
In the health care sector, the government has clamped down. They’ve done worse than not fix the problem, they’ve exacerbated it by locking the cost increasing third party payer system into place. They’ve added regulation and mandates. If, instead of doing that, they de-regulated and allowed the free market and entrepreneurs to have a crack at bringing prices down and care up for consumers, costs (including spending by the government) could go down and revenue generated by the health care sector could go up. How? This is simplified, but it would work: End mandates of what must be covered, and open the market to selling insurance across state lines. One regulation I would put in place is that insurance companies sell only individual (or family) policies and that the “group” each buyer is in includes everyone the company insures (no more “company/group size” pricing, everyone belongs to the much larger group called “everyone who buys a policy from the insurance company”). Give individuals the same tax breaks as companies would get (even if that means ending the tax breaks to companies for providing insurance… we need to end the “health insurance tied to your job” culture). And let people save money, tax free, to pay deductibles. This allows people to buy cheaper catastrophic coverage insurance (or whatever coverage they want from a menu of options) and have the money (and therefore the bargaining power that comes from paying cash rather than through a third party) to pay for care.
Also, from the care provider end, there must be tort reform. I heard a report yesterday that a study was done on imaging technology and how often it was used unnecessarily. One third of the imaging was done to cover the doctor’s ass in case the patient sued. The other factor in the excessive use of costly imaging technology was the fact that a third party was paying, so there was no consequence for the patient asking for it even though it was unnecessary diagnostically and it exposed them to greater levels of radiation. The doctors had to say “yes” to the unnecessary imaging because if they said “no” and a complication occurred down the road, the patient (rightfully or not) could sue. That’s one third of expensive diagnostic equipment use that was unnecessary! The elites talk about health care costs exploding, but won’t address tort reform.
Change the regulations about who and how primary care can be done. Why can’t nurses open neighborhood care centers? Wouldn’t it make sense for a system to be created (by entrepreneurial effort, not mandate) where there is a care starting point that is low cost and very local (even to the point of a nurse or physician’s assistant making house calls) to take care of kids with colds or strep, that escalates as the malady gets more severe? Picture this: Local nurse with a storefront or making a house call handles check-ups and easy cases; when something needs greater attention she sends the patient up the line to a doctor’s office for diagnosis and treatment; only when the doctor requires hospital facilities or specialists does the patient go to the hospital. Wouldn’t that reduce costs and make primary care and check-ups affordable, as in: easy to pay out of pocket?
When you look at poor countries, the first thing that catches the eye is how much government interference there is in the private sector. If it’s tough to start a business, or too easy for the government to take the business (or any property), people are poor. If taxes are too high, people are poor. If there are too many government regulations, there is government corruption, and people are poor.
It seems so simple: cut spending, and get government out of the way so the private sector can flourish, which increases revenues to the government. The problem we have is that the government elites cannot grasp this simple concept. What’s worse is that they love their power so much that they refuse to submit to the simple truth that a flourishing private sector makes them and their programs unnecessary.