Big Government Needs Big Reforms

(This article was first published in Smart Girl Nation online magazine in March 2011)

Only humans with heartbeats pay Washington's enormous tab. Real people pay every nickel. Even corporate taxes are ultimately paid by flesh and blood people.

Take an ordinary, every-day American family; one that averages $70,000 of income during its earning years.  It will spend a stunning $1,300,000 in taxes during its lifespan. 

After extracting that sum, in an act that has been characterized as governmental child abuse, politicians push fresh debt equal to $11,000 per family onto politically undefended youngsters. 

The Government Accountability Office notes that the federal government will have to raise its taxes 50% simply to stabilize the national debt. Or it can cut spending 35%.

Certainly, portions of government provide vital functions. Nonetheless, it is vulnerable to charges of widespread inefficiency, special interest control, and financial negligence. Look at the money lost by the Post Office and Amtrak; a formidably mediocre public education system; the empty Social Security trust fund; and a Defense Department that cannot pass a basic accounting audit.

Naturally citizens are looking for ways to save tax money. The biggest programs deserve the closest examination.

Social Security and Medicare together consume a whopping 8% of the economy. They are large public policy mistakes. The $2.9 trillion trust funds are empty and the programs are short by a stunning $225,000 per family. 

Two keys to a realistic understanding of reform: First, the money that trusting citizens paid into Social Security is gone. Disappeared. Spent. Flushed. Second, the social injustice of raising taxes on younger people for a political "oversight" of this magnitude is profound.

Benefit cuts are not the end of the world. Many Social Security beneficiaries do not need it.  In 2008, 25% of families headed by someone 65 or over had income of more than $75,000.

US health care offers more low hanging fruit. It is twice as expensive as that of other rich countries. Singapore's patient-centered, free-market model is four times more cost effective than the US. Vast healthcare savings of 8% - 12% of GDP are within grasp, enough to solve much of the looming retirement shortfall. 

Defense and education, the second and third largest programs, are nearly equal in cost. Each burn through 6% of GDP.  For decades, the US has performed the bulk of the globe's security work. Perhaps the current arrangement is optimal, perhaps not. In light of the mounting financial pressures, a thorough re-evaluation is in order.

Federal, state and local governments will spend $880 billion on education in 2011, but struggle with quality. Productivity has fallen in half. Per-pupil K-12 funding doubled since 1971 while reading and math scores have remained flat. In 2009 international comparisons, American 15 year olds posted a mediocre 14th ranking in reading and struggled at 25th in math.  

A flick of a policy switch would greatly lessen a critical difference between the rich and the rest - high quality education. Less-than-wealthy families cannot escape the public K-12 system. It is a tool of financial repression. Watch quality increase and costs fall after freeing parents to use their tax dollars to shop for education in a truly free market.

Of course, government is necessary. Of course, collecting taxes is necessary, as well. Necessity, however, does not make tax collection less coercive. And coercion should be held to an minimum in any society purporting to be free.  

A government that extracts $33,000 in cash and liberty annually from middle income families to fund a sprawling, inefficient, and often venal government - then borrowing $11,000 per family more - is increasingly difficult for taxpayers to justify. 

Fire up your imagination. It's time to re-think government.  Completely.