Showing posts with label Ronald Reagan. Show all posts
Showing posts with label Ronald Reagan. Show all posts

Thursday, August 6, 2009

Steven Lagerfeld: We've Made a Bad Bet on Taxes

The WQ's Steven Lagerfeld opened my eyes to the risky, two-way bet of tax cuts:

In another way, today's red vistas of debt recall the era of tax cutting under Ronald Reagan. The Reagan Revolution was in part a gamble: Cut taxes, and an alarmed public will demand budget cuts in order to avoid red ink. Now we may be witnessing a kind of reverse Reaganism: Increase the size of government and gamble that an alarmed public will eventually authorize the taxes to pay for it. [From Wilson Quarterly, Summer 2009, Vol. 33, No. 3, page 4]

Mr. Lagerfeld is absolutely correct--by refusing to cut government spending, we failed to uphold our end of the tax bargain. It seems that voters will always demand the same level of services or increased services; as a result, cutting taxes--which reduces revenue available for government services--might actually be a slow suicide pact. Californians just don't seem to have the stomach to cut spending, even when the money isn't there to provide the same level of services. Perhaps some kind of counterproductive but ingrained psychology is involved--after all, once you've tasted gourmet food on a regular basis, it's almost impossible to go back to the frozen microwave dinner--even if you have less money to spend and should be cutting back.

If Mr. Lagerfeld and I are both correct--that the bet on lower taxes failed, and once spending is increased, it's almost impossible to cut services--then cutting taxes should not be the main focus of any government policy. Instead, we ought to be focusing on the following areas: first, having a consistent tax policy to attract business and minimize inflation; second, requiring all new government programs to terminate at the end of the following fiscal year if sufficient revenue to fund the program does not exist; and third, to pass a balanced budget amendment to each state's constitution.

Thursday, May 29, 2008

Ronald Reagan on Libertarianism

If you analyze it I believe the very heart and soul of conservatism is libertarianism. I think conservatism is really a misnomer just as liberalism is a misnomer for the liberals — if we were back in the days of the Revolution, so-called conservatives today would be the Liberals and the liberals would be the Tories. The basis of conservatism is a desire for less government interference or less centralized authority or more individual freedom and this is a pretty general description also of what libertarianism is. Now, I can’t say that I will agree with all the things that the present group who call themselves Libertarians in the sense of a party say, because I think that like in any political movement there are shades, and there are libertarians who are almost over at the point of wanting no government at all or anarchy.

From Interview with President Reagan, published in Reason July 1975

http://en.wikiquote.org/wiki/Ronald_Reagan

One of the American public's worst misconceptions is that libertarianism calls for no laws. As I explained in my review of Milton Friedman's Capitalism and Freedom, Mr. Friedman himself stated the need for government: "The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the 'rules of the game' and as an umpire to interpret and enforce the rules decided on." See

http://willworkforjustice.blogspot.com/2007/08/capitalism-and-freedom-by-milton.html

Thus, anyone who states that libertarianism means anarchy or no laws is incorrect. Libertarianism merely means that you agree that interference with your ability to lead your life as you see fit--assuming your actions do not interfere with others' freedom--should be reduced as much possible.

More on government debt and the money we pay to the government: Richard Carmona, former U.S. Surgeon General (2002-2008), says that "75 cents of every tax dollar that you contribute [to health care] is spent on chronic disease, much of which is preventable" (The Commonwealth magazine, June 2008, page 44). Mr. Carmona singles out smoking and obesity as two of the largest scourges of health. One issue with having universal health care is how we regulate chronic disease--does an obese man get a free gastric bypass, or a free diet book? I wish I knew the answer.

One way to reduce the burden on any proposed national healthcare system is to have government workers use the premium + pay-as-you-go system (similar to Kaiser's HMO), while non-government workers use a separate, heavily subsidized health care system (similar to Britain's NHS). With most government workers not being "at-will" and therefore harder to terminate, they are best positioned to budget and pay monthly premiums. This type of carve-out is not unprecedented--postal and other federal workers, for example, do not get the same federal retirement benefits private citizens do because federal workers don't pay certain taxes. With more than 1.8 million civilian employees, the federal government, excluding the Postal Service, is the Nation’s largest employer. If you add in local and state government workers, you would have enough members to incorporate into a "closed system" of medical care (similar to Kaiser's HMO). In fact, you could probably leave the current HMO/PPO system intact, and then work with existing hospitals to provide heavily subsidized health care to private citizens while also investing in new hospitals. (There's no reason Thailand should have more hospitals than America per capita.) The out-of-pocket and insurance reimbursement system would shift to government members rather than private citizens, private citizens, especially blue collar workers, being the ones most required to be healthy so that they can be productive and pay taxes to sustain the government.

[Note: this post has been updated from its original content.]