Same old new ideas

I'm nervous. The federal government is expanding with designs on getting into automobile manufacturing, health care, and investment banking. It's already into insurance, thanks to the AIG bailout. As the state should be separated from the church, so should it be from private enterprise. Ahh, but these are extraordinary times and call for extraordinary actions. True, but this is the same federal government that's watching our Social Security system go bankrupt, and presides over an income tax system that is a farce.

Consider this: when the Social Security program started in 1935, the average life expectancy was 63. You weren't eligible to collect benefits until the age of 65. As originally designed, many workers paid into the system but died before they could enjoy its benefits. This helped cover the cost of the program. Today life expectancy is 77 years old, and if you live to 65, the average increases to 83 years old.

A lot has changed in the past 73 years, yet the system remains basically the same. We just keep sending money to Washington so they can send it to senior citizens who are living longer and longer. Seniors now collect Social Security benefits an average of seven years longer than they did in 1960.

One of the reasons life expectancy has increased is because of the advances in medicine. Our taxes also pay for Medicare to extend the life of seniors. Compassion is a virtue, even when mandated by the feds, and a promise made (to provide income and healthcare for the elderly) is a promise kept, but what exactly is the plan here?

The main source of revenue to run government operations is the income tax, a program started in 1913, legally explained and described on eight official pages. Today the tax code runs over 8,500 pages. It is beyond the comprehension of the finest CPAs, IRS accountants, and tax lawyers, not to mention "ordinary Americans."

And how's that War on Poverty declared by President Johnson back in 1964? Back then 19% of Americans lived in poverty. The poverty rate today is about 12.5%. The cost for this apparent improvement: nearly ten trillion dollars! ($10,000,000,000,000.00) However, the number of Americans living in poverty has actually increased. At the time Johnson declared war on poverty (without describing what a victory would look like or defining an exit strategy) 36 million Americans lived in poverty. Today the number is 36.5 million.

At the time of this writing, Congress is debating how to help the domestic automakers avoid bankruptcy. They may offer a loan from that $700 billion Wall Street rescue package. (Where did they get that money???) If the auto companies take the loan, they'll have to give up some authority to run their own business. Congress may demand that the CEOs step down, that executive salaries be capped, that the companies only build vehicles approved by the government, and so on. Part of the Big 3 troubles stem from the federal government: expensive regulations, such as new fuel efficiency standards, and foolish policies that led to the credit crunch. I'm trying to imagine what kind of vehicle the federal government would design and, more interestingly, how much it would cost.

Can we overcome the challenges of underfunded Social Security and Medicare systems, ongoing poverty, the banking and housing problems, etc? Yes we can! But, we need innovation, and the federal government is not exactly an idea incubator. The centralized government doesn't operate on a profit and loss basis, so failure is often rewarded and mistakes are repeated. Decision makers don't debate new ideas so much as fight over how much current programs should be protected or expanded.

We now enter a new year and new political reality. Even with new leadership, we're already hearing the same old ideas: send more money to Washington to support a larger, more activist central government. There's talk of a massive new government program to manage "carbon credits," and a program that would move toward universal health care. Those who believe the federal government is best equipped to identify and solve problems now control the Congress and White House. Maybe this time their ideas will work? As we head into a new year full of serious challenges one can only hope, or pray, that they are right.