A Trillion Here, There…

Politicians in the U.S. need to implement large, systematic changes to further the nation’s interests, not special-interests. With history as context, Czuchnicki takes a look at how.

Our politicians need to implement large, systematic changes to further the nation’s interests, not special-interests. Perhaps politicians should act more like engineers, particularly in recognizing, analyzing, and dealing with reality by building. The need to shift behavior patterns is urgent, from efforts that leave nothing behind but a worsening problem to building big again.

For the United States, yesterday's "a billion dollars here" is today's "a trillion dollars there."

We owe over $14 trillion – that's a "14" followed by "000,000,000,000." Each man, woman and child in America today owes about $40,000 – their share of our national debt. Senator Everett Dirksen was right: "eventually, it becomes a lot of money."

Each year, until it is paid back, interest is owed and must be paid. This financial reality describes why you are poorer than you thought.

For many, the 1950s are remembered as almost a golden age epitomized by Ozzie and Harriet living the good life. They benefited from America’s industrial might, escaping WWII’s devastation and returning to peacetime production; excess capacity could even go to wage the Cold War. Our workforce was plentiful, thanks to all those Rosie the Riveters. Working in innovative factories – nourished by capital – we converted our trove of natural resources into valuable products, sold worldwide.

Our competing, distributed and limited government fostered a climate of individual opportunity. This is epitomized by the words from our Declaration of Independence “…that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.” America was truly exceptional – and should continue to be so.

With less than five percent of the world population, we still produce almost a quarter of the world’s goods and services. We feed many overseas. People still flock to the United States. Our educational system feeds minds that patent inventions and garner the vast majority of the Nobel Prizes. But we now worry whether America is in decline as we learn the scope of our debt and obligations. We see comparisons to Greece and hear questions about the future of democracy. Will we go bankrupt, or be forced to learn Chinese?

In the debate that is on-going about the debt ceiling, a few structural problems – and solutions – at the trillion-dollar level, need restatement because they add up.

Consider energy. It is the driving force behind life, whether powering a home or an entire industry. The U.S. may soon be known as the Saudi Arabia of carbon-based fuels: coal, gas, shale and oil. But many say “not in my back yard,” seemingly content to continually send almost a trillion dollars to other countries each year for their oil.

In the midst of the Great Recession, new, well-paying energy jobs are desperately needed. Americans would fill them, yet we are barely moving on this front.

There are those who caution against polluting our world with CO2. The U.S. invented nuclear power; the first reactor was built in a squash court under a Chicago stadium. These plants have a zero carbon footprint. Building about 400 of them – each producing a billion watts of electrical power – would meet the country’s entire electrical power needs and then some. Again, the jobs created would be here; with a long-term, economic benefit felt for decades; the impact on global warming would be a bonus. The cost – perhaps a trillion dollars – but we’d have something tangible to show for it.

And while we are considering electricity, note that the national grid is inadequate – more money that needs to be spent – but again, we’d have something afterwards to show for it, including all those jobs while the work is underway. We as a nation can invest money to build both for immediate impact and a long-term benefit. We must.

Government has exploded; but it still cannot pick “winners.” Just consider our “Energy Department.” Do we have an energy policy to ensure we become energy independent? Certainly we have banned the 100-watt incandescent bulb. This has closed U.S. factories and opened Chinese ones. It fuels controversy: broken bulbs’ mercury contaminates, the bulbs are 20 times more expensive, provide less-quality light and have suspect energy consumption forecasts. We cannot continue to pour money into pursuits whose economic justification is based upon faith – as is the case of our creating a “green,” i.e., renewable, energy system, depending upon continuing government subsidies.

Even President Obama has learned the truth of “shovel-ready projects.” It is no longer possible to get industrial projects off the ground quickly so we cannot easily achieve the benefits of producing things of value – which includes employing people.

This recession is illustrating the enormous size of federal, state and local governments and the fact that they do not drive the economy forward. Every five private-sector workers support two public-sector ones – including their future pensions. All of this is a huge drag on private sector, added to the cost of   regulation – annually near $2 trillion. This thousands-of-dollars per worker “hidden tax” hits small firms at twice the rate of large. This insidious “expense” is more than the average annual salary in some overseas nations, thus is a significant impetus to move jobs there. If our government size is reduced so will its urge to regulate at the “nit” level. It too often loses the forest for the trees – e.g., missing the housing bubble.

When we talk of government growth, we must examine the Big-3 entitlements: Medicare, Medicaid and Social Security. In 1965, the House Ways and Means Committee estimated that the hospital insurance portion of the Social Security Act of 1965, Part A, would cost about $9 billion annually by 1990. Actual spending then was $67 billion. The record is worse for other portions of this Act, which has grown as other obligations have been added.

Part of the program’s growth is simply attributable to theft. Senator Tom Coburn, R-Okla. – an ob-gyn – estimates Medicare pays out $80 billion fraudulently each year. All told, the two programs now account for 23 percent of the federal budget, some $793 billion.

Social Security is different, but the same. Originally, the program was self-funded, with contributions from individuals and firms put into a trust fund. That account today contains an IOU for $2.6 trillion. This represents the government owing itself. This accounting trick is certainly useful for the politicians who wanted to spend the money but offers scant reassurance that the money will be there tomorrow.

The image of Americans circa the ‘50s is of men and women who were in shape from doing – the men, back from war, were re-building a car engine. Today, our children are fat, gorged on cheeseburgers eaten while playing their video games. Half the country pays no federal taxes, are supported by the other half.

The newest U.S. agency, the TSA, now has over 50,000 employees; with many engaged in putting their hands on others’ private regions. Our laws are written as multi-thousand page behemoths, opaque to our citizens awaiting bureaucrats’ implementations. Their only certainty is that hidden in them are myriad surprises. No one knows what Dodd-Frank will do to the financial industry or what the Health-Care Act will do to health-care.

Our nation needs to build for its future; and not just build a debt that expands the bureaucracy. We must examine the value of the many services provided by the government and determine whether they create. We must change our attitude to that of engineers: think, choose then create. The American Dream has always been ahead of us and it has always begun with a reality addressed by energy and creativity.

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