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Tuesday, June 23, 2009

A People's Budget for the USA:

Even though I was concentrating on ways private businesses were getting money through largely nefarious means, this would also be a good time to address the insane federal budget that comes out of Washington D.C. every year robbing the productive economy and handing the money over to unproductive or evil ends.

Currently, if money were simply 100% taxed and then distributed evenly between everyone in the United States, everyone, every year, would be given around $46 thousand dollars each. A family of 4 would therefore have $184,000 to play around with every year. It's a staggering amount of wealth. The question we have to ask ourselves, is where is it all going? This kind of money could make everyone prosperous for life, if it were properly directed. Like I said in my last post, machines have generated unimaginable wealth in our economy -- the problem of production has been solved. The problem that remains is the problem of distribution. Somehow or other, deserving families receive little to nothing of this vast wealth, while undeserving elites or pointless government programs devour it all. Though it's easy to imagine we could increase productivity yet again by, say, improving computer technologies, inventing new synthetic materials, discovering new sources of energy production, curing various diseases or breeding better strains of wheat -- the fact remains that no matter how much wealth we produce, if the government is akin to North Korea's or Nigeria's, the people will still be impoverished and suffering. A good government is a necessary precondition to the overall well being of the people. Prosperity cannot be measured by GDP or per capita GDP. So long as the government misallocates funds and the rich are the primary (or sole) beneficiaries of all this extra money, we'll be no better off than before.

First let's look at where we are:

First we see our tax revenues. The estimate is we raked in $2.7 trillion this year. My intention is to abolish every single one of these taxes and replace it with a national sales tax. As a side effect, this will also abolish all tax loopholes, deductions, credits, so on and so forth that so plagues our tax code. These various taxes have also discouraged businesses by making economic activity uneconomic, and uneconomic activity economic. In addition, simply complying with the tax codes costs billions due to how arcane and difficult it is. The estate tax is unfair and a case of double taxation. There's nothing more natural than giving your money, land, or business intact to your children. Punishing parents who save money to give to their children and grandchildren and rewarding them for spending it all during their own lifetime for their personal enjoyment makes no ethical sense. The sales tax will be a flat tax and it will be levied on all goods equally, there will be no further manipulation of the economy through taxation. I'll worry about how high the sales tax will have to be set, after I find out just how much money I will need. Sales taxes are superior in another way, in that they discourage consumption. Income taxes discourage production. Between the two, it's obvious that one is more beneficial to the economy. People have every incentive to make as much money as they can since there is no tax penalty for doing so, but they also have every incentive to spend their money wisely and sparingly since there is a tax penalty attached to every purchase they make.

Now let's go through this budget 'line by line,' as they say. Every president when coming into office promises to eliminate wasteful budget spending, but in the end the budget only increases every year instead. It's rather miraculous. However, I actually mean what I say. The cuts will be massive.

Social Security, 644 billion: Cut.

Medicare, 408 billion: Cut.

Medicaid + Schip, 224 billion: Cut.

Unemployment Benefits/Welfare/Other, 360 billion: Cut.

Interest on the National Debt, 260 billion: Though it would be nice to simply renege on all our debts, it would probably cause a financial crisis and cost more than the benefit. Therefore instead of reneging on all our debts, I will take action to completely pay off the federal debt, thus cutting 'interest on the debt' to zero within ten years. Therefore in terms of long term planning: Cut.

How's this for a good start? We've just saved $1.89 trillion dollars. We'll worry about what to do with the money later. First, let's tackle the discretionary spending budget:

US Department of Defense, 515.4 billion: Cut.

Global War on Terror, 145.2 Billion: Cut.

Health and Human Services, 70.4 billion: Cut.

Education, 59.2 billion: Cut.

Veteran's Affairs, 44.8 Billion: Translate into a one time payoff of all veterans, then cut. We won't have many soldiers left after this budget reform and therefore veteran's affairs will be obsolete anyway.

HUD, 38.5 billion: Cut.

State Department, 38.3 billion: Cut. Henceforth diplomacy will only be conducted by our elected officials, and we can assume most diplomacy will be a cheap matter of websites, emails, phone calls and the like. There is no need for a diplomatic corps in the 21st century. Foreign aid will be abolished, same with AIDS drugs to Africa.

Department of Homeland Security, 37.6 billion: Keep and expand. We must protect our borders and fight crime and terrorism occurring within our borders. These agencies, in one form or another, our vital to our national security.

Energy, 25 billion: Keep. The department of energy includes our stockpile of nuclear weapons. It will also be useful as an investor in new energy technology, a utilities provider, and so on.

Agriculture, 20.8 billion: Cut.

Justice Department, 20.3 billion: Keep. We need these agencies to enforce the law.

NASA, 17.6 billion: Keep and expand. Space has to be a top priority for any aspirational nation.

Treasury, 12.5 billion: Keep. Someone has to manage our budget, mint coins etc.
Transportation, 11.5 billion: Keep. Public transportation is often better suited than private transportation. A good place for government investment.

Interior, 10.6 billion: Keep. We must preserve our parks, fisheries, and the beauty of nature intact to our children.

Labor, 10.5 billion: Cut.

Social Security Administration, 8.4 billion: Cut.

EPA, 7.1 billion: Keep. Possibly combine it with the Interior. The environment is priceless.

National Science Foundation, 6.9 billion: Keep and expand. Investment into scientific research can revolutionize the world into a better place. Long term benefits of research are rarely funded by private businesses. This is an ideal place for government intervention.

Judicial Branch, 6.3 billion: Keep. We have to fund our court system after all.

Legislative Branch, 4.7 billion: Keep. Congress needs to eat and all.

US Army Corps of Engineers, 4.7 billion: Cut.

Executive Office of the President, .4 billion: Keep. President's got to eat and all.

Small Business Administration, .7 billion: Cut.

Other Agencies, 7.2 billion: Cut.

Off-budget Spending, 39 billion: Cut. I'm sick of secret organizations. In a democracy, the people must know exactly what their government is doing in their name, if they don't, elections are meaningless because we don't know who or what we are voting for.

Extra hundreds of billions for Iraq and Afghanistan war: Cut. America should pull out of all our wars, then disband our military and the DoD.

Excellent, I just took around 1.5 trillion dollars, and cut it down to 112 billion dollars. That saved us 1.4 trillion dollars.

1.89 trillion saved, plus 1.4 trillion saved = $3.29 trillion dollars in spending money. I can do whatever I want with this money without raising anyone's taxes. Conservatively, simply removing government intervention via a flat tax should increase the economy's efficiency by a large degree. Let's say the savings generate increased profits so now I have 4 trillion dollars to work with. So keeping tax levels the same (though changing how I taxed people) while cutting the budget down to 112 billion has given me 4 trillion dollars to work with each year.

What should be done with this extra money? I can think of a lot of worthy causes. For the first 3 years, however, it will do only one thing: Pay off the national debt. (Another cool idea would be to sell off all our military hardware to allied nations like Europe or Japan and use that as a means to generate revenue. Let them police the world if they want to do it, I'm through.)

So for three years or so, people will receive little to no government services, as I dig our way out of a debt I didn't create and didn't want. Don't blame me, blame the past 100 years of fiscal policy in the US. People will have to suck it up and bear it, or rely on their state and local agencies, or whatever.

Subsequently, our new budget options become much rosier. Since this article's only concern is the budget, let's say we keep the entire population of the USA as is, including the illegal immigrants currently here. So we have roughly 300 million people, and 4 trillion dollars. The result is 13,333 dollars per person. However, let's rule out any money being given to minors. Parents should handle their household's budget, after all, and we don't want to pay people to endlessly reproduce. 20% of the USA's population is under 14, so now we're down to 240 million people and up to 16,666 per person. Here's what I'll do with the money. As the federal government, I have no particular interest in funding education. I'll leave that up to local and state government, where most of the funding for education already exists. Let's put aside 1% of the 16,666 per person to fund a militia (basic training but leave people in the civilian workforce unless we are invaded upon which they will be called out), sumbarines (nuclear delivery vehicles par excellance) missles and the like. Or in other words, 1% of 4 trillion, which is 40 billion dollars. This will be our new military spending. Even with this tiny amount of funding, this would make our military the 6th largest on earth, just below Japan and just above Germany.

As you can see, our governments have been lying to us about the need for such an enormous military to defend our country. Everyone else on earth manages to defend their countries just fine, without anywhere near that kind of money. The only real use for more money than I allocated is for aggressive wars, which is reflected by the fact that the US is the only country currently engaged in aggressive wars in the world.

So now we only have 16,500 per person. What else would I like to do for people?

Universal Misfortune Insurance: Let's say you're the victim of a natural disaster, a bank failure that steals your entire life savings, a health crisis unrelated to old age, an accident at work, a car wreck you didn't cause, or the like. Wouldn't it be nice if the government intervened? There's no way a private individual of modest means can save up enough money for these disasters. That is why the government should be charitable and distribute money as needed for problems like these. I'm not certain how much money this would cost, but I suspect it would be surprisingly little. Let's start the fund at 500 billion a year and see how it goes. The best part about this is it would put all the insurance companies out of business, saving people more money, probably, than the tax dollars required to fund the agency.

That leaves us with 3.46 trillion dollars left, or 14.4 thousand per adult. Let's set basic cost of living at 12,000 per person. With that, he can save for retirement, save for health care related to old age, pay rent or make a mortgage payment, open up a business, pay for college, pay for food, pay for entertainment, pay for the kids, or pay for a vacation. I don't care how it's spent. I just want a minimum standard of living for everyone in America, such that no one has to suffer in a country so overwhelmingly rich such as ours. I also want money that meets all our country's needs, that is not connected to various practices. For instance, having children doesn't net you any more money. Nor does giving to charity. Nor does running a church. Or being unemployed. Or being old. There is no way to game the system, no one is better off than anyone else. Every month, at the first of the month, 1,000 dollars will be delivered to your bank account. You can spend it, save it, or give it away. If you waste it and end up in dire straits, you will have to ask someone else's help. The government will not save you from yourself. If you spend it all and leave nothing for retirement, tough cookies. It was your choice to die young, it seems, or else work all the way until death. You could have saved the money if you had wanted. If you want to stick all of the money into the stock market every month you get it, and thus make even more money -- good luck. It's not our fault if you lose it all, (though strictly speaking it's impossible to lose it all, since 1,000 new dollars keeps being delivered to you every month) but it's our hope it will make a lot of sound business sense, and increase the wealth of our nation and our people yet again.

Charles Murray called it 'The Plan.' I'd rather call it the 'citizen's dividend.' Money that frees everyone from their basic necessities and gives them the tools to make choices about their lives. Do they want to spend ten years in pursuing a degree? That's now possible. Do they want to start a family early? Go ahead. Do they want to save massive amounts for old age, or just enjoy their youth? Either way now they can. Incidentally, this solves all problems caused by free trade or machinery caused unemployment and the regressive nature of the sales tax. Yes, sales taxes will take heavy dents out of the working class -- no, it won't matter. The 1,000 dollar a month check will easily cover the tax for the working class. If you just lost your job because it was more efficient to outsource it, no worries. Your check in the mail can't be outsourced. You earned that by being a member of our nation, fair and square.

Will this kind of money mean lots of people laze about unemployed forever? If so, what of it? We can afford it, and there's no point in people working for less than 12,000 a year anyway. Most such jobs are makework and should be abolished anyway. If people want more money than 12,000, which honestly is a pretty bare bones existence, and far below what most people expect to have as spending money for themselves today, they will have to work. Many people also enjoy working. Furthermore, this gives millions of women the chance to contribute financially to the family (with their citizen's dividend of 12,000) while staying at home and taking care of the kids, doing chores, talking with their friends and neighbors, and all the rest of that feminine world. This is an unprecedented opportunity to save the nuclear family and restore traditional gender roles for all those who pine for them. (And yes, many women would like to be housewives if they could afford it even today). Finally the community would be recognizing the worth of the mother and housewife, and provide them with a material compensation for their effort, such that they don't have to abandon their kids simply to feed them anymore.

Over time, I would hope that with this monthly check, and the abolishment of the estate tax, and regular investments into the stock market with this extra citizen's dividend windfall, the affluence of each generation would rise above the last. From there people could enjoy even better than a minimum standard of living. Poverty and want would have to be read about in our history books, because no one in their lives will have seen them. That first little bit of capital, if saved and transferred from generation to generation, could add up to a tremendous reserve of wealth. It would be nice to be giving our children fortunes, instead of massive national debts, for their inheritances.

Amazingly, that still leaves us with 570 billion dollars left over. Lets add 70 billion dollars to the 112 billion I left in the original budget, distributed in such a way to promote worthwhile government projects or make up for oversights I neglected when initially cutting everything.

As for the remaining 500 billion? Maybe we could invest it into some amazing science project, monument, or the like. But I think the simplest solution would be to give it back to the people. Whatever money is left over after the funding I've given, I'll just cut the tax rates that amount. Everyone already has everything they need.

In addition, I hope to increase business productivity by eliminating affirmative action. Studies have shown that affirmative action presents a 4% drag on the GDP every year (In other words, 560 billion dollars!). I will abolish it and let companies hire whomever they feel is qualified. Those who no longer get their dream job? Too bad. They still have 12,000 free dollars a year to meet their basic needs with. Merit is the sole reason people should have a job. Crying about how you 'need' the job no longer works, as the citizen's dividend covers all your needs. This will generate extra revenue for everyone and yet again provide a buffer for any miscalculations in my budget.

Free trade with everyone will also increase the general wealth of the country and make businesses happy. This is a People's Budget, but it is also far more pro-capitalist than any current US party is offering. Business will do better than ever before, they have nothing to complain about.

So there you have it. No proposal for 100% taxes on everyone, in fact, I propose to cut taxes overall. No need to get rid of any under performing minority -- we can afford all of them. No stripping of people's most treasured boondoggles -- the citizen's dividend makes up for all of them. No reneging on our national debt, no deficit spending, instead I'll pay all 11 trillion dollars back in 3 years. ((When does the current government intend to pay off their debts? Ever? They can't even stop the deficit.))

It just goes to show that by properly distributing our nation's money, we could all live happily. It just goes to show that all unhappiness in America, all financial difficulties, all poverty, is due to bad government. We could end poverty in America in ten years -- the current government never will. It also goes to show that even with the human capital we currently have, 60% white America, so many problems could be solved. With a 100% white America, it would become positively embarrassing. It would be the most blessed nation in history, and the envy of the entire world.

So can we get all the minorities out of our country? Who knows. Maybe we can't. But we could still introduce a citizen's dividend while cutting the military, social security, and medicare. We can still eliminate the income tax and replace it with a flat sales tax. It's a rare opportunity to offer a policy that truly does make EVERYONE better off at the end, a policy no one in their right mind would oppose. The People's Budget is one such opportunity. I hope America doesn't waste it.


Anonymous said...

Keeping NASA is _not_ a good idea. They've wasted their money worse than just about any other agency.

Diamed said...

There's no way that can be true. For one thing, we spend pure pocket change on NASA. 17 billion a year, even if it is pure waste, is no competition at all with the wastefulness of social security, medicare, welfare, or the military.

Second, NASA has accomplished real and important results with its programs. Voyager left the solar system, we found water on mars, we brought rocks back from the moon, we've collided with comets and looked at their cores, used the Hubble to study the interior of Jupiter and the furthest galaxies, discovered extra-solar planets. . .why on earth would you call that wasted money? At the very least it helped propel satellite tv and internet connections and the GPS system.