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October 5, 2013

Maine Voices: Deadlock offers Washington ‘teachable moment’ on federal spending

By James Oaksun

SACO — In 1952, educational theorist Robert Havighurst wrote: “When the timing is right, the ability to learn a particular task will be possible. This is referred to as a ‘teachable moment.’ It is important to keep in mind that unless the time is right, learning will not occur.”

Now, the time is right. Now, at the impasse, we’ve reached the teachable moment. Our representatives don’t want to address the fundamental issues or consider any solution beyond the next debt ceiling expiration, continuing resolution, fundraiser (those don’t ever “shut down”; they are not “non-essential”) or election.

A visionary with a clean sheet of paper would fundamentally re-examine federal taxation and spending and government’s role in our lives. We must bring government into the 21st century through a grand compromise done once that totally pleases few.

One solution would have six components:

TAX POLICY

The Internal Revenue Code and associated regulations total more than 9 million words – 12 times longer than the Bible, 10 times longer than the complete works of Shakespeare.

First, eliminate the IRS, scrap the code and regulations and create a system that will be simpler, less cumbersome and less discouraging of work and innovation. Ultimately, repeal the 16th Amendment to the Constitution.

MILITARY

Our military expenditures exceed those of every other country on the planet put together. We must rethink our commitments around the world, adapt to a multipolar geopolitics and reduce military spending by at least 40 percent.

RETIREMENT AND SAVINGS

Younger generations (people under age 40) deserve a system where they will see appropriate returns on retirement savings. Today’s Social Security will not meet that objective.

Phase out the current system over the next 50 years. People over age 40 will remain in the current system. Those between 30 and 40 will have the option of staying in the current system or participating in the new system.

Anyone under 30 will be in the new system, which will resemble a super 401(k) funded by mandatory individual and employer contributions.

The funds will be invested in a balanced mutual fund comprised of intermediate term bonds, as well as securities that track the S&P 500 index and the prices of key commodities. Loans against one’s account balance will be allowed to help finance a home purchase or education expenses.

WELFAREAND EDUCATION

Washington will transfer welfare and education commitments to the states, in exchange for assumption of states’ health care costs as explained below.

COMPREHENSIVE HEALTH REFORM

First, eliminate the cartelization, rules and regulations that foul the system. This would include, but not be limited to, changes in licensing requirements, medical school certification, specialty admission, certificates of need and Food and Drug Administration policy.

Next, create a system to guarantee all Americans catastrophic medical coverage (beyond a modest annual deductible).

A randomized selection process will divide the country into pools of approximately 100,000 people selected regionally. Because of the randomization, pool members would be diverse in age, gender, race and, to some degree, geographics. Some will be young; some old. Most will be in good health; some won’t be.

Private health insurers will bid on contracts to provide coverage to these pools, all of which will have essentially the same risk characteristics. This program would replace Medicare, Medicaid and all individual and group health plans, and will be financed through the new tax mechanism. It would be separated from employment and become a universal benefit of living in this country.

BALANCED BUDGET AMENDMENT

The final step will be a constitutional amendment mandating a balanced federal budget, except in dire national emergencies.

If politicians were angels, they could be trusted to approve deficit spending in bad times, to be repaid with surpluses when good times returned. But they are not angels, the deficits continue and the surpluses never materialize. It is time for the political implementation of John Maynard Keynes’ theories to be consigned to history.

What are the key lessons in this teachable moment?

Sometimes you have to say “no.”

Wants are different from needs.

Priorities must be set.

Local solutions are often better than remote and distant ones.

We do not always have the right answer for every international problem, and oftentimes the best thing we can do is stay out of it.

Just because something was a good idea 50 or 100 years ago doesn’t mean it’s a good idea today.

And our species is capable of moving forward inexorably.

— Special to the Press Herald





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