So the subject of "limited government" is something that I have been thinking about a good deal as of late. Basically I wonder what "limited government" really means. Now I consider myself, on paper, a limited government guy. "Free-market capitalism, fiscal conservatism, low taxes, limited government." to different people, this term can have different meanings however. For some people, the term "limited government" means no Social Security, Medicare, or Medicaid (or no equivalents) and very lax regulations over industry and commerce. To others, it just means a limited social welfare state, but not an outright European social welfare state (where benefits from the government are much more generous than what we tend to have in America). To some it means a large defense budget, but a limited social welfare state, to others it means a very miniscule defense budget.
Now as I said, I consider myself to be a limited government guy, but in practice, I wonder if I am really as limited a government guy as I like to think. I have no problem with programs like Social Security, Medicare, and Medicaid, or at least, with what they do. I am not sure if I agree with HOW they function, as they are all government-run and seem to be on an unsustainable path. However, on the other hand, I am not entirely sure if the alternative proposals, such as forms of individual accounts people would pay into, would work either.
Now the standard conservative/very libertarian argument goes that we should leave things like retirement and healthcare to the market and the private individual. If you retire and you haven't save enough to survive, then that's your fault. Well okay, I understand that argument, but how is it to be done in a secure manner? A lot of people did just this, thinking they had saved enough for retirement, only to then see their holdings in the stock market completely plummet with the recent financial crisis.These are people who saved money and were prudent, and still got screwed in the end.
If one wanted to store all of their money in a bank, well bank accounts are only insured up to $150,000 I believe (or was it $250,000?). So if you put $1 million into an account in some bank and then the bank folds due to a financial or economic crisis of some kind, the Federal Deposit Insurance Corporation will only reimburse you with $150,000 of your money. So you can still end up up the creek without a paddle, so-to-speak (and this is WITH the government insuring the banking sector in this sense; in the old days, before the Federal Reserve and the FDIC, if a bank folded, THAT WAS IT, you were really out of luck).
So while we can argue that the government is a bad manager of money (Social Security is a giant Ponzi scheme technically, what gets paid in by workers today gets paid out to recipients), we can also argue that to just say "Individuals have a responsibility to save for their own retirement and if they don't, that's their fault," is a little oversimplifying it I think.
This is where programs like Social Security and Medicare come in. Social Security is something everyone pays into when they pay taxes. The "idea" of it was what you pay into it is what you get paid out of it, but the way it really works is that what gets paid in currently is what gets paid out to current recipients. There used to be quite a number of people paying into SS for every recipient, but eventually, the system is going to get where there are more recipients than payers. In addition to this, the government also opened up the SS trust fund to spend on other things (one of the most snake-oil things ever done by our government I think). But the idea is that it would provide a secure form of retirement for people, or at least in theory again. Technically, when SS began, most people did not live to be sixty-five years old (which was the age at the time one could begin to collect SS). so most people were expected to die before they would receive it. To make SS like this today, the retirement age needs to be raised to something like seventy-five years old, basically make people work until they die. I don't know how realistic this would be for most people though (would medical ailments stop a lot of people from working, or what if a person is unable to find employment?), or how realistic it would be to even pass it politically as most of the general public assume that SS is meant to be there to allow people to retire and receive a base amount from the government, not to be a program for only the miniscule number of people who live beyond the average age of death.
There are thus multiple ways proposed to make SS solvent again for many more years, ranging from a combination of raising the retirement age, to raising the FICA tax (the SS tax), to raising the cap on income subject to the FICA tax, to getting the government's paws out of the SS trust fund (don't know if this is even doable), and so forth. As mentioned, I do not know if raising the retirement age is doable politically or even practical if it was doable politically. Raising the FICA tax rate can be done, but people won't like it. Raising the cap on income subject to the FICA tax could also be done, the problem with this is that since SS is paid according to how much one paid in, then if the full income of say someone making $2 million a year is to be subject to the FICA tax, then come retirement, a massive amount of money must be paid out to said likely wealthy (or very well-off person). One can of course imagine the political ramifications for this. You'd basically have rich folk getting massive SS payments, which wouldn't sit well with much of the public. Now considering how SS is supposed to function (you get paid out what you paid in), this should be fine, but that still wouldn't stop a lot of people from being offended by it. Populist politics never go out of fashion. The government avoids this whole issue simply by making it where only the first (I think right now $210,000, but I maybe off by a bit) of a person's income is subject to FICA taxes.
Now, what could be done is if subjecting all of a person's income, no matter how much they make, to the FICA tax, we make it where say those making over $250,000 a year would see a cap in how much SS they can receive during retirement, because it would be assumed that they would be wealthy enough in retirement to be okay. The big problem here though is that then you are turning SS into a defacto welfare program. No more would the claim be made that SS is a mandatory retirement program that you pay into to then be paid out of in the future. It would be pointed out that SS is in fact a welfare program for retirement, one in which although everyone is taxed for it, a large chunk of its money would come from higher earners.
As for getting government's hands out of the SS trust fund, such a large portion of the government's budget comes from SS taxes that this is nigh impossible. The government would need to come up with a completely new source of revenue.
What will probably happen is that SS will gradually be phased-out over the years and then eventually be replaced with something totally new. SS cannot be privatized. It can be combined perhaps with some private elements, but privatizing it would not be workable, because then it would be subject to the market, which means peoples accounts could be wiped out in the event of an economic, financial market, or stock market crash. So no matter how privatized, SS would need to retain some form of governmental security.
Medicare is another government program that is very popular. It is essentially a single-payer healthcare program for the elderly. It helps remove a massive burden on the part of the elderly, i.e., how to pay for healthcare. At least to a degree anyway. Medicare is funded by the federal government, via the FICA tax, but it is managed by the states. Medicare has a lot of problems of its own, ranging from high levels of fraud and abuse, to having been expanded beyond its original purpose, to not being financially sustainable in the long-term. Like SS, it may well end up being gradually phased-out over time and repalced with something else altogether.
In addition to Medcare, there is also Medicaid, which is a single-payer health insurance program for poor folk (many of its recipients, from what I have heard, are also among the elderly as well). And then of course there are programs such as unemployment benefits, food stamps, and other government programs. Now as I said, I have no problem with any of these programs in terms of WHAT THEY DO, because I see them as programs meant to serve as social safety nets. They are programs for the elderly (at least for the elderly who can no longer work), the disabled, and those who end up temporarily knocked on the butt due to plain bad luck. They are not an outright welfare state meant to pay people literally not to work. They don't seek to have the government coddle people for their entire lives. In terms of how they are actually structured, their functioning mechanics, I think the big ones (Medicare, Medicaid, Social Security) are badly designed.
The thing is, and I really am trying to find a point to this post as I can't, is that I don't know if adherence to all of these makes me a limited-government guy or not. Take unemployment benefits. One of the arguments made by strict fiscal conservatives and libertarians is that in hard times, charities, churches, and family are who should care for people and provide help, that the government should not be involved in this.
Well okay, I can understand this argument, but a problem is what happens if you have a major economic crisis as we just did, where charitable donations decline to charities and churches right when people need these institutions the most and where some charities lost their entire fortune due to folks like Bernie Madoff, and thus can no longer help anyone? At this point, if charities and churches are seeing a shortage of funds while seeing a massive increase in the number of needy people and families who need help, the government is the only entity with the ability to step in and provide help irregardless of the economy's health.
With regards to things such as government regulation over industry, I very much am a believer in, overall, light and efficient regulation for the economy. Obviously some industries must be more regulated than others, for example the automobile industry is a lot more regulated than the software industry. But overall, the economy should be subject to light, but efficient, regulation. Basically regulation that will do its job of keeping us safe, but not be excessive to the point that it allows big corporations to dominate and stifles innovation, entrepreneurship, economic growth, and so forth.
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