This is an interesting question. It’s not clear if you want philosophical answers or specifics. It’s also not clear if you’re asking about our government or any government, or if it is federal government or all government. So with those caveats, I will go for specific federal government actions right now.
1. Stabilize the business environment. We need jobs and that isn’t going to happen until business has some clue as to what the future holds. We need to extend the current tax rate, shelf Cap N Trade, repeal the Health care bill, and get rid of the ridiculous financial reform that didn’t even address the problem. Basically provide a stable business environment where investment is encouraged rather than penalized.
2. Fix the regulatory environment. For decades we’ve been piling regulation on top of regulation. When we encounter a problem we don’t fix it we simply pile more regulation on top of the old bad regulation. In 1999 we gutted Glass-Steagall, which is one of the major players in the current recession. Instead of fixing the problem by re-instating Glass-Steagall, we decided to leave that alone and create a new financial reform, which completely misses the point. In 2002 we passed Sarbanes-Oxley, which costs American corporations on average $1 million to comply and didn’t fix the problem it was created to address. The books are fraught with this type of regulation that is killing business and not fixing the problem. We need a complete overhaul of the regulatory environment. Based on studies done covering the cost or regulation, we spend about ⅓ of our entire GDP on regulation. If we fixed that problem the recession would be over. And our deficit would be fixed.
3. We have got to streamline our government. The constitution lays out some fairly clear guidelines about what should be federal and what should be state controlled. If it is a state function, let the states do it. If it is a federal function do it right. Currently there is so much overlap between what should be state and the federal government that we duplicate the effort and double the cost. Education is a clear example. The federal government spends $100 billion/yr on education and it is a state function. The DoE has a $50 billion budget but education funding is done in over 100 different federal agencies. So if you want money for education you can apply at one place and if denied, you simply go to the next. Eventually some one will cough up the money. If you’re really clever you keep going and you may get the money from several different agencies. Hell, they don’t coordinate and have no clue what has been granted elsewhere. And it’s a states function, not federal.
4. Balance the budget. This is not easily done and will require a lot of work. The simple answer is to just raise taxes to cover the shortfall. Unfortunately, that would kill our economy and the shortfall would simply get bigger. Streamlining the government and fixing the regulatory environment will go a long ways to reducing the deficit. But we need to look a bit further. Currently no one wants their pet projects or entitlements cut. And frankly I look at most of the big entitlements (SS Medicare, etc.) as a last resort. At least as far as cutting the benefits. But there is no reason we can’t fix the abuse and corruption. First we need to break this down a bit differently. Social Security is running about $500 billion. Revenue from employee and employer contributions add up to about the same $500 billion. Set that aside as a fund to be streamlined and should be self supporting. We look at mandatory spending as something we can’t cut without reducing services but we’re look at it wrong. Mandatory spending is not really mandatory, it only means we don’t go through the congressional appropriations process. So things like congressional salaries (and staff) and presidential salaries, are considered mandatory spending. Hell even the TARP is in ‘Mandatory Spending’. When congress votes themselves a raise, it becomes mandatory spending. It is not sacrosanct. and needs a little visibility. Medicare spending is about $500 Billion and the medicare revenues are about $200 billion. The three hundred billion shortfall needs to be addressed. A large piece of it is fraud and abuse (same thing with Social security). Obama feels he can pull about $50 billion out just in fraud and abuse but he has already spent it on his health care. Hell he spent it before we even know how much is there. And he spent it on another underfunded entitlement program. We just can’t do that if we plan to balance the budget.
5. Defense is an integral part of the federal government. It is too high. Cutting programs from defense however is not for the feint of heart. But it would make sense for us to begin charging for some of our foriegn defense. We maintain a large military presence in S.Korea and Berlin. If they want us there, they should help to pay for that presence. If not we should close down. It is nice to be the worlds police force but at some point the world needs to help pay for it.
Anyway, these are just a few of my favorite things. Much more detail is warranted but time and space precludes it. If we get out of this recession, we can then go for all the social reform and welfare projects that seem to be so popular and drive ourselves back into recession. But let’s at least get back on an even keel before we drive ourselves into bankruptcy.
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Composing members:
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