Skip to comments.Thomas Sowell: Another Spending-Cut Plan. Cut Subsidies to Billionaires!
Posted on 04/12/2011 6:27:10 AM PDT by SeekAndFind
Since everybody seems to be coming up with plans on how to cope with the skyrocketing national debt, let me try my hand at it too.
The liberals easy solution is just to increase taxes on the rich. But, if you do the math, there arent enough of the rich to cover the huge and record-breaking deficit.
Trying to reduce the deficit by cutting spending runs into an old familiar counterattack. There will be all kinds of claims by politicians and sad stories in the media about how these cuts will cause the poor to go hungry, the sick to be left to die, etc.
My plan would start by cutting off all government transfer payments to billionaires. Many, if not most, people are probably unaware that the government is handing out the taxpayers money to billionaires. But agricultural subsidies go to a number of billionaires. Very little goes to the ordinary farmer.
Big corporations also get big bucks from the government, not only in agricultural subsidies but also in the name of green policies, in the name of alternative energy policies, and in the name of whatever else will rationalize shoveling the taxpayers money out the door to whomever the administration designates for its own political reasons.
The usual political counterattacks against spending cuts will not work against this new kind of spending-cut approach. How many heart-rending stories can the media run about billionaires who have lost their handouts from the taxpayers? How many tears will be shed if General Motors gets dumped off the gravy train?
It would also be eye-opening to many people to discover how much government money is going into subsidizing all sorts of things that have nothing to do with helping the poor or protecting the public. This would include government-subsidized insurance for posh and pricey coastal resorts that are located too dangerously close to the ocean for a private insurance company to risk insuring them.
This approach would not only circumvent the sob stories, it would also circumvent the ideological battles over whether to cut off money to Planned Parenthood or National Public Radio.
The money to be saved by cutting off agricultural subsidies to the wealthy and the big corporations is vastly greater than the money to be saved by cutting off Planned Parenthood or National Public Radio, much as they both deserve to be cut off.
If spending cuts are to be done strategically, a good strategy to follow would be that of General Douglas MacArthur in World War II. General MacArthur realized that he didnt have to attack every Pacific island held by the Japanese. He captured the islands that he had to capture, in order to get within striking distance of Japan.
In peace as in war, there is no point wasting time and resources attacking heavily defended enemy positions that you dont have to take.
Social Security and Medicare are supposed to be among the most difficult programs to cut. However, it is not necessary to attack all the spending on these programs in order to make big savings.
Instead of attacking these programs as a whole, what is far more vulnerable is the compulsory aspect of these programs. If Medicare is so great, why is it necessary for the government to force people to be covered by Medicare as a precondition for receiving the money they paid into Social Security?
Many people with private health insurance would rather continue to rely on that, instead of being trapped in Medicare red tape. It is not a question of taking away Medicare but allowing people to opt out, saving the taxpayer from having to subsidize something that many people dont want.
It is not a question of forcing people off Social Security either. But private retirement accounts can offer a better deal.
Even someone who retires when the stock market is down is almost certain to get a bigger pension from a decent mutual fund than from Social Security.
By giving young people the option, while continuing to honor commitments to retirees and those nearing retirement age, the sob-story defense of runaway spending can be nipped in the bud.
Thomas Sowell is a senior fellow at the Hoover Institution
Left out the billions in welfare to worthless defense contractors. I would bet money someone somewhere is still making jeep parts for the army.
The Federal Ponzi Scheme is collapsing. It resembles the Fukishima Nightmare. A smoking pile of toxic rubble with no solution. Massive inflation and money printing is the only way they will ever pay the bills.
Agree. I have stated many times on FR that you cannot have true fiscal sanity without cutting the billions in overhead, G&A and fringe costs the US government pays out to defense contractors. It is incredible that we allow the Lockheed Martin’s, Northrup Grummans, CSC’s, BAE’s of the world to charge 100 percent overhead
Eliminate ethanol subsidies.
Let corn be corn
Dr. Sowell is right, but I can’t see Congress kicking their big contributers off the gravy train.
Corporate welfare isn’t any better than welfare for the poor. In fact, it’s arguably worse. On the other hand, even though it should be a political slam dunk to cut off subsidies to billionaires, Mr. Sowell fails to mention the considerable political influence these special interests wield in DC. Senators, for example, get pretty touchy when one talks about cutting corporate subsidies in their states.
We should do what Sowell suggests and raise taxes on billionaires.
RE: We should do what Sowell suggests and raise taxes on billionaires.
Sowell suggested ENDING SUBSIDIES for billionaires, where in the article did he suggest raising taxes on them?
I think we should quadruple the taxes for:people in the movie, television entertainment and music industries, as well as professional basketball players and union leaders.
US life has been good to them. Let them contribute their “fair share.”
Why don’t we put Thomas Sowell in charge of the Republican Party? It might revive with him directing it.
We should do what Sowell suggests as well as raise taxes on billionaires. That will get our debt paid down even faster.
IIRC, The Goreacle receives one such subsidy for a mining operation in TN.
The man just has so much common sense! Sarah Palin ought to ask him to be one of her Economic Advisors!
They are not "allowed" to charge 100 percent overhead. They are audited on direct and indirect expenses and then SOME of the costs that otherwise commercial businesses would be able to recover in their cost of sales are allocated to overhead accounts. There are many "unallowable" costs that cannot be included in the overhead rates.
I know DCAA, DCMA, etc all audit constantly. New rates are issued at random times throughout the fiscal year.
I have worked now for 2 multi billion dollar defense contractors inside the beltway doing proposal work. I know how the system works and its a major fraud to the American tax payer.
Unallowable costs typically end up being if you are stupid enough to put on your reciept “Bunny’s adult entertainment club”
All contractors low ball the hell out of their proposal and request change orders over the life of the contract to “get well.” Overworked and incompetent CO’s agree, and boom the tax payer is getting fleeced while the CEO’s of these contractors are making 10s of millions off the tax payer.
I view them (the CEOs and high levels of these contractors) the same way I view welfare queens-useless people living off the dole of the government
That's a pretty cynical view. How do you expect the B-17 mechanics and flight crews to get around the airfield?
It is a bit more complicated than you are representing.
Unallowables are tracked very closely, and there are a lot of legitimate expenses in the commercial business world that are unallowable on government contracts.
A big part of the “overhead” and administrative costs that are factored in and recovered is the extreme cost of compliance with all the ridiculous and excessive regulatory costs associates with government contracts. Certifications, internal and external audits, and various other oversight costs mandated by the government impose significantly greater costs on governemnt contracts than all the fraud and greed and abuse that the executives could even dream up.
Similar stuff was presented in John Stossel’s documentary... “FreeLoaders”. Subsidies are a big issue and need to be curbed.