The way that the government operates is very interesting to me. Annoying, to be certain. But interesting. Take a look at this byline on a recent story in the Charlotte Observer: (County officials) agree that county won’t shift entire cost of programs to users. They are flat-out saying that the people using facilities won’t pay the full cost for doing so.
Transit is a mess. The costs of riding the bus only covers a percentage of the cost required to operate the bus. So we spend another $6 billion to subsidize trains, too.
A fellow blogger recently posted an entry on social security to his blog. It was actually an interesting piece, but it doesn’t seem to be available on the web (I read it through Bloglines). Apparently by paying in approximately $36 thousand dollars per year, he can currently expect to receive annual benefits of $31 thousand dollars per year, assuming he waits to age 70 before claiming those benefits. That’s about 86% of the dollars put in. Yes, a negative return. Of course, there are all sorts of calculations, and you’re not going to get a one-to-one ratio of years contributing to years withdrawing, and the yearly amounts vary, and today’s estimates won’t be what he’s actually paid.
But doesn’t it seem odd to anyone that you work for 50-odd years, contributing $X to your “account”, and when you withdraw the money, a process that will take maybe 30 years, you get 86% of the money contributed on an annual basis? Even a 0.5% savings account would return better than that. Of course, the problem is that the government doesn’t actually save that money. They spend it. Then they pay the bills of those who are withdrawing with money from those who are “building their accounts”. Thus, no reserves.
The plans of the government are so out of whack with fiscal reality that they are forced to grab whatever fees they can just to try and pay the bills. Maybe instead of extorting the populace, they could cut programs that don’t pay for themselves, and let people try their own hand at it? It can’t be much worse than what the government has done thus far. Maybe providing services that people won’t pay for indicates that they aren’t worth providing. Is that concept too hard to grasp?
Comments
2 responses to “Fiscal Responsibility”
Hi Eli –
You make some really good points. The auto is certainly no more deserving of heavy federal subsidies than the bus or the train. My apologies for not making that clear.
But you touch on one solution: Let the autos go it alone. As you mention, costs in Europe are much higher than they are here in the US. Rather than continued government subsidizing when budgets are in the red across the country, wouldn’t it make more sense to work the most on programs that can pay for themselves?
Where is it written that the government must pay for programs for us? It’s not like people aren’t paying anyway. It’s just going through taxes instead of through fuel costs (for instance). I, for one, would much rather see the costs borne by the components that make up that cost, than to have my money go to wherever the government decides. If some programs fall through the cracks, so be it.
The main point being that perhaps we should stop expecting the government to do everything for us, and still be upset that they raise taxes. Let’s drop the programs that don’t pay for themselves and put the costs where they really belong. Then the government won’t be able to hide behind all these smokescreens.
Consider that most of our government programs don’t pay for themselves or don’t pay for themselves directly.
There are some expenditures that pay for themselves down the line — X dollars spent on the Headstart program means X+Y less dollars spent on prisons or wellfare, and X+Y dollars more coming in as taxes from a productive and happy citizens. I don’t have the exact numbers but I’m just using Headstart as an example.
Then there are the more complex cases like your bus example; which is good but doesn’t tell the whole story. Car transportation is heavily subsidized. The taxes on fuel, registration and purchase only cover a fraction of the costs of maintaining roads, parking, traffic cops, and emergency services (motor vehicles causing more injury and death than cigarettes and handguns combined). And then you have the short and long term costs of pollution produced by cars which is huge.
And yet almost no one is arguing to let the auto go it alone — the cost of driving would at least double! Look at the cost of fuel, parking, and vehicle licensing in Europe if you want a taste.
So for those who either can not afford a car (or gas or insurance) or who choose not own a car, and take up the road, or contribute to global warming, it seems sane and fair to spread the subsidy around a little bit, by giving a little for buses, trains, sidewalks, bike lanes, etc.