The Comeback (18 page)

Our long-lasting war on drugs has been an expensive failure, costing taxpayers billions of dollars in judicial, penal, and incarceration programs. Struggling local police departments now pursue marijuana violators because they receive federal money as an incentive. Yet jails are then filled with these so-called felons, at a huge cost to state and local government.

Other victimless crimes have wasted societal resources and simply make no sense to prosecute, especially in light of the federal, state, and local budget challenges we face. Moreover, too many lawyers are facilitating spurious lawsuits on individuals and businesses. What is compounding these problems is that there are no real penalties for filing frivolous lawsuits (unlike the “loser pays” practice in England). One result is that
businesses can be ruined by lawyers bringing lawsuits every time a company stock goes down, someone is injured, or some other perceived harm occurs.

The third role of federal government is to promote the general welfare.
This is a laudable challenge for any society, but the promise cannot be unlimited and requires setting standards and priorities. For example, is every American entitled to clean water? That deals with infrastructure. On the other hand, is every American entitled to own a home? This view, aggressively pushed by politicians onto federal regulators, led to the sub-prime mortgage debacle, which almost collapsed the American and global financial systems.

In other guises, promoting the general welfare has come to mean universal health care or cradle-to-grave social programs. Indeed, we are paying the price today for unrestrained good intentions. I do believe that government should help its citizens at certain critical times. No American should die from hunger or untreated disease. With notable exceptions (severe disabilities and old age), this aid should be temporary and designed to
incentivize
people to keep trying to improve their lot.

But what about federal spending that doesn’t fit into one of these three categories? Again, any additional spending should still be subject to triage and priority setting. Should we subsidize crops that are not healthy for Americans? Should we be laying off teachers and cutting the class size of non–special education students so we can ensure that every special-needs child has personalized education? Should we consider the cost of keeping terminally ill patients alive? The “death panel” accusations as part of the 2009–2010 health-care debate were a deliberate perversion of a commonsense bipartisan
effort to compensate doctors for discussing end-of-life options with patients.

I have some personal views about how such analysis and triage should proceed, some of which include the following procedural suggestions:

Identify all government spending by whether it invests in and promotes the future of our children, or is a clearly rational response to a specific, high-priority need.
I have previously explained why our nation’s future depends on future generations.

Require measurements in all government spending programs to assess whether the program is working, and include triggers to discontinue any program if it is not meeting the goals assumed when it passed Congress.
This is mere common sense, even if it prevents politicians from promising all things to all people.

Cut overseas spending unless it promotes a clear strategic priority.
Our spending in Afghanistan, Egypt, Iraq, and South Korea is vastly disproportionate to our spending elsewhere, and we need to reallocate resources.

Link the compensation of our federal legislators to our annual national deficit.
For example, a bill might be passed that says, “Congressional salaries will be reduced 20 percent from prior year salaries if the budget the Congress approves is not balanced.” Such an approach might require a constitutional amendment but is clearly worth such a challenge. And if such a measure seems harsh, remember that this is what happens every day in the business world in one form or another (usually the executives are fired or the business is closed). The simple fact is that
politicians are not doing their job by making tough decisions; rather, they take the easy way out by saying “yes” to virtually everything, especially if it gains them campaign contributions.

Require Congress to vote up or down on a bipartisan commission to address our national debt and unfunded liabilities.
This actually was a bipartisan proposal in the Senate, defeated in 2010, that would have created a commission to examine all federal taxes and spending. It would have empowered a commission to come up with a balanced budget proposal and required a simple up or down congressional vote on the proposal. A similar approach was taken a few years ago on the contentious issue of which American military bases should be closed. It worked because Congress voted only to accept or reject the conclusions of the commission. The driver is requiring an up or down vote by Congress on a proposal that cannot be amended. Regrettably, President Obama instead created a bipartisan commission whose recommendations Congress will not be required to vote up or down.

In addition to the above procedural suggestions, I have several specific policy recommendations that I believe are crucial to restoring sanity to our nation’s fiscal condition:

Reduce unfunded pension liabilities for public unions.
In this regard, I have five specific suggestions:

Immediately freeze all government-defined benefit plans.
This means no newly hired workers will benefit from the plans.
They should be eligible for defined-contribution 401(k) or 403(b) plans, which means you pay for these plans as you go.

Stop all consideration of any “card check” bills.
If enacted into law, the so-called Employee Free Choice Act will allow secret unionization and thus destroy the ability of employers to control their pension costs.

Stop requiring that federal government money go only to those using union labor.
This provision is what the Democrats in Congress try to put in every stimulus and jobs bill (under the euphemism of requiring government to pay a “prevailing wage”). This not only raises the taxpayers’ cost of government programs but also expands unfunded defined benefit obligations.

Stop “in-sourcing” government work.
The recent Obama Administration initiative to shift work from private employers to government has been executed with questionable ethics and does not consider the enormously higher future costs of using government workers and the overhead that supports them.

Rescind local, state, and federal government-defined benefit plan obligations to unions as the sponsoring localities declare bankruptcy.
This is unpleasant and unfair to those that have worked careers with a promised pension, but employees are creditors like everyone else, and unlike the pre-packaged GM bankruptcy, we cannot throw over all other creditors in favor of one class. Yes, it is most unfortunate that we must focus on the benefits of long-tenured employees, but as our
nation’s fiscal woes dramatically mount because of spending promiscuity, we must make tough decisions.

Reduce Social Security spending.
The social security obligation is financially choking our nation, and soon we will have very few workers supporting an aging population that is living longer and longer. Fortunately, we have difficult but straightforward solutions. First, we must raise the retirement age before payments are made. Second, we need to means-test the payments to recipients. Third, we must stop automatic cost-of-living increases. Although these break the “contract” for some contributors, we can no longer let our older generation steal from the younger generation.

Cut Medicare and Medicaid spending.
Most importantly, we must do the following:

Reform medical malpractice costs and incentives. Simply by limiting jury awards in malpractice cases, we would save $54 billion over the next ten years according to the Congressional Budget Office. If doctors’ malpractice premiums can be lowered, if they are not discouraged from practicing defensive medicine, and if they can spend their time outside a courtroom, then their reimbursements can be slowed because their costs don’t have to be raised.

Reconsider end-of-life treatment policies. The last few months of life’s treatment is estimated to consume one-third to one-half of all health-care costs. To address this problem, when getting a driver’s license every American should be asked to state his or her preferences for end-of-life care. More provocatively, a person could choose to forgo end-of-life non-palliative care in return for a cash payment
from the government, which could be given to the heirs. The issue is not the falsely named “death panels” but rather free choice by Americans when they still have the capacity to make the choice.

Reward innovation that cuts costs and/or improves health. Drug companies are now incentivized to develop and test variations of drugs to extend expiring patents. Such drugs often provide only marginally improved benefits. Instead, every treatment must be measured relative to its cost and the benefit it confers. Further, doctors and drug companies that develop game-changing drugs and treatments should be recognized and rewarded.

Reward and encourage healthy lifestyles. With two-thirds of Americans overweight or obese, and with “lifestyle” choices contributing to the bulk of American health-care costs, from diabetes to low infant birth weights, this is a realm of potentially great savings. First Lady Michelle Obama is right to focus on childhood obesity. Its societal cost is huge.

I should note that the 2009 and 2010 congressional debate about health care was disingenuous about solutions and actual budgetary impact of the so-called “reform.” The “scoring” of the law was deceptive on many levels: It assumed six years of expense compared to ten years of revenue. It assumed a 21 percent cut in physician Medicare reimbursement, which was immediately restored in May 2010. It assumed $350 billion in “unspecified” Medicare cuts. It did not even include the $100 billion it will cost the federal government to operate the program. We cannot tolerate such deception by our politicians.