Three Big Things to Make America Great Again

First, neither Republicans or Democrats are going to change much in Washington unless America goes over a huge financial cliff that would make the Depression look tame.  And without some very creative thinking, that cliff is not that far away.

So the below ideas aren’t really  for the politicos, as they are more consumed in power than in solutions.  So I will assume there is a new political party.  In fact, to make it easy, let’s call it the New Party. You know, new ideas, new people, new principles.  Oh, and the principles….

  • Liberty, our freedoms, are the catalyst of greatness in all things we do; nationally, corporately, and personally.  Freedom is the foundation for success for economics, our society, our culture and especially our politics.
  • To protect liberty, decentralized power is essential .  Think limited federal government and our tenth Amendment as a great framework.   A government that is either too powerful or too weak harms our liberties.  Once a government is too powerful,  its complexity expense will diminish if not kill our liberties.
  • Open, transparent free markets are the best economic structure for a thriving nation.  Markets are not only optimal for economic growth, they are perfect tools for social, political and cultural dynamism.  When considering transforming our aging and inefficient social monopolies, markets should be considered as a primary option unless that option is considered impossible: for instance, the military.
  • Any great nation must be able to defend itself, so building the best military in the world is essential to both preventing war and winning  a war, should one be necessary, to protect our freedoms.
  • Great ideas seldom come from our leaders.  We, the people, are the greatest source of ideas.   When the power of BIG money deafens the ears of our current parties, the needs of the many are ignored.  Since Congress will never be able to mitigate the powers of money in Campaigns, and, frankly, it shouldn’t, the New Party will regulate itself.  No donation will be taken over $195.  [OpenSecrets.com defines a large donation as $200 and up.  In the last presidential election, 2/3 of donations collected were large and total edabout $700 million of the billion dollars collected by each party. Only 1/10 of one percent of donors were large donors: our dear elites.]

So of the very long list of possible problems: what would I choose:

Entitlement Reform: How to produce $100 trillion in individual nesteggs.  Create a dual-track solution that allows the current beneficiaries to get what they have been promised and allow workers to save their 7.65% they are currently taxed..    Three proposals that have already been floated in Washington that need to be adopted so that the dual track approach will work.  They are:

  1. Means-test benefits,
  2. Employ a fixed-benefit solution for Medicare (a la Paul Ryan’s Plan or something like it.)
  3. Don’t raise the age of retirement, tie it to average life expectancy minus, say, 9 years, which today would mean retirement would increase to 69,   The retirement ago will float up naturally as time passes allowing savers to plan for their future.

What are the results of adopting a dual track solution.   As people saved more and more people would no longer need benefits because the nesteggs for most Americans will be substantial.  It is amazing how much money most of us can save during 45 years of work if the 7.65% tax is replaced by 7.65% of our income goes to savings and investment accounts (yes, with some protections.)  Were I too save what I was taxed, my nestegg would exceed $700,000, and I am not a rich man.

Add up everyone’s nesteggs and  the total approaches $100 trillion dollars.  And that’s at the low end.

Imagine how many jobs that these savings and investments will create for the economy?  Actually, it is very hard to imagine.  At some point, the saving rate might need to be ratcheted back a bit because their would be too much money saved.   Which leads to….if we create a vast pool of new job opportunities, who will fill those jobs.

Education: Considering the large and evolving permanent underclass we are creating in many of our school districts around the nation, a better educated citizenry might be very useful.  For the last forty years our education system has doubled in real costs.   We now spend twice what other industrialized nations spend and yet we are falling behind.

How can we update the aging relic.  I like to think that Goldilocks delivers a bit of advice here: test-result, test-result, test-result: this looks good.

Our education solution is one-size fits all.  And its a Yugo.  Markets act like Goldilocks.  They are forever testing and finding new solutions, improving adequate solutions, and killing bad solutions.   The one-size fits all solution is trapped in a stasis.  It is a three-tier, government monopoly run by unions whose key members are not the children.   And the children need advocates, especially their CEOs, Chief Education Officers, otherwise known as their parents, who are locked out of the education equation.  What can we do?

Break up the three-tier government/union monopoly.  Provide states and school districts with one of two options to test and discover great results:  1) For blue states, a continuation of the current structure and, with the right politicians in place, unlimited funds to run their one-size fits all monopoly. 2) for Red states, the ability to deconstruct the government monopoly and open educations markets for a variety of school solutions  (yes, within reason.)  As the Blue states continue to send money to schools focusing on Teach-side solutions, Red states will send money/vouchers/chits, etc, to the parents (Learn-Side) so they can choose, public, private, religious, online, charter, education.   There should be a simple contract setting objectives to be meet by the school and expected conduct by parents and students.  When things don’t work out, the school can kick the kid out, or the parent, not liking the school, can choose a new school.

Simplify of Regulatory Empire:

Our Congress, in conjunction with the administration/regulatory state has created so much regulation, such onerous, confusing, conflicting, complex, expensive regulation, that compliance costs are estimated to be $2 trillion a year, about 9% of GDP.  Two trillion!!!!

Every product you buy has a 9% tax for lost productivity.  For every buck you spend, the real cost is $1.09.  Put another way, if you earn, $50,000 a year, $5,000 goes down the drain because you government can’t do things simply or wisely.  Do we need regulation? Yes.  Does it need to be this costly.  Not really.   A well-run regulatory environment would have costs, but not $2 trillion, and probably not $1 trillion or even $500 Billion.  Simplicity needs to rule the day, and simplicity is a foreign commodity for lawyers and politicos.

So how do we fix this problem.  One fix is quick and easy, and one is cultural.

First we roll back the most onerous regulations. Dodd Frank, Obamacare, Net Neutrality, Sarbanes Oxley,  Common Core and No Child Left Behind.   There are plenty of large costly targets.  As part of the roll back, but with future simplification, the tax code can be reduced to one page by paying effect tax rates instead of the high rates we see published.  Tax rates vary from 10% on the low end to 39.6% on the high end.  When doing taxes, and taking into account all the credits and preferences in the 80,000 pages of IRS rules, these right rates are reduced to what we actually pay: the effective rate.  The lowest rate turns into 1.9%, the richest pay about 24%.   My 25% rate turns into about 12%.   Throw the code out and pay the effective rates.  As important, if the government pursues the dual track retirement system, in about 15 years, the a single-low tax rate of about 9% can be instituted.

The cultural problem with our regulatory state is different. Congress passes laws and regulations and then leaves the administrative state (mostly lawyers who are not good problem solvers but seem to like long, complex regulation) to fill out the rules to support the law. abdicating their Constitutional responsibility.  This is simply nuts and irresponsible.  Congress should be writing the rules.

As much of Congress is made up of lawyers, having our politicians in problem-solving,/rule-making mode may not be much better, and a bit chancy.  Regardless, Congress is elected and accountable and the administrative state is not.

The key here is simplicity.  Simplicity is hard.  Einstein noted that if you couldn’t explain your solution to a six-grader you probably didn’t understand the problem.   Try reading the Federal Register and you will quickly discover no six-grader is coming to this party.

Though some good answer might come for insider in Washington, the best answers, like I believe we will find from this website, come from folks like you and me.  Perhaps we can inaugurate a X-Prize solution for each new regulation proposed.  Give the winner a sizable tithe for winning and go to the next problem.

Let me know what you think.

CIVIL is political movement to clean up the toxicity of American Politics