First up is news that Serbia has to cut 20% of its federal employees in order to receive a round of funding from the IMF. This ties in with a crackpot idea I had about the US federal government quite ways back that I don't think I have mentioned before. Let me just say that its not like I've written a white paper detailing budgets and personnel issues in order to sort out how this would work. So with that in mind.
In the most simplistic form close every federal department except the defense department (and FBI etc). Farm everything out to the state and pay for the state to administer the programs with federal dollars but with out the federal buildings or federal personnel. As for the personnel, continue to pay them for two years which is a reasonable amount of time for them to find work.
This would also include replacing the IRS and federal income tax as we know it with some sort of flat tax for everything except groceries, anything to do with healthcare and gasoline (including home heating oil or natural gas). [snark]Maybe we would charge a double flat tax on soda though.[/snark]
This idea is only half-serious but the federal government is too big and there is plenty of redundancy with what the states do. The savings from selling some building, no longer paying rent on others and no personnel costs (after two years) would result in a colossal savings.
A little more serious we have this article about the Chilean stock market. The article notes that Chile has lagged some of the other Latin American markets this year, which it has. The chart covers two years and reveals some interesting action.The big reason I invest in Chile, and why have written about it so many times over the years, is captured in the chart. Chile is a commodity based economy that is generally very conservatively run. This created the chance that it could go through cycles on a slightly different timetable than the US market which is what happened; it bottomed out much earlier and the ride down was much less.
Also included on the chart is the Bovespa Index from Brazil, another market I have been a fan of for many years. That peaked much later than the US, bottomed out at about the same time and has come back much more than the US. Chile has sort of split the difference between the US and Brazil. In the context of needing to invest more into foreign stocks there are not too many emerging markets that are less volatile than the US. I have owned one of the banks for clients, there is also an ETF from iShares and a closed end fund along with several other individual ADRs.
The Patriots-Bills game last night was crazy and not to overly obsess on the little things but did the Chargers powder blue jerseys seem to be not quite, I don't know, powdery enough? It didn't quite seem like the correct shade of blue, anyone else notice this?
13 comments:
Be careful what you wish for
if the ever start a national sales tax they will say it is for something noble and it will only be 0.5% or 1%. They may even offer to reduce other federal taxes at first.
Remember they got federal income taxes passed because they said it would only be 1% and maybe a 2% level on the rich.
In the end there will be no exemptions for anything national sales tax will be raised to 15+% and income taxes will likely be raised as well.
Why spare the DOD and FBI? Declare victory in our Land Wars in Asia and get out. Get out of Germany, Korea, etc. They can defend themselves. Keep a small effective navy as T. Jefferson advised to keep the sea lanes open.
Law enforcement can be handled on a much more downsized local level if it's focused on real crimes: violence, theft, etc. And not on pot & internet poker, & downloading music.
I agree with Anon 7:49, absolutely. The DoD is the most egregiously wasteful branch of the gov't, and what worse they waste most of the money overseas, where we don't even get a trickle-down benefit. And don't even get me started on the "war on [some] drugs."
As far as laid-off employees finding "other work," I know you're not serious, but just to bring the point home: we already have something like 20 million unemployed chasing 2 million job openings, and you want to add what to that number?
Anyway salaries for civil servants is such a small fraction of our fiscal problem, it doesn't seem like the best place to start. Laying off a million federal workers would not come close to balancing the budget, and what about Medicare?
Here's another angle: When Eisenhower was president, we have a top tax rate for rich individuals of 91%, and corporations paid 50% of income taxes. I don't have to tell you how those figures have eroded. Yet we are less prosperous, now and Norway (for example) with 60% income tax (plus high gasoline tax) is hugely prosperous. So I don't think "too much gov't" is as much of a problem as too little gov't revenue--aka too much political clout by the few greedy uber-rich.
The ten year cost of a million civil servants is roughly 3/4 trillion dollars, possibly more depending on benefit costs. Funny someone would think this is not significant.
hey Roger - sounds like you may be a libertarian after all. Welcome. As to the Chargers - they look like cheap imitations of UCLA.
AAlan, where to start? You must be a civil servant or, at least, benefit from wasteful gov't non-defense spending. Every study I have ever read shows DoD is the most efficient part of the gov't; and, whether it is efficient or not does not matter, as it is one of the few things the gov't does these days that are actually authorized by the Constitution. The 10th amendment, in theory, prevents the the federal gov't from doing anything not specifically called out in the Constitution for it to do, that covers about 90% of the present-day civil servants (i.e., making what they do technically unconstitutional). Or, maybe you would like to point out the section and paragraph that calls for Medicare, Medicaid, Dept of Education, Human Services, Social Security, ObamaCare, etc.?
Accounting friends in civil service who have worked in both DOD and other agencies agree that the defense department is the most productive. The bad news is they think all civil servants are unproductive in all agencies.
Higher Highs and Higher Lows
I say this looks like a bull market.
Rog,
As you said, its just a suggestion, but 1st, how many of the laid-off Fed employees would end up on state payrolls?, and 2nd, I know its not state, but local, but evidently, you've never watched a City of Chicago Streets and San crew at work...4-5 fat white guys, standing around watching the single non-white guy in the hole, swinging a pick, or wielding a shovel.
Back to the drawing board...
OLd Trader
how much do the fat guys get paid and how fat would I have to be XD
Why not go all the way and stop piping tax money through the federal government and back to the states - just let the states raise taxes for whatever programs they value.
I suppose the "right" time to downsize the federal pay-roll is during a cyclical expansion but then everyone is feeling profligate...
While we are reforming I would also propose outlawing the business income tax. This tax is regressive because the people who actually pay it are the employees through lower wages and customers through higher prices. Also corporate taxes give business inordinate power with congress; 'don't bite the hand that feeds you...'
After BHO and the progressive mob ruining America, the compelling question for a national defense budget is simply, "DEFEND WHAT?"
I agree with Matthew that we should let the states tax and decide what needs to be done in there state. The Feds don't need to tax and hold the money over the heads of the states. The way it is today states that curry the most favors get the money, not the states that need it. This is why Alaska got tons of money even though it has less than a million residents. Also, our founding fathers envisioned more localized control in government so the citizens could have more say in the matter. It is much easier getting ahold of a state senator than a Congressman.
Second, those who are saying the Defense Department is efficient should work there first. They may be more efficient than other branches, but that is like saying Moe was the smartest of the Three Stooges. We spend 50% of the worlds defense dollars to defend 5% of the population. We can cut some spending folks. With over 4,000 bases/sites outside the US, we can cut back. Just so you know I am not a tree hugging hippie. I am a Veteran.
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