Americans Like The Idea Of Small Government, Not The Reality Of It

Medicare-keep-your-hands-off-my-medicare

Heh.

Americans have a funny way of thinking about big government and government benefits: “big government is only bad when it doesn’t help me specifically,” and, “my stuff from the government are benefits, everyone else’s are welfare,” are two examples that we see quite a bit. The truth is Americans don’t really want small government, we just wont admit it.

The National Review’s Mona Cheren points this out:

[National Affair’s John J] DiIulio writes: “Add our annual debt per capita (about $49,000 in 2011) to total annual government spending per capita (about $20,000 in 2011), and we have a rough ‘big government index’ of nearly $70,000 for every man, woman, and child in this country.”

The difference between Americans and Europeans is that we aren’t honest about our appetite for big government. We hide it through a variety of proxies, private contractors, and public-private partnerships. Leaving aside the Department of Defense, which employs 3.2 million Americans, government employs more than 20 million civil servants. Only 2 million of those are full-time federal workers.

I couldn’t agree more with the sentiment about being honest about our desire for government. I feel that we should always talk about government benefits as either all, “benefits” or “welfare.”

Americans prefer small government to big government — in the abstract. But 60 million receive Medicaid benefits; 54 million collect Social Security; 48 million participate with Medicare; 45 million receive food stamps; 7 million are in prison, in jail, or on parole or probation; more than a million have de facto government jobs working for defense contractors; nearly a million children participate in Head Start; and about 40 percent of K–12 students receive free or reduced-price meals. There’s some overlap in those categories, but it still adds up.

Taking a government check goes down much more easily when you can persuade yourself that you’re only withdrawing money that you have faithfully paid in over the course of a lifetime. Indignant elderly callers to C-SPAN constantly invoke the “I paid for my Social Security” myth. They didn’t. The average beneficiary will receive far more in Medicare and Social Security benefits than he paid for in taxes.

Now, what this article attempts to do is fight the old fight of “big government vs. small government,” in which it fails spectacularly. Its difficult for the right to admit that their agenda is highly unpopular because Americans don’t actually want small government, but this piece does it. Unless we have small government Republican dictator, we are never going to shrink because people don’t want a small government.

What conservatives ought to do is focus on fighting complex government instead. I wrote about this yesterday. Look at the complexity caused by our refusal to admit we want big government. Our government services are a piecemeal of, “proxies, private contractors, and public-private partnerships.” How efficient could we be if our services were out in the open, like in Europe, and directed in a more effective manner to solve specific problems? Much more. Complex government is more expensive than big government because of administrative costs.

More to come.

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29 Responses to Americans Like The Idea Of Small Government, Not The Reality Of It

  1. Pingback: Your Taxes Just Got Way More Complicated | Reason and Politics

  2. Pingback: Reform Healthcare By Reducing Complexity | Reason and Politics

  3. fatherkane says:

    You wrote – “I’d personally like to opt out completely, like the clergy are able to. I understand that you’ve paid in your whole life and deserve that money, but for me personally at 31, its a guaranteed negative return on investment on 6.2% of my income”.

    So you know how long you’re going to live.
    Here’s the problem with ‘opting out’.
    #1 – What happens when the money you have runs out?
    Are you then going to want to go on ‘social security’ or at least expect the Government to take care of you?
    #2 – I have never met anyone who says they have been prevented from making money because they pay into social security.
    Nor do I see all these people who are wealthy by ‘investing’.
    People who actually make money by just investing account for less then 2%.

    #3 – The revenue taken out by those ‘opting out’ would collapse the system which is desperately needed by the other 98%.
    We are all in this together.

    My Uncle is 85. He retired at 65 from BofA very well set. Pension. Several IRA’s. Several 401’s and Social Security.
    After 20 years the IRA’s are gone. The 401’s are gone. He still has the pension(rare these days) and Social Security and since moving into a ‘retirement home’, he also gets a benefit from the Veterans.

    They did not in any way, shape of form live ‘lavishly’. But 20 years and my Aunt having a stroke and living for 3 years, drained them.

    So for anybody wanting to ‘opt out’, go ahead.

    But put in writing that you know exactly how long you are going to live, know every medical condition and emergency that will happen and if you live longer then what you think – you understand no one will help you.

    By ‘opting out’ you have decided you didn’t want to be in this together with the rest of us.

    At 31 (I’ve been there) you feel if not immortal, at least better able to judge for yourself your abilities.
    At 60 (I am there) I understand it does ‘take a village’.

    • My position is that if I am comfortable assuming the risk of opting out of SS I should have the right to do so. By all means, if people want the perception of the security of a state pension, it should be there. I’m sure the vast, vast majority of people will choose to stay in the program. I am suggesting individuals should have the right to opt out and forfeit their benefits. The calculation would be the same as if I never paid payroll taxes to begin with.

      I save 22% of my income in 401(k) and Roth IRA. If I was able to take an additional 12.4% (I still want my employer match) over the next 30 years of work… I’d have enough not to worry about retirement expenses. Or anything. Even a conservative ETF that just follows the S&P would have millions and millions.

      Retirement planning needs not be a collective exercise, like healthcare. I agree entirely with you on the “we’re all in it together” nature of healthcare. Retirement planning? Not so much. I’d actually take a single payer health system and a privatized state pension if I could.

      • fatherkane says:

        OK but two points.
        Again what happens if you run out of money before you run out of life?
        And that’s serious question.
        And again by ‘opting out’, you are taking revenue away from a program that the majority will need simply to survive.
        If say just the top 25% of income decide to opt out, when your generation does ‘come of age’, it will fund less then 10% of the people retiring.
        This would create an even worse problem then what social security is now.
        I think if we just means test and remove the income cap, that should get us past the baby boomers and after that, SS as it stands now would be well funded.
        Oh and I’m also all in for the single payer health care system.

      • There is a chance I could run out of money. That’s the risk I take everyday. I could lose my job or any number of things could occur. I take reasonable steps to manage risk in my life, like wearing a seatbelt. The same with retirement planning. A good plan takes those items into account.

        As for defunding the program, the Swiss have been able to make their state pension partially privatized. Its interesting what they have done. The left loves to use Europe as examples of progressive policies, they need to acknowledge when Europe has successful conservative policies as well.

      • fatherkane says:

        So when (if) you run out of money, just too bad?
        No. Government will have some type of program.
        We need something. Everybody (in fact very few) will save/invest enough to have enough for the rest of their lives.
        If we want to remain a ‘society’, we have to act in the best interests for all – not just some and that means we are all in this together.
        That doesn’t restrict anyone’s ‘individualism’. It just means we are all responsible citizens of our society.
        We place the good of society above selfish needs.
        The ‘good of the many out weights the need of the few or the one’.
        That’s not just a clever phrase out of a movie.
        It’s the foundation for a stable society.
        And that leads me back to ‘complex issues’.
        The Swiss and most of Europe do have successful conservative policies.
        The Swiss and most of Europe also don’t spend 27% – ONE TRILLION DOLLARS A YEAR on their military either.
        Comparing our Nation to Switzerland or any other Nation is comparing apples to oranges.
        WE have the problem.
        WE need to come up with the solution.

      • We need not compare ourselves to other nations, but seeking best practices is a good thing. If there is a better way to do state pensions, I want to enact it. Privatization, or partial privatization is not a scary thing.

        I’m not even suggesting any of this could ever happen by the way; it won’t. It’s just my wishlist that I could have the right to plan my own retirement. In my opinion, saving one’s own money is one’s own business.

        There’s no grantee that our political leaders will even make the necessary fixes to SS by the way, then I’ll only receive 75% benefits. That nearly guarantees a negative rate of return on my 6.2% unless I live to be over 100. I’ll take my chances in the markets.

      • fatherkane says:

        Who is stopping you from planning your own retirement?
        I did mine. And I’ll have SS also.
        And again what happens when (if) you run out of money before you run out of life?
        Answer that question and then you can reverse engineer backwards to a solution for everyone – not just a few.
        Go ahead and invest. But also ‘pay it forward’ for a civil society.
        Taxes, SS, a real National Health care programs are all the price of a civil society and stable society.

      • Again, this is all hypothetical and will never happen. The overwhelming majority of people agree with you and no one is ever going to take my suggestion. However, my solution does address that risk because it allows anyone to still participate in SS. I’d still take another 12.4% in my retirement than in SS any day.

      • fatherkane says:

        First you say you want to ‘opt out’ of Social Security and now you say – “However, my solution does address that risk because it allows anyone to still participate in SS”.
        The risk I was referring to is that as fewer (especially higher incomes) ‘opt out’ of paying into SS, the fund shrinks so that when your generation comes along to collect, less then 10% of the retired population will have ANY benefits.

        Those that want all the benefits but DON’T want to do the work of maintaining a stable civil society are the real ‘takers’.

      • My opt-out idea would disqualify those who opt out from any benefits. They wouldn’t affect the system because they are not participating. This already exists by the way. Clergy can opt-out of SS for religious reasons. I don’t know why I can’t for philosophical or mathematical reasons. They haven’t ruined SS by not participating, I’m not sure why I would.

        The Swiss’ version still requires everyone to save. They just take a part of those funds and put them in the market. Paul Ryan’s SS plan works like that too. He takes 3% of your 6.2% and creates an IRA like account for that money. That money is yours, and if you die is passes to whomever you choose.

        This also increases the net worth of individuals, which is a huge problem in America. That’s probably a much better idea than my opt-out.

      • fatherkane says:

        You – ” They haven’t ruined SS by not participating, I’m not sure why I would”.

        You as an individual wouldn’t. Now take a group – upper middle income and above and just say 50% of them ‘opt out’. The resulting large group taking the revenue away from SS WOULD effect it.
        Greatly.
        You’re trying to compare individual dynamics to group dynamics.

        You – “That money is yours, and if you die is passes to whomever you choose.
        This also increases the net worth of individuals, which is a huge problem in America. That’s probably a much better idea than my opt-out”.

        And when it runs out – it’s gone.

        Again the question you won’t answer – ‘What happens when you run out of money before you run out of life’?

        What are the long term effects of Ryan’s plan of cutting SS revenues in half?
        10 years from now. 20 years. 30 years.
        How stable/funded will SS be for the vast majority because Ryan cut the revenue by half?

        And for those on the Ryan plan – what happens to them when they run out of money before they run out of life?

        40, 50 60 years from now we have an extremely underfunded SS and a growing # of people trying to enter the plan because they ran out of money.

        Look I’m beating as dead horse here.
        You are stuck on you and don’t can’t see the larger picture of the economic group dynamics.

        That and no one is stopping you from investing on your own.

        Nobody knows what the future holds. It’s impossible to save/invest for any and all possible futures.

        SS provides basic dignity via a stable income to the greatest # of people.

        Nobody is stopping you form investing.

        I have never met anyone who claimed that they were stopped from being wealthy because of the tax they paid into SS stopped them.

        What possible rationale is there to cut the funding to a program that needs more funding so that people can invest in IRA’s that once they start using them, eventually the money will run out and the original SS program (now way underfunded) can’t provide for those who are already in it let alone the additional that ran out of $ in their ‘private’ IRA accounts.

        Answer the question – What do people (not just you) do when they run out of money before they run out of life.

        That’s the real question.

        It’s not about you – it’s about ALL Americans.

      • Well I have enjoyed debating this with you immensely. You have certainly given me lots to think about. Truly.

        I would hate for you to think I’m some mindless individualist. I fully understand the need for working together, and that some issues are best solved collectively. Health care is a great example, and like I said, I’d support a properly incentivised single payer system.

        If you read my other posts, you’ll see I argue with people on the right a bit more than the left, but I am an independent thinker and don’t subscribe to any particular ideologies.

        Again, thanks for debating with me and I hope I didn’t come off as if I wasn’t listening to what you were suggesting. I have great respect for your positions. I hope you’ll visit again and have another discussion with me soon.

      • fatherkane says:

        I also enjoyed it. No I don’t think badly of you. Quite the contrary.
        I’ll add you and maybe we can ‘debate’ again.

  4. Barneysday says:

    Its not a guaranteed negative return, unless congress in their infinite “wisdom” decides to cut your benefits instead of fixing the problem. For example, why not collect SS on every dollar earned instead of cutting off at $113K?

    Many European countries and Canada strictly limit the prices charged by servicers; Our lobbyists have insured that there are so many loopholes in our process that expenses will always outstrip our funds. And most importantly, these other countries don’t have a multitude of suppliers, thereby insuring inefficiencies and higher costs. If we had one medical coverage plan, instead of a combination of private, employer, medicaid, medicare, and Obamacare, then we too, could reduce costs.

    And our citizenship expects gold star service. For example, we all die, its part of life. But the whole discussion of Palin’s infamous “death panels” limits our being practical about dealth. the vast majority of Medicare funds are spent on the last 6 months of life. Think we might need to readdress that?

    You are right in one point, the issue is complexity, not size. But writers and pundits continually attempt to boil down these very complex issues to a one size fits all sound bite, such as “entitlements” and that does us all a great dis-service.

  5. Spoken like a true liberal. As a matter of fact, when my grandmother — a Republican — heard about the government starting the Social Security Administration and Fund, she was steadfastly against the entire concept. Most of our seniors today have been entrapped into the system, that was meant to never pay them a dime. The only reason that didn’t work is because the original perpetrators of this fraud didn’t expect that life expectancy would rise so dramatically. Had the fund kept raising the payout age to keep up with the rising life expectancy, they would have had a lot more money to steal from us. If they let us keep the money we contribute through FICA (social security tax) and have the employer continue to kick in their matching portion, place that into a 401K fund to be invested at our will, we’d come out much better, the country would be better off and social security wouldn’t need to even exist — that is, once the current batch of patsys age out of the system.

    I disagree when you say that most Americans like the idea, but not the actual implementation of small government. In fact, if you reduced the taxes we are charged for supporting all those government welfare babies, for paying those millions of useless federal employees to torment us, to buy outrageously priced goods, to waste money on filth masquerading as art and bridges to nowhere, we would be perfectly fine with that. A smaller government would mean block grants to states to administer the smaller social welfare programs for those indigents with special needs, who were unable to take care of themselves. Holding local and state officials to task over their handling of tax dollars is much more efficient than trying to do so with some lifetime public beaurocrat in D.C.

    Ah, a Republican on her soapbox, you might say? No, not really. The Republican political machine has become nearly as indistinguishable from the Democratic one as any in history. Those of us in the Tea Party intend to take this government back into the hands of the good people of this country who want only the best for our country. When the fringe, loud-mouthed, minority, special interest groups run the country, this is what happens to it. Fiscal cliff? How about a fiscal abyss? We’re finished playing nice. Now we mean business, so get ready for it.

    • Well good luck with that. Nothing you mentioned fixes the debt by the way. Social Security is paid for. All the rest of what you mentioned is chump change compared to Medicare and the DOD.

      Perhaps if you spent less time insulting people and more time listening you’d have something to contribute to an intelligent conversation. Let the adults handle this.

      • Actually, everything I mentioned fixes the debt, by the way. By reforming the underlying system of how government takes and distributes our tax dollars, the economy would once again begin to grow, people would become employed rather than hanging on my their fingernails to a failing social welfare system, they would be paying in tax dollars on their earnings, sales taxes on their purchases, property taxes on their homes and the country would soon be back in good shape.

        If you add to that the fact that we will immediately repeal Obamacare and the fiscal nightmare it has created, undo the thousands of federal mandated rules and regulations currently strangling business growth and industry and provide the stability and impetus for the country to thrive again, then the country will soon be out of fiscal danger.

        This president never wanted this country to continue to succeed as it had for decades. He intended from the very start to tear it down and this is why he is sitting there chuckling away as our legislators wring their hands trying to figure out how to do something about his attempt to destroy this country. He doesn’t want to cut spending, he wants more. He doesn’t want to reduce debt. He was perfectly willing and even eager to take us over the fiscal cliff. If he can tear this country down to its knees, then he can build it back in the socialist, communist, marxist image he has in mind for us all.

        Being insulted is the least of our worries — think survival my friend. Unless something is done soon survival will be the watchword of the day.

      • Obamacare is not going to be repealed. That’s reality. The economy is growing. That’s reality.

        Economic growth is different than the job market, by the way. The economy can boom with a stagnant job market.

        You cannot have a serious conversation about deficits and debt unless you talk about the DOD and Medicare. Plain and simple. You can’t just cut spending for “welfare babies” and shrink deficits.

      • Apparently your grasp on “reality” is tenuous at best. You’re right in that having a “serious conversation” seems an impossibility. I don’t know what I must have been thinking. Please excuse the intrusion into your world.

  6. Barneysday says:

    Mona Cheren repeats a common fallacy about Social Security and Medicare; that is, the age old argument that it is a government give-away program by citing, “we get far more out of it than we put it.” Exactly! Let me give an example, I’ve been investing for almost 50 years, and now I’m retired. By putting money into stocks and bonds and mutual funds and annuities, I certainly expect to get a great deal more money out of it than I put in. I’ve been putting money into Social Security for just as long, and into Medicare since day 1 of its existence. Like any good annuity, and thats truly what these programs are, I expect to get more out than I put in.

    Simply put, these programs are not “entitlements” with all the negative connotations the Far Right attaches to that word. They are investments that millions of Americans have paid into, and have the right to expect a return on their investments.

    • Thanks for the comment. The only problem with Medicare is that it’s wildly expensive and doesn’t really provide good services. I expect, at a bare minimum, to get better care from Medicare for half the price. That’s what the Swiss get, and they pay 1/2 what we pay in per-person costs. Germany and France are even less. I don’t think we can just keep throwing vast fortunes at a program that doesn’t work. If we paid what the Swiss pay, we’d get the entire DOD for free!

      Social Security is another issue, but not a huge fiscal problem. I’d personally like to opt out completely, like the clergy are able to. I understand that you’ve paid in your whole life and deserve that money, but for me personally at 31, its a guaranteed negative return on investment on 6.2% of my income.

  7. fatherkane says:

    And the most complex form of ‘complex government’?
    The military industrial complex.
    That’s the very first one that we should take on.

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