Posted 8/5/2011

AVOIDING AN ECONOMIC CATASTROPHE

The budget bill saved an immediate default, but exposed the greater danger – collapse of the U.S. economy. Some people think Washington is trying to create 1929 all over again.

The Great Depression was caused by the speculative spending of private investors. But the coming collapse is being spurred by speculative government spending. Medicare and Medicaid are approaching a cost of $1 trillion a year. This will bump up even more with the implementation of ObamaCare's added coverage.

All three rating agencies are threatening to downgrade America's treasuries if we do not get control of the deficits, which are pushing us into debt oblivion. The stock markets have plummeted because investors believe the government is using too much money which should be flowing to private investment and the jobs it creates.

The arithmetic is simple to understand. For every dollar Washington spends, it borrows forty cents from China, Japan, Social Security or other nations.

But make no mistake: out-of-control government spending has been caused by both the Republican and Democratic parties. Do you remember the economic mantra of the Bush Administration? It was, "Deficits don't matter."

Not to belabor the point, but everyone is at fault – including you and me because we have become the "Me-est" of the Me Generations. We operate under two drivers:

1. I want mine.

2. I want more.

We rationalize this way:

1. He is greedy.

2. You are selfish.

3. I am entitled.

We combine the worst aspects of greed and distrust.

The solution to our problems is crystal clear. We must eliminate greed and create trust.

There is only one proven way to accomplish this in the short run: The Army way.

In a very short period of time, the Army turns a bunch of me-first recruits into men and women who will put their lives in the hands of their buddies – the ultimate trust. Greed is obliterated with the mission of defending the country and giving up life itself if need be.

How does the Army do this?

By teaching a group of people to march in step.

When a platoon of new recruits is commanded, "Forward march," a mess occurs. The first soldier steps off, the second waits and then moves, the third waits for the second soldier and so on until you are looking a scattered line of walkers.

Two weeks later, the same platoon will step off at exactly the same time with exactly the same foot. Because in two weeks' time, each recruit has learned to trust the person in front of him to step off with his left foot, thereby creating space for the left feet of those trailing. And in sacrificing their personal styles of walking, each soldier develops a sense of pride in how sharply his unit moves and maneuvers across the parade ground.

What has this got to do with controlling government spending? At this time every person in the country refuses to see his interests cut because he doesn't trust the guy in front to step off into an equal cut simultaneously. Nobody trusts anybody in Washington.

The solution is a simultaneous agreement for every person, every official, and every interest group to take a 20 percent cut in government spending: Medicare, Medicaid, Social Security, Defense, Energy – every single department in Washington.

Every beneficiary of government spending (oil companies, farmers, Medicare recipients, mortgage interest deductors, etc.) would all take simultaneous 20 percent cuts as well.

A 20 percent spending reduction would not solve the whole problem, but it would not destroy the economy, either. The remainder would come from revenue raising afforded by a massive simplification of the tax code and a fairer allocation of tax burdens on business and people. (How do so many people and corporations get away with paying no income taxes?)

The key to this plan is shared sacrifice and trust. Everyone has to participate. No sob stories from bureaucrats, millionaires or generals will be accepted.

The second step will be to allocate the money more properly. Some organizations may have outlived their usefulness – Commerce, Education, Energy.

Some medical treatments are money wasters – depression, scooters, sleep apnea. Do we want to accept the Psychiatric lobby's claim that 24 percent of us are mentally ill? How did the country become great if a quarter of its people were nuts? Why spend for the ATF, which sends guns to Mexican drug gangs? Why fund military operations in Iraq and Afghanistan, which send billions to our enemies? Have we forgotten that the Bush Administration gave the Medal of Freedom to Jerry Bremer, who lost $8 billion in unaccountable Iraq funds?

We can and should get rid of the waste.

But the first step is to accomplish a sense of shared sacrifice and trust by stepping off on the same foot at the same time.

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