Friday, November 08, 2019

The Debt Bomb: A Bold Plan to Stop Washington from Bankrupting America

Tom Coburn begins Debt Bomb with a nightmare scenario where foreign organizations disavow American Debt, causing a massive devaluation of the dollar and a huge crisis. He then goes into details of why debt is bad and why congress keeps raising debt. His identifies "careerism" as one of the biggest problems. Politicians are more concerned with winning the election and staying in office. Politicians on both sides love earmarks and are in favor of producing pork for their home district. They are also keen to use slight of hand, passing bills authorizing programs without funding them. They can then say they did not add funding, but still brag about the new program. (The implication is that it would be funded.)
His argument is heavily towards the conservative side. The invisible hand of the economy is the best way of building up the economy. Government is viewed as inefficient. (However, he is in favor of some things like highways - even though private markets have managed those also.)
He is very passionate about his argument and is willing to sacrifice sacred cows to get there. I do buy into his concern with "careerism" in D.C. The press does love to cover the elections, but the actual governing does not tend to provide as much drama. We would do better if we had a congress that was focused on solving problems rather than distributing pork in order to get re-elected.
He also sees "purity pledges" and approval by third party organizations as problematic. Many special interest groups go to Washington with noble intentions. However, they gradually achieve a seat at the table and then fight to keep it. And soon they become part of the problem.
He proposes we work on reducing wasteful spending. In his book, similar programs in multiple departments are waste. Earmarked projects are also usually waste. Programs that have expanded beyond their initial purpose are also problematic. However, the big elephant in the room is entitlement spending. He would like to add free market aspects to entitlements as well as means testing. (Alas, this seems to go against his argument that people have "skin in the game".)
He has some persuasive arguments. However, the concern about the debt has been somewhat ameliorated by the persistently low interest rates. In real terms, interest rates are nearly zero now and trending downward. Some countries, such as Japan, have negative nominal interest rates. With rates so low, there is little incentive to reign in debt.
Furthermore, while arguing against having the government "pick the winners", he encourages us to maintain the current system of winners that the government has picked. He advocates continued fossil fuel use. In other words, continue the huge government subsidies to the highway and car transportation system. The country once had a highly competitive private railroad system. However, the government bulldozed communities and built "free" highways, giving road transportation a huge advantage over private railroads. Just because the government entered this arena does not mean it should remain.
Means testing is also a sticky topic. He criticized the stimulus plan for giving special funding for states that didn't keep their house in order, while not favoring those that did. However, he would also like social security and medicare to be means tested. This would do on an individual level what was not done on the state level. A better approach would be to make the health care system fully available to all. Perhaps a simple approach would be to have a public system that provides basic care for everyone, while leaving the private market for enhanced coverage. Some of his other ideas for health care reform were much better. The system we currently have of employer provided health care just needs to be thrown off a cliff.
Coburn is a die-hard conservative who is not fond of Republicans spending on pork when they get in power. Alas, he is also roped in to the rest of the Republican ideology. It would be great if we could have liberals who were concerned about keeping our finances in check.

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