Sunday, July 26, 2009

Bush’s Original Sin Revisited

To the Sacrifice Generation, the original sin of President George W. Bush was that in the wake of the September 11th attacks he gave no call for national sacrifice. He had an approval rating in the 90s, the good will of the nation, and the political capital to ask for the moon and get it from the American population. We would have saved more money. We would have sent our children to war in numbers that rivaled World War II. We would have committed ourselves to complete reimaginings of healthcare, social security, NASA, transportation, or energy. We would have done anything. “Fortunately” for us, all he asked was what we already wanted to do: shop.

His clarion call for national action consisted of asking Americans to mob malls and conspicuously consume in order to support the American economy. There was no call for sacrifice. There was no was request that we put aside personal good for common good.

Howard Kurtz has noted that President Obama is repeating that original sin. He has refused to ask Americans to sacrifice for a national healthcare plan. This is inexcusable. We’ve already posted that healthcare isn’t cheap and shouldn’t be treated like it is. The president owes it to the country to level with us: “This will be expensive. This will be costly. But it will be worthwhile. It will help the country. I am asking you all to sacrifice now to make our children better off.”

Americans will respond to this challenge. We want this challenge. Our country has always found its better angels when giving of itself to forward a cause worthwhile. We are better than the president is giving us credit for.

Wednesday, July 22, 2009

Stop Saying Its Cheap

We heard New Hampshire Representative Carol Shea-Porter speak on Monday about the health care legislation Congress is currently batting around. She said something that caught our attention: “The Congressional Budget Office estimates that this plan will only cost a postage stamp per person per day.” We understand why she said this. A postage stamp is an appealing rhetorical device. It’s cheap and convinces listeners that the health care package will be inexpensive.

But that’s not true, and most people either know it or are thinking it already. The health care bill is estimated to cost around $1 trillion. (The US Postal Service would kill for that much mail to be sent!) Telling Americans that they can have an effective national health care system on the cheap undercuts the integrity of the speaker and the appreciation of the listener for such a system.

It’s a cliché that you can’t get something for nothing, but clichés exist for a reason. So when it comes to important national decisions – health care, the wars in the Middle East, the senior citizen prescription drug program, etc. – why do we allow ourselves to be talked into going along with programs that are described as costing “only a postage stamp a day?” Or as “paying for themselves?” We’re getting something for nothing, and then when that programs turns out to be less than we imagined we have the nerve to be surprised and even angry.

What we wish we had heard Rep. Shea-Porter, other representatives, and senators say was something like this: “The health care package is expensive. It should be. If we expect this to lower costs in the future, we have to pay upfront. That’s the way life works. If you want an annuity that pays $100,000 a year for 30 years, you can’t pay $100 up front. You have to pay a lot more. We’re going to reap the benefits of this for decades to come: better care for more people for less money. Ultimately. Right now we have to sacrifice.”

This country was founded and made great by willing sacrifices from our forerunners. We will do the same. But we need to be asked. We need to be organized to make that sacrifice.

Sunday, July 19, 2009

Harry Potter and the Vatican Know Sacrifice is Necessary

The Vatican's newspaper, L'Osservatore Romano, approved of the new Harry Potter movie recently, noting that it accurately depicts that "good is right" and that "sometimes this requires hardwork and sacrifice." This advice could be given to the entire American nation right now: in order to do good, we must sacrifice now.

Tuesday, July 14, 2009

Sacrifice means giving things up

Thus far in this space we have written mostly about giving up low taxes, an early retirement, etc. In many ways, these are the easier sacrifices to make. The easier of the hard choices. In this post, we’d like to address what, in many ways, are much harder hard choices: dropping government programs.

In order to secure the solvency of federal, state and even local governments, it will likely be necessary to shrink those governments. This will require choosing priorities. We haven’t done that very well for a long time. When President Obama described his philosophy of government, he emphasized that he would continue the programs that worked and eliminate the programs that did not. But he never mentioned whether he would consider whether the government should even engage itself in those programs.


What follows are three suggested types of programs that could be eliminated. We do not also suggest that these will be easy choices. But of all the areas that the government is in, we believe that these either could be eliminated or should be in the discussion as to what is eliminated.

  • Arts Programs. Some of the government-sponsored art programs do not provide a significant return on our investment. Many do not significantly improve education systems or increase property values in the communities where they occur. The government should examine the benefits of each art program to determine whether they result in more than merely excess art. To justify government funding, art programs must accomplish more.
  • Farm Aid. There are small-government urban legends that feature landowners in farming areas who have no intention of farming but who still receive farming subsidies. The extent of the truth of these legends is unclear, but as a general principal, we should not pay non-farmers not to farm. Nor should we pay subsidies to profitable farms; that’s what their customers are for.
  • Defense Programs. Surprisingly, Donald Rumsfeld was spot on correct about the nature of our defense program. It’s too big, too archaic. We have a hard time responding to the modern threats of rogue states, terrorist cells, and independent actors. Much of our military is still geared toward engaging in two-front, traditional land-based wars. But almost everyone agrees that those types of wars don’t happen anymore. We tried to fight one of those wars in Iraq, and couldn’t make the new paradigm bend to the old paradigm. Our bloated military budget encourages large and expensive equipment that is not as necessary to our defense as it was during the Cold War.

Again, we don’t expect these to be popular cuts. We expect everyone in the country to take exception to at least one of the broad programs we have recommended making cuts to. But making these hard choices today will help us examine our priorities and make our governments work better. Our hard choices to today will lead to better governance for our children.

Friday, July 10, 2009

Sacrificing Articles

We've been pleased to discover a number of excellent articles and blog entries about the idea of sacrifice, either personal or societal. Check out the links:

David Leonhardt's Economix entry about Club Wagner and his follow up entry

David Brooks' article about shifting from a consumption-based economy to an investment-and research-based economy

Froma Harrop's column relies on the 91% tax rate during the Eisenhower era to argue for higher taxes

Joe Klein on Obama's need to make hard choices

New parents are sacrificing new and expensive for second hand and cheap

Wednesday, July 8, 2009

Types of Sacrifice

Sacrifice as a form of national service is historically linked to that last full measure of devotion: a soldier laying down his or her life for the country. This is certainly part of what we memorialize when we speak of the Greatest Generation. We venerate that they willingly ran into gunfire for God, family, and country.

But we do their parents a disservice if we forget other types of sacrifice. Cutting creature comforts to save future generations qualifies as honorable service and sacrifice.

In the 1930s, when the Greatest Generation grew up, their parents had to make significant sacrifices because of the Great Depression. There were far fewer resources for families, and hard choices had to be made. “We can’t afford a large apartment, we’ll all have to share one bedroom… We can’t afford meat, we’ll have butter sandwiches… We can’t all afford the movies, maybe just the kids can go.” Hard choices, but ones that nurtured their children through a difficult period, allowing them to lead the country to bigger and better things.

Now, we are in a position to be the parents of the next Great Generation, and we should acknowledge the honor and opportunity in it. By making domestic sacrifices now, we can instill in our children all the attributes that the Greatest Generation had. Our sacrifices will not be made into Hollywood movies. There is little glamour in consistently subordinating our material comfort for others. There is honor in it, as well as a quiet glory. But it is not glamorous.

We think it is necessary, though. If we spend the next twenty years saving more aggressively, purchasing more prudently, and governing more wisely, our children and their children will have better lives.

That is not to say our lives will be bad. But it is to say that for a number of years, we will not be as physically comfortable as we might be otherwise. The parents of the Greatest Generation are an apt example. They made sacrifices in the 1930s, but as they aged and retired after World War II, their standard of living was much improved. As the country rose, so did they. That’s our opportunity now.

We have already begun to talk about these sacrifices on this site. They include smaller houses, later retirement, and higher taxes for better education. Those sacrifices cut broad swaths across luxuries – some would even say rights – of the vast majority of Americans. Young workers don’t want to give up the dream of a big family house before they even start saving for it. Older workers don’t want to continue working after working so hard for decades. Americans who feel they pay too many taxes already don’t want to pay more.

But these are the sacrifices we can make. Smaller homes mean more savings, greater wealth, and more purchasing power. Later retirement means solvency for social security and the federal government. Higher taxes for education means a talented and prepared workforce that strengthens the economy when we retire. These sacrifices are of a type that we don’t publicly honor. But we should. And if we now begin to make these sacrifices and others like them, future generations will publicly honor our Sacrifice Generation.

Monday, July 6, 2009

Pete Peterson Wants to Make Hard Choices

Recently, we ran across an op-ed piece from Pete Peterson, founder of the Blackstone Group. In it, he describes his plan to take the $1 billion he made from Blackstone’s public offering and start his own charitable foundation. He worries about that “our children are unrepresented.” We’re creating debts, problems, and unresolved situations that they will have to address, but will have fewer options to do so because of our behavior and policies.

He’s right to be concerned. We’re concerned too and are convinced that the only way to avoid dumping enormous problems in our children’s laps is to make hard choices now. If we make choices now that address some of our most glaring problems – unfunded entitlement programs, inadequate public education, unnecessary government spending, insufficient personal wealth – we can avoid passing on our problems to our kids. The world does not soften for each successive generation. Our children will have their own problems. They don’t need ours.

The Peter G. Peterson Foundation (and similar organizations, like the Concord Coalition) has the right idea: educate the public about the fiscal problems of our country. So many people are unaware. But the solution cannot be education alone. We must also embrace our challenge and opportunity to sacrifice for our country and children. By giving up some personal comforts, by working a little later into life, and making other small changes to our lives, in 20-30 years we can give to the next generation a solvent government, an older generation with retirement wealth, and a country that is more civic minded.

Our first step: start making hard choices. We’ve made easy ones for too long.

Friday, July 3, 2009

De-Incentivize Big Homes

For decades now, the federal government has essentially paid us to buy homes. This was a policy choice, and an easy one. People already wanted to buy homes. They were more than happy to allow Washington to give them money to do what they already wanted.

And this is not an entirely bad idea. Following World War II, the GI Bill allowed millions of veterans to obtain mortgages and purchase houses that they never would have been able to without government assistance. It is estimated that by 1955, 4.3 million home loans had been granted under the program with a total face value of $33 billion. This allowed many Americans to gain unprecedented equity in a way that was never possible before the GI Bill. The great expansion of wealth in our country since World War II can be attributed in no small part to the mortgage assistance given to veterans.

But that assistance has long since been replaced by unnecessary and inappropriate bribes. Here’s a list of some of the incentives offered by the federal government to induce home ownership:

  • The interest you pay on your mortgage is tax deductible, up to $1 million.
  • You don’t pay taxes on any profit you make when selling your home, up to $250,000 for a single person and $500,000 for a married couple.
  • Local property taxes are tax deductible.
  • Moving expenses to a new home are tax deductible.

That’s a lot of money being given away to convince people to do what they already want to do. The American Dream is already so tied up in home ownership, that incentives are only necessary up to the point where they encourage Americans to build equity and wealth as another form of savings. Anything beyond that is wasteful.

And we’re well beyond that. Nowhere is this more apparent than in the size of American homes. The average American home in 2006 was 2,349 square feet; in 1950 it was half that. With that extra size comes extra costs: heating, cooling, maintenance, furnishing, and all the stuff that can fit in the added space. We expand with our space. More space equals more use and more stuff. Concerns about this are causing many to seek smaller homes.

Thoughtful people have also drawn a connection between home size and quality of life. Today, it is common for both spouses to work, yet households feel like they have less money than they did 60 years ago. House size is large factor. Smaller homes can be run with less money, allowing one spouse to stay at home with the kids, at least part time.

Our suggestion is to make the hard choice and slash tax incentives for homes that are larger than 1500 square feet. If Americans want to buy a reasonably sized home where they can live, where they can raise their children, and that will earn equity for their savings, there should be a tax benefit for that. But if Americans want a large home for luxury, they will have to pay for it.

This might mean our kids will have to share a room. Or that we won’t have three TVs spread throughout the family room, play room, and den. In general, we won’t be quite as physically comfortable as we’d like to be. But this type of physical comfort is the easy choice. If we had made the hard choice decades ago to stop paying ourselves for larger homes, America might be a slightly better place now. Children would have fewer TVs to watch. They might have to get along better with others. And we all might have to talk more with one another.

Wednesday, July 1, 2009

Mandatory Service

As high schools in the United States increasingly require volunteering or some service for graduation, a debate has emerged about whether this is actually volunteering and whether it is beneficial to students.

Some have looked beyond this debate, however, and started advocating for a formal mandatory service program on the national level. The basic idea is this: at some point after high school, every American young adult must complete a year of national service. It can be in the military, teaching, working with the poor, or some other form of community service. And the federal government would pay for it.

Some argue that this type of program is too expensive for undetermined results. But while it is certainly expensive, the results are almost always positive. Talk with anyone who was formerly in a position performing national service, and almost to a person they report that the experience had a positive impact on them and forced them to be more civically engaged later in life.

In 2010, the US Census Bureau estimates that the US population will be 310,232,863 people. The percentage of that population that is between the ages of 0 and 19 is 27.4%, or 85,003,804 total people. Assuming the federal government pays each of those people $25,000 (which includes salary and all benefits) for one year of service, the total cost for twenty years of civically minded young adults contributing to the nation is $2,125,095,100,000. This is absolutely a lot of money, even when spread over 20 years. And it is a hard decision to commit to that much money.

But had we made this hard decision twenty years ago, there would be more volunteers in inner cities working with economically blighted areas. There would be more campgrounds cleared on federal land. There would be a larger and deeper respect for the military, as more of our children would have joined and the burdens of military families would be more widely shared. In short, there would be more of many things that we want more of. A hard decision to pay for mandatory national service would have led to a better country today.