WHAT ROMNEY SHOULD HAVE SAID II-- SOME SOLUTIONS

by Tom Brown

We must start the discussion by saying what we cannot do; namely rely on new programs, financed by tax increases on high income people, to spend our way out of our problems.  There are not enough high income people, and even if there were for this year’s issues, this wouldn’t work on a continuing basis as costs continued to grow.

It is clear from the new demographics that there are not enough people that would vote for a purely conservative approach, even if it would work.

Presumably all of us would vote for a more efficient caring government responsive to a broad range of issues deemed important to most demographic groups.  Here would be my priorities.

Regarding employment:

1.      Make retraining a requirement to receive extended unemployment benefits.

2.      Try to minimize what an employer must pay above and beyond a basic wage or salary, such as unemployment insurance, social security or health insurance so it is easy and cheap to hire people.  Taxes and benefits should be the responsibility of the individual but forgiven (in the case of taxes) or accrued (in the case of insurance or retirement) when the individual is unemployed.

3.      Make vocational training available at the secondary school level, as an alternative to college preparation.

4.      Make any federal school aid dependent on test scores and improvements realized so that we are promoting and graduating many more students that meet standards for their grade level

Regarding immigration:

1.      There must be a path to a work visa and later to citizenship that exacts a one time penalty for being here illegally that is high enough discourage future illegals, but reduces the number of undocumented illegal immigrants.

2.      There must be sufficient temporary and seasonal  work visas for needed unskilled and semiskilled workers.

3.      There must be better policing of professional work visas to prevent abuse and allowing foreigners to take jobs that young people should be training for and getting.

4.      We must take politics out of immigration and work visa quotas, by having congress write the principles and the INS to do the numbers.

Regarding government’s contribution to the cost of living:

1.      Justify all government services on a cost versus benefits basis.

2.      Privatize services where appropriate in a way that access is not impeded and fraud on the part of the public and providers can be kept low.  Health insurance and road plowing are examples.

3.      Minimum wage must follow inflation, at least on a lagging basis, so as to be understood by the public as contributing to being able to earn a living wage.  We must understand and accept that there will be some impact on low level jobs.

4.      Any regulation, existing or proposed, must be justified on the basis that the harm it would avoid is significantly greater (say 100x) than the effect on the cost of living plus the cost of establishing  the regulation plus the ongoing cost of enforcing the regulation

Regarding health care:

1.      Go to two levels of care for all.  Basic which uses proven cost effective practices and efficient delivery systems, available to all on a subsidized basis with the subsidy depending on income. Advanced which is private where the delivery system and practices followed are as agreed between the policyholder and the insurance provider and not subsidized by the government. A board of experts is to determine on an ongoing basis what constitutes basic care.

2.      More effort to identify what works, especially with analysis of electronic medical records on an anonymous basis.

3.      It should be noted that some of the Obama care program is valid certainly including the requirement that all people should have insurance.  This concept would accomplish this in another way.

4.      It is also important to note that a health savings account and catastrophic insurance, with a deductible equal to the health savings account balance at the policy anniversary should be an acceptable way of meeting the requirement of being insured.

Regarding the tax code:

1.      We should move to a highly simplified tax code with one or two progressive rates and few if any tax deferrals, exemptions and deductions.

2.      We should strive for very low corporate taxes.

3.      A minimum tax might be considered but might not be necessary with low rates and almost no deductions and exemptions.

4.      We could also use the alternate minimum tax concept to simplify taxes.  And in any case tax revenue analysis must take it into account.

Regarding retirement:

1.      All pension contributions from a company or government agency must be placed in a trust account in the year earned.

2.      Retirement age must be increased based on current life expectancy; savings must be increased by removing IRA contribution limits.

Regarding infrastructure:

We need to catalog and prioritize infrastructure that serves interstate commerce.  We should pay for it partially with an increased fuel tax and partially through eliminating ‘pork barrel’ projects.

Otherwise infrastructure must be a state and local issue.

Regarding the balanced budget:

We must remember that we are now inflicting a horrible financial burden on our children, grandchildren and beyond by having a budget deficit.

We need spending cuts to balance the budget within 5 to 10 years.  Maybe 8 years for political reasons.

We need a temporary revenue increase to reduce the deficit and finance the transition over a 5 to 10 year period.

The spending cuts need to be thought out and carefully studied to minimize the impact on citizens.

As an example, we cannot simply cut Medicare reimbursement rates.  We need to establish qualifying criteria for a given treatment and establish treatment protocols so that only the lowest cost effective treatment is allowed.  This must be coupled with changes in how the treatment is delivered to further lower costs.

We probably need to negotiate reimbursed drug costs; we have high costs on branded costs the in some cases subsidize the cost of drugs to other countries.  It would not necessarily hurt to have reduced drug research; we have a lot of “me too” drugs.

Regarding efficient government:

1.      We cannot pay people who are not working except for a relatively brief period.  Some of what is now extended unemployment could possibly be spent on retraining the unemployed for available jobs.

2.      We cannot guarantee home loans for people who cannot get them in normal private channels, as there are big risks of downstream defaults guaranteed by the taxpayers.