Limited Government is Desperately Needed

 

by Richard Colman

Does anyone remember Ronald Reagan’s first inaugural address as president, which he gave on January 20, 1981?

For those who may have forgotten what Reagan said, here are some quotations:

“It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government.  It is time for us to realize that we’re too great a nation to limit ourselves to small dreams.  We’re not, as some would have us believe, doomed to an inevitable decline.”

“In this present crisis, government is not the solution to our problem;government is the problem. [Emphasis added.]  From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people.”

Reagan, who won a landslide victory over President Jimmy Carter in 1980, may have had an understanding of what overbearing, overweening government could do to stifle individual freedom and the benefits that derive from liberty.

Reagan’s thinking was not new.  In the formative years of the American republic, ideas about limited government were expressed by such Founding Fathers as Thomas Jefferson, James  Madison, and Benjamin Franklin. (Even President Bill Clinton agreed.  In his 1996 State of the Union Address, Clinton said, “The era of big government is over.”  Since the end of World War II, only one president has balanced the federal budget four times.  That president was Clinton.  And his four balanced budgets were done in four consecutive years, 1996 to 2000.)

Franklin’s views on government debt are especially important.  He warned the new republic to remain debt-free.  By 1837, America was debt-free.  By 1981, the national debt had escalated to $1 trillion.  Today, that debt is over $21 trillion.

The essential problem in a democratic society is that people can vote themselves unlimited financial benefits and not be able to pay for them.

Since 1913, the federal government of the United States began a financial and legal expansion that continues to this day.

In 1913, Americans, through a Constitutional amendment (the 16th Amendment), got the federal income tax. 

In the same year, 1913, Congress passed the Federal Reserve Act, setting up an unelected authority, the Federal Reserve, to print money and control interest rates.  The Federal Reserve Act created a national currency (the dollar).  The act was supposed to bring about financial stability by creating a system that could respond to upheavals in the banking system.

In 1935, Congress passed and President Franklin Roosevelt signed the Social Security Act.  As originally conceived, the act required each wage-earner to contribute one percent of his annual wage income to a special government fund.  The worker’s boss was to contribute another one percent.  Social Security collections originally stopped at a wage ceiling of $3,000.  Thus, the maximal Social Security tax on wages was $60 per year — $30 from the worker and another $30 from the worker’s boss.

Today (in 2018), the wage ceiling is $128,400.  The worker must contribute 6.2 percent of his wages, and the boss must contribute an equal percentage.  On an annual wage income of $100,000, both the worker and boss contribute a total of $12,400 annually.

During the years that Lyndon Johnson was president (1963-1969) government expanded ever further.  The nation got Medicare, health benefits for individuals over age 65.  Two new cabinet departments were created:  The U.S. Department of Transportation and the U.S. Department of Housing and Urban Development.

In 2010, President Barack Obama signed the Affordable Care Act (ObamaCare) into law.  The intent of the law was to provide health benefits for every American.

Government has become so big and so intrusive that it faces collapse unless strong action is taken.

To prevent collapse, government’s growth can be slowed or stopped by putting strict limits on taxation and spending. 

A law or Constitutional Amendment could help by requiring a balanced budget.  (If an emergency, like a war were to occur, the budget could go unbalanced by a vote of 60 percent or more of each house of Congress.)

Balancing the budget would be easier if government programs like Social Security, Medicare, Medicaid, and ObamaCare were taken off budget.  These programs are known as entitlements because anyone who is eligible gets the benefits.  Let these programs pay for themselves, an action that would presumably be easier if the programs were partially or fully privatized.

The 2018-2019 federal budget is $4.1 trillion.  Of that $4.1 trillion, 62 percent ($2.5 trillion) goes for entitlements.  By taking entitlements off budget, that total of $4.1 trillion drops to $1.6 trillion.

Another action would be to have a currency (the dollar) that holds its value.  The 1970 dollar is worth about 13 cents today.  Rising prices (inflation) could be stopped by having the dollar backed by gold.  In 1967, $35 could buy an ounce of gold.  Today, one would need about $1,300 to buy an ounce of gold.  As an example, $10,000 of income in 1967 would require $372,000 of income (in 2018) to buy one ounce of gold.  How many people who earned $10,000 a year in 1967 are now, if still working, earning $372,000 a year?

Remember, inflation can be called “debtor’s paradise” because the borrower pays back his obligations in cheaper dollars.  For example, suppose a person borrowed $10,000 in 1970.  Because of price increases since 1970, the borrower would be paying back a total of $10,000, but the $10,000 would only have the purchasing value of $1,300 in 2018 dollars.

And who is the biggest debtor of all?  It’s Uncle Sam, who owes $21 trillion.

By having truly limited government, more Americans would have more freedom to innovate and create.  Taxes and regulations would be less burdensome.

So, Ronald Reagan was right:   “Government is the problem.”

If President Donald Trump were paying attention to the idea that government is the problem, he would be able to make America great again.

 

Richard Colman is the founder and president of Biomed Inc., a biotechnology, publishing, and informatics company.  He is a biochemist and earned masters and doctoral degrees from the University of California at Berkeley.  He lives in Orinda, California.


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