Newsletters

Newsletter 82 - Summer 2016



Screen Shot 2016-04-01 at 9.58.13 AM

Presidential race
Cast your bread upon the waters
Fiscal problem
Delaware National Guard
Social Security
Energy policy
The economy
Video corner
SAFE Board
Join us

Presidential race – SAFE is not affiliated with any political party, nor does it endorse candidates. We do study where the parties and/or individual politicians stand on the issues, however, and publish our findings as a public service. See, e.g., our coverage of the 2008 presidential race, which attempted to objectively assess the debate on policy during the general election phase. What would you like, central planning [Obama] or an eclectic mix [McCain]? 10/27/08.

Senators McCain and Obama have endorsed essentially the same economic goals, but offered quite different approaches for achieving them. For details, see the following entries: 10/10/08 – Famous last words: “my plan will cut taxes”; 10/15/08 – October surprise: financial turmoil; 10/20/08 – Both candidates offer “pie in the sky” healthcare plans; 10/23/08 – A paradox: the global warming scare lives on. A wrap-up discussion follows, in which our concept of good policy (in italics) is contrasted with the proposals on the table. *** Our job is done, dear readers, and hopefully the foregoing information and opinions will prove helpful. The choice is up to you!

We started earlier this time, posting our view of the campaign issues over a year ago. Questions for presidential candidates, 6/9/15. Subsequent entries tracked the positions of the leading candidates (including some who have since suspended their campaigns). See the campaign issues file on SAFE’s blog page. In coming weeks, we’ll round out our analysis by factoring in the policy positions that House Republicans recently put on the table.

This entry will compare and contrast where the presumptive nominees appear to stand on the fiscal problem, Social Security, energy policy and the economy. We don’t believe either of them has offered very good answers in these areas, but there’s four months left for Americans to ask questions before the general election. As the emphasis shifts from rallying base supporters to wooing the broader electorate, let’s hope Hillary Clinton and Donald Trump will rethink and upgrade their respective proposals.

Cast your bread upon the waters – There is lots of great material on the SAFE website, and we all have a stake in getting people to peruse it. To this end, a one-page flyer has been posted re the current state, SAFE’s agenda, and some tips on how to learn more. It can be readily printed, or shared by sending contacts the link. http://www.s-a-f-e.org/resources/SAFE-Flyer033116.pdf Please help us to get the word out!

Fiscal problem – The gross national debt has soared in recent years, e.g., growing from $5.6 trillion (57% of GDP) at the end of fiscal year 2000 to an estimated $19.4 trillion (105% of GDP) by September 30 of this year. And if growing shortfalls for Social Security and other entitlement programs are factored in, the outlook is even more ominous. Without big changes soon, a fiscal meltdown seems inevitable.

SAFE has repeatedly urged that the government get the budget back in balance and keep it that way, but neither of the presumptive candidates has offered a credible plan for eliminating deficit spending. Deficits & debt, 2/29/16.

Clinton proposes to hike taxes on well-to-do individuals and big business, but the proceeds would be earmarked for new spending and middle/lower class tax breaks versus deficit reduction and there has been no apparent recognition of the economic drag effect of the higher taxes. With such an approach, we would expect the fiscal problem to keep getting worse.

Trump has proposed a tax plan that would cut taxes for just about everyone. The Tax Foundation has estimated that his plan would reduce government revenues by about $1 trillion per year. Trump also proposes to rebuild the military, and his rhetoric about cutting spending in other areas is vague. All things considered, we doubt that the net result would be to reduce the deficit.

Delaware National Guard – Major General Frank Vavala spoke at the Retired Men’s Luncheon Club on April 15. As the First State’s adjutant general, he is responsible for the readiness of all DNG units for both federal and state missions. SAFE director Jerry Martin arranged the program.

Wearing a field uniform and exhibiting an engaging style, General Vavala provided an overview of the Delaware National Guard. Here are some highlights.

The roots of the DNG can be traced to 1655, when Swedish settlers in the area organized a militia unit in a dispute with the Dutch (who were more numerous and prevailed). Its operations and organization have changed over the years, but the basic mission remains to protect and defend. Last year, the DNG celebrated its 360th anniversary.

Big picture, there are some 470,000 National Guard soldiers in the United States, which currently constitute some 34% of the overall US Army but consume only about 12% of its budget. The concept is to attract and train soldiers who are equal to those in the regular army, but are employed in the private sector and will only be called on for military service as needed. In recognition of the importance of the National Guard to the overall military, its national commander now serves on the Joint Chiefs of Staff.

There are some 2,700 members of the National Guard in Delaware, including Army and Air Force units. As an example, General Vavala traced the history of the 198th Signal Battalion, which began as an infantry unit (in the Revolutionary War), later became an artillery unit, and assumed its current communications mission in 1970.

Members of the National Guard were traditionally expected to serve one weekend a month (plus a week or so of summer camp), hence the “weekend warrior” label. Due to additional demands, the typical service period is now some 5-7 days a month. DNG units are maintained in a high state of readiness, and many of them have been deployed to locations around the globe.

The speaker ended by praising the Delaware National Guard and expressing his pride in having been a part of it over the past 49 years. “I’m Frank Vavala, that’s my story, and I’m sticking to it.” Well said!

Social Security – Social Security outlays are nearing $1 trillion per year, and they will continue to grow rapidly in coming years. An aging population is the main driver; lax control over disability benefit awards has also been a factor. The rising cost of Social Security could lead to spending cuts for traditional government functions (e.g., the military), tax increases, and/or growing deficits (currently about $0.5 trillion per year).

Some may believe there is plenty of time to work things out because the Social Security Trust Funds won’t run out until the 2030s, but there is no money in the trust funds and program costs are already exceeding earmarked tax revenues.

Both Clinton and Trump vow to protect the Social Security benefits that have been promised. Indeed, Clinton has gone further by proposing enhanced benefits for certain beneficiaries, e.g., widows and long-term caregivers, which would be offset by (you guessed it) higher taxes on the well to do.

Neither Clinton nor Trump has acknowledged the current and rapidly growing funding shortfall for Social Security, let alone offered ideas on how to cover it. Social Security, 3/28/16.

Among the cost saving ideas that should be considered, in our view, are: tighter review of disability applications, raising the retirement age and offering a personal account option for younger workers, and perhaps a less generous cost-of-living adjustment for retirement benefits. Other possibilities include tax increases, means testing of retirement benefits for affluent participants, and diversion of funds from other programs.

What ever happened to the old slogan, “tell it like it is”?

Energy policy – Should the government press for a switch from fossil fuels to “renewable energy” (wind, solar, maybe nuclear) and energy conservation, or leave such decisions to the private sector? The prime argument for government intervention is that the burning of fossil fuels is causing rising atmospheric levels of carbon dioxide, which according to the manmade global warming theory (MMGWT) could have disastrous consequences. Skeptics note, however, that (a) global temperatures have not risen significantly over the past 15+ years, and (b) the costly measures under consideration wouldn’t do much to stop global warming anyway.

The administration strongly favors reduced use of fossil fuels, and in the absence of congressional buy-in it is proposing regulations that would force this result. Legal challenges are pending to several major EPA regulations, notably the Clean Power Plan.

The candidates have taken sharply different positions on the appropriate path forward. Energy policy, 5/16/16.

Clinton embraces the MMGWT as “settled science” and dismisses skeptics as having a political agenda. She proposes a series of specific steps to continue (or accelerate) a switch from fossil fuel to alternative energy sources, and envisions a big economic payoff from making this country “the world’s clean energy superpower.”

Trump is skeptical of the MMGWT. He has talked about revising the decision to prevent completion of the Keystone oil pipeline, supporting increased US fossil fuel production, and abolishing “a tremendous amount of regulations.” If elected president, he might denounce the Paris Agreement (re international commitments to reduce carbon emissions), which was signed without congressional approval.

True, but - Air traffic control: What’s your height and position? Pilot: I’m six feet tall and in the pilot’s seat.

The economy – Public opinion polls indicate that the top election issue is “the economy,” which is commonly equated with abundant jobs and rising pay levels. Recovery from the 2008-09 recession has been slow and unsteady, and the pace of job growth seems to be faltering (e.g., 38,000 jobs were added in May versus predictions of some 160,000). So how do the candidates propose to make things better? The economy, 6/13/16.

Clinton promises new or enhanced social welfare benefits, to be funded by higher taxes on the affluent, and government support for “green” job programs. She supports a big hike in the minimum wage. She has stated that her husband (who served as president during the last period of solid jobs growth) would be one of her key economic advisers.

In our view, the government should not be expected to create jobs – that’s something the private sector is much better equipped to do. Raising the minimum wage and mandating new benefits would be counterproductive, boosting compensation for some workers but reducing job opportunities and raising prices.

Trump vows to “make America great again” (a slogan used by Ronald Reagan in the early 1980s). He envisions big tax cuts for everyone, slashing regulations, securing the border, great trade deals, harsh penalties for US companies that move operations overseas, and perhaps (despite initially stating otherwise) a higher minimum wage.

Some of Trump’s ideas are appealing, notably slashing regulations, but we don’t believe the huge tax cuts he has suggested would be feasible. As for international trade, his notion of slapping a high tariff on imports from China (because they have a big trade surplus with the US) reminds us of the infamous Smoot-Hawley Tariff Act in 1930.

Video corner (links in electronic edition): #The progressive income tax: a tale of three brothers, Prager University, 4:59; #Flash mob orchestra plays theme from Beethoven’s 9th (lovely!), 5:40.

SAFE Board
Andrew Betley, (302) 239-9679
Suzie Dickson
Edgar Fasig, treasurer, (302) 999-0611
Dan Kerrick, (302) 658-7101
Steve McClain, (302) 998-3910
Jerry Martin, (302) 478-5064
rycK Stout, (302) 478-9495
Bill Whipple, president, (302) 464-2688
For e-mail addresses see
link

About SAFE - SAFE is a non-partisan, all-volunteer organization that was founded in 1996. We advocate smaller, more focused, lower cost government, to be achieved by cutting spending, restructuring “entitlements,” simplifying taxes, and rationalizing regulations.

The SAFE agenda is promoted through: (1) Our
website, including issue statements, a weekly blog, and a “Delaware Chatter” microblog; (2) Letters to the editor, public events, legislative contacts, etc., which are also posted and/or recapped on the website; (3) This quarterly newsletter, available in print (since 1996) and now electronic editions; and (4) Posts on Twitter and/or Facebook (click icons on the website to access).

SAFE dues are $10 per year for subscribers to the print edition of the newsletter and zero for electronic subscribers. Contributions are also appreciated and may be tax deductible (SAFE is a Section 501(c)(3) non-profit organization).

To join SAFE, renew your membership, or make a contribution, please print and complete this
form and mail it with your check to SAFE, 214 N. Spring Valley Road, Wilmington, DE 19807. Thank you!