OT re paid for in taxes
I can't buy the "well I paid for it with taxes" line.
Not even Social Security was paid for with recipients' taxes: despite being billed as a government insurance program for retirees, there's nothing at all like insurance in it, and it's apparently well-accepted that present contributions are funding present benefits, rather than have present benefits paid from past accumulations plus investment returns.
The fact is that as offensive as tax rates may be, they don't pay for the things you think would make a good federal investment; the taxes you paid years ago were pissed away on things like millionaire congressmen getting a lifetime salary, $500 hammers, and expenses caused by regulatory capture by federal suppliers of their fattest, dumbest customer.
I honestly don't expect that when the FEMA folks look at my stated income that they will give me a red cent. I expect that if I want anything to tide me over, it'll be related to business halting and involve an SBA loan. I think getting the loan will take me more time than it's worth, and that I'd be better off working -- or helping clients get into a position to pay me again!
The threat of actually getting government aid -- which I didn't really entertain until I read Lango's screed against its receipt -- has made me wonder if we shouldn't look at Cinderella Man (the movie) for an example of how aid should be treated: like at most a depressed-interest loan. I've had those before in connection with school, though in that case there's a private lender in the mix, with a federal guarantee. To avoid having aid obliterate the chances of recipients getting their credit in order and re-establishing themselves, perhaps aid programs for people who are temporarily out of work should have a special class of low-priority claim to ensure lenders and landlords that the amounts sought won't be taken before new clams are paid. Eventually, if the aid works, recipients can -- like the Cinderella Man -- pay the money back.
As long as it comes off as a no-strings gift, and an entitlement, it'll be hard to get people to treat it like it has value. So long as federal money is treated like it's free, we'll have no end to its consumption. We need to make people consider its cost, and perhaps that means we need to stop treating it as a handout altogether.
In a related vein, I keep seeing signs that show the cost of road construction projects. Typically, they identify the officials in charge of the project, the cost in local dollars, the cost in federal dollars, and the total cost. The federal dollar line is probably there to make onlookers see the project as a clever lure to create local jobs with money obtained from D.C. I see it differently. Those are dollars my community would have to solve problems with the priority of my community but for the funds having been taxes away by a Congress that's been unable to get close to balancing a checkbook since before the Second World War. I'm frankly irritated that Congress is allowed to tax these sums away, only to offer them back with strings, in effect buying a police power denied to Congress by the Constitution.
There may be great things funded presently with money disbursed by the authority of Congress. However, I'm doubtful these are things Congress should be funding; I think in many cases they are projects properly funded by someone entirely different. The cost of the funding is alarming: everybody seems to trade pork-barrell projects as currency, which means they're selling their votes for a payoff made with my money, taxed from me at gunpoint.
I'm sure we can get into a long tirade on projects specifically funded with money earmarked by law for dubious purposes, but this is a symptom of bigger problems.
I'm about given up on fixing it, though. I heard the President announce money market funds will now be paying a tithe to the federal government in exchange for more 'insurance' without explaining how the insurance will be priced and how risks will be adjusted, if at all. I recall the premiums being inadequate during the S&L crisis, inadequate for the flood coverage that encourages people to build costly mansions in known flood plains, inadequate to cover the loan guarantees made by federally-chartered mortgage guarantors -- all because nobody figured out how to price the risk. I have a crazy, dangerous idea: if federal regulators knew the right price on these risks, they could run their insureds' businesses better than the insureds themselves, and should be making money on it. Just how likely is it that we'll see rational premium pricing in any of these federally-created so-called insurance programs?
It's a future bailout waiting to happen.
Offering a money market insurance program today is akin to offering flood insurance after a hurricane has formed in the Gulf, and I suspect the math is about as good.
On the other hand, confidence is a good thing. The question is how long the federal government can convince people its guarantee is worthwhile. I remember when Japanese corporations could issue debt cheaper than the US Gov't, and used proceeds to buy Treasury bills. How things change.
I never thought the US government would end up being taken seriously as a worldwide financial guarantor again. I thought its inability to balance its books had pretty much killed that goose. Maybe everyone else is in even worse shape ...?
Ahh, to be able to work again!
I expect to drive back to Houston tomorrow.
Take care,
--Tex.
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