John Stossel on the Entitlement Mentality

[Dennis Hardin]

Once again, John Stossel has produced a brilliant documentary on our nation’s current fiscal crisis. The FOX News program is called “The Money Hole,” and it deals with the altruist-collectivist entitlement mentality that is rapidly sinking our economy in an ocean of debt. The following is a summary of some of Stossel’s key points:

The U.S. government is currently 14 ½ trillion dollars in debt.

In Greece, the debt level rose to 126% of the Gross Domestic Product in 2009. They currently owe more money than their entire economy can produce.

The government in Greece had no choice but to make significant cutbacks, and this was followed by riots and chaos in the streets. The people of Greece demanded their entitlements as a matter of right.

In the U.S., at current rates of spending, our national debt level will begin to exceed our GDP within the next ten years. It will then become extremely difficult for the U.S. to borrow money to cover the debt, leading to a dramatically worse economic situation than we have today. Not only will interest rates spiral, but the pressure for the government to print more money could lead to runaway inflation with all the disastrous consequences that would entail.

In Zimbabwe, for instance, it takes 25 million local dollars to equal one American dollar. That’s where we are headed.

So in February, 2010, Obama appointed a fiscal commission, and they came back with the recommendation that we raise taxes by one trillion and cut spending by three trillion. Obama ignored their consensus, but told the national press that he was still looking to their conclusions as a “framework for a conversation.” Last April, Representative Paul Ryan proposed a serious plan with very specific spending cuts, targeting one of the key government programs responsible for the crisis: Medicare. Whereupon the president responded by saying he would offer a “more balanced approach.” His “balanced approach” included no specific spending cuts—just a vague promise for cuts—and, of course, a proposal to raise taxes on the rich.

The fact is that spending has increased so fast that no conscionable level of taxation could possibly make much more than a minor dent in the level of the national debt.

Congressman Ryan’s plan to make Medicare solvent has been met with the same angry resistance that Dan Rostenkowski, the Democratic chair of the Ways and Means Committee, faced in 1989 when he proposed a plan for seniors to make modest co-pays. The message politicians get is: “Don’t dare touch our hand-outs!” In fact, citizen lobbyists continue to descend on Washington to try to get more tax dollars for their pet projects. The careers of senators and representatives depend on pleasing the lobbyists and catering to their respective needs.

Congressmen who resist the pressures of lobbyists such as Jeff Flake (R, AZ) and Scott Garrett (R, NJ) are rare exceptions. The good news is that they now have more allies in Congress as a result of the upstart TEA party voter movement in 2010.

Despite the current 2 year “earmark moratorium” for congressional pet projects, ridiculous local, state and federal government spending progams continue unabated. Senator Harry Reid predicts the "moratorium" won’t last.

Governor Scott Walker of Wisconsin was elected because of his strong stance against public sector unions. Their fixed compensation packages of pension and healthcare benefits were bankrupting the state. Walker eventually won some cutbacks in those areas, but demanded that the legislature reign in the union’s power to extract similar benefits in the future. The unions insisted that the government was trying to take away the union worker’s right to collective bargaining.

Collective bargaining agreements for government workers are simply a tool for union leaders to forcibly extract tax money, which is then used to bolster support for the politicians who support the unions. The fat salaries and exorbitant pensions for public employees that result from the CBAs are kickbacks which politicians (mainly Democratic) give to the unions who elect them. The union leaders claim to be nonpartisan, but the political donations of public sector unions are consistently around 90% democratic.

Needless to say, the union leaders call such entitlements “rights.”

The vehement protests against Governor Walker continue. Fortunately, Walker is not alone. Chris Christie, Rick Scott, and John Kasich are fighting similar battles in their own states. And then there is the remarkable job being done by Luis Fortuno, governor of Puerto Rico.

What follows are some excerpts from Stossel’s written article, “The Money Hole.” The content is similar to the points made in his FOX documentary.

Two years ago, Fortuno fired 17,000 government workers. No state governor did anything like that. He cut spending much more than Walker did in Wisconsin. In return, thousands of union members demonstrated against Fortuno for days. They clashed with police. They called him a fascist

Fortuno said he had to make the cuts because Puerto Rico's economy was a mess.

"Not just a mess. We didn't have enough money to meet our first payroll."

Fortuno's predecessors had grown Puerto Rico's government to the point that the state employed one out of every three workers. By the time he was elected, Puerto Rico was broke. So the new conservative majority, the first in Puerto Rico in 40 years, shrank the government.

What was cut?

"Everything. I started with my own salary."

The protesters said he should raise taxes instead of cutting spending.

"Our taxes were as high as they could be, actually much higher than most of the country. So what we've done is the opposite." Fortuno reduced corporate taxes from 35 percent to 25 percent. He reduced individual income taxes. He privatized entire government agencies.

"Bring in the private sector," Fortuno said. "They will do a better job. They will do it cheaper."

Fortuno's advice for leaders who want to shrink the state: "Do what you need to do quickly, swiftly, like when you take off a Band-Aid. Just do it. And move on to better things."

Stossel also discusses the important changes Canada made to shrink the size of their government in the mid-90s.

Economist David Henderson, a Canadian who left Canada for the United States, remembers when The Wall Street Journal called the Canadian dollar "the peso of the north." It was worth just 72 American cents. "Moody's put the Canadian federal debt on a credit watch," Henderson said.

The problem, he added, was that Canada had a government safety net that was more like a hammock.

"When I was growing up in Canada, people who went on unemployment insurance were said to go in the 'pogie.' You could work as little as eight weeks, taking the rest of the year off."

So in 1995 Canadian leaders cut unemployment benefits and other programs. It happened quietly because it was a liberal government, and liberals didn't want to criticize their own. The result was that Canada's debt stopped increasing. As the government ran budget surpluses, the debt went down.

"The economy boomed," Henderson said. "Think about what government does. Government wastes most of what it spends, and so just cutting government and having that money in the hands of people means it's going to be used more valuably."

Canada fired government workers, but unemployment didn't increase. In fact, it fell from 12 percent to 6 percent. Canadian unemployment is still well below ours. And the Canadian dollar rose from just 72 American cents to $1.02 today.

Canada also raised some taxes. But the spending cuts were much bigger, six to one: agriculture was cut 22 percent; fisheries, 27 percent; natural resources, almost 50 percent.

Great work, John Stossel. I have only one suggestion to offer. Make the moral connection. If people have a "right" to entitlements from government, where do those benefits come from? What about the rights of those who provide those benefits?

Remember all those nice things you had to say about the Atlas Shrugged movie?

Well, perhaps you could end such documentaries with an out-take from the film’s final scene. You know, when John Galt is telling Ellis Wyatt about this place he knows where they recognize a man’s moral right to his own life.

[Dennis Hardin]

Since I had all those nice things to say about John Stossel last week, I feel the need to temper those words with a less than enthusiastic comment about his latest FOX News Special (“Stossel”).

Sigh. Stossel is a libertarian, and because he does not have a philosophical base to work from, he tends to look at everything through the libertarian lens. In other words, always try to explain things from the perspective of the evil of guns and government force, even when those guns are justifiably aimed at those who want to kill us.

On this week’s show, he interviewed Thaddeus Russell, author of A Renegade History of United States. A sample of Russell’s erudite wisdom:

“In general, American military intervention has increased anti-Americanism and hardened repressive regimes. On the other hand, American popular culture—what is often called the worst of our culture—has done more for our liberation and national security than anything the 82nd airborne could do.”

Reagan’s military build-up had nothing to do with the bankruptcy and downfall of the Soviet Union. The Soviet people and the Eastern Bloc simply walked away from communism, and that began when American popular culture—Jazz, jeans and Rock’n Roll—began infiltrating those countries after WW II.

Springsteen gives a concert in East Germany. Glasnost ensues. And the Soviet Union was cooked.

I love Bruce Springsteen. But giving him the credit for Ronald Reagan’s triumphant defeat of communism is going a little far.

Stossel: “So that was what brought the Berlin Wall down, not our guns?” Of course, says Russell.

If popular dissent against a repressive regime and a craving for freedom was all that was required, Iran would not presently represent a deadly threat to the safety and security of the entire world.

(Please note that I am not claiming that the present foreign policy of the United States is remotely rational or sane.)

This sort of hokum is what gives libertarianism its well deserved reputation for total and utter naivete. And this is why Ron Paul (whom Stossel endorses for president)—so brilliant on the economy and so incredibly dim-witted in regard to foreign policy—is doomed to fail.

[algernonsidney]

I wish Stossel had talked to me. I have known a bona fide welfare bum personally for over four years. This guy is on disability, even though he is pretty much able to work. He does absolutely nothing, except buy self-help courses and other baloney. He lives with his parents and in his 30's.

[Selene]

I wish Stossel had talked to me. I have known a bona fide welfare bum personally for over four years. This guy is on disability, even though he is pretty much able to work. He does absolutely nothing, except buy self-help courses and other baloney. He lives with his parents and in his 30's.

Chris:

I must be missing the point you are making. Are you under the impression that Stossel would support the entitlement program for the person you know?

Adam

[Selene]

This sort of hokum is what gives libertarianism its well deserved reputation for total and utter naivete. And this is why Ron Paul (whom Stossel endorses for president)—so brilliant on the economy and so incredibly dim-witted in regard to foreign policy—is doomed to fail.

Dennis:

I have some serious reservations about aspects of Paul's foreign policy analysis, but it would be tempered by a number of factors if he were to become President.

The newest Rasmussen poll of likely voters here, or, as those of us in the political consulting game call them, the prime voters, shows Obama 41%, Ron Paul 37%.

Now, his path to the Republican nomination is a difficult one, but not impossible. His appeal to independents and individual rights democrats is strong enough to beat O'biwan as long as there was no serious third party.

His stand on economics, his opposition to a centralized powerful executive and his approach to a balanced budget by Constitutional amendment appeals to me and a large swath of Americans.

If it were a choice between Ron Paul and O'biwan, the boy prince dictator, which lever would you pull?

Adam

[Dennis Hardin]

This sort of hokum is what gives libertarianism its well deserved reputation for total and utter naivete. And this is why Ron Paul (whom Stossel endorses for president)—so brilliant on the economy and so incredibly dim-witted in regard to foreign policy—is doomed to fail.

Dennis:

I have some serious reservations about aspects of Paul's foreign policy analysis, but it would be tempered by a number of factors if he were to become President.

The newest Rasmussen poll of likely voters here, or, as those of us in the political consulting game call them, the prime voters, shows Obama 41%, Ron Paul 37%.

Now, his path to the Republican nomination is a difficult one, but not impossible. His appeal to independents and individual rights democrats is strong enough to beat O'biwan as long as there was no serious third party.

His stand on economics, his opposition to a centralized powerful executive and his approach to a balanced budget by Constitutional amendment appeals to me and a large swath of Americans.

If it were a choice between Ron Paul and O'biwan, the boy prince dictator, which lever would you pull?

Adam

Adam,

One lesson we have learned from the Anointed One is that a newly elected president faces severe limitations on what actual changes he can make. Obama can’t even close Gitmo, despite promising to do within days of taking office.

I would definitely vote for Ron Paul, and be thrilled to do so. But his hopelessly unrealistic foreign policy statements (e.g., Iran is not a threat to our national security) will likely prevent me from getting that chance.

Like the current White House occupant, Paul would be hamstrung from making drastic changes either in foreign policy or in domestic economic policy. Hopefully, he would have some advisors who could talk some sense to him about the perils of ignoring certain foreign threats. I am convinced that his overall influence while in office would be extremely favorable to freedom. I’m willing to take my chances that the good will out-weigh the bad.

[Dennis Hardin]

I wish Stossel had talked to me. I have known a bona fide welfare bum personally for over four years. This guy is on disability, even though he is pretty much able to work. He does absolutely nothing, except buy self-help courses and other baloney. He lives with his parents and in his 30's.

Chris:

I must be missing the point you are making. Are you under the impression that Stossel would support the entitlement program for the person you know?

Adam

Adam,

I'm pretty sure Chris intended his post to be further validation of Stossel's theme about the extensive waste and abuse that is rampant throughout the entitlement-welfare system.

[Selene]

Dennis:

Thanks. As to Paul, I agree. I actually am confident that he would not let the office go to his head.

As to Chris, I am always wary that he might be in a sardonic and satiric modality.

Adam

[Selene]

The newest Rasmussen poll of likely voters here, or, as those of us in the political consulting game call them, the prime voters, shows Obama 41%, Ron Paul 37%.

Now, his path to the Republican nomination is a difficult one, but not impossible. His appeal to independents and individual rights democrats is strong enough to beat O'biwan as long as there was no serious third party.

Adam

This is interesting. Ron Paul just picked up a critical endorsement in Iowa here.

Now it is not a major national endorsement, but in terms of the internal machinations of the Republican primary process, it can have a major impact because of the Ames Straw Poll on August.13th.

It is the ancient Archimedes axiom:

Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.

This is the kind of event or happening that you look back on and say hmmm, so that is where it started.

Adam