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Defining Our Fiscal Crisis Correctly is Step One

The opinions expressed by columnists are their own and do not necessarily represent the views of

The first step in solving any problem is defining the problem correctly. It’s here, at step one, where we’re already failing in how we’re thinking about our nation’s fiscal crisis.

Despite the fact that we’re talking about an out-of-control federal budget, the problem at its root is not a budget problem. It’s a cultural problem which reflects poor decisions we’re making about how we use our valuable resources. Until we come to terms with this, these problems are not going to get solved and will only get worse.

If a friend of yours was constantly broke because he spends his paycheck on beer and lottery tickets, you wouldn’t tell him he’s got a budget problem. You’d tell him he has a personality problem.

No different with the nation. The fiscal and economic black hole into which we are being sucked reflects bad thinking and bad decisions.

Like the guy who is broke because of beer and lottery tickets, we know we’ve got a problem. But we still have a lot of work to do to understand the personality, or cultural, problem that’s causing it.

Polling reflects this.

Today only 31% of Americans are “satisfied” with the “size and power of the federal government.” This is down from 41% just two years ago and 50% ten years ago.

But, although 70% of Americans understand that the federal government has gotten out of control and is getting into our lives where it doesn’t belong, when we get down to the specific programs that cause the problem, Americans indicate that they still want these programs.

The elephant in the room are entitlements – Social Security, Medicare, and Medicaid. These now total up to $1.6 trillion in spending, or about 45% of the federal budget. The $1.6 trillion is projected to double over next ten years. We simply can’t meet these obligations.

Yet polling indicates Americans don’t want these programs cut. Recent polling from the Pew Research Center shows over 80% of Americans want these programs to stay where they are, or increased.

How do we reconcile the paradox that most know that the federal government is out of control, yet support the programs that are driving it out of control?

One factor is the way the discussion is taking place.

We’re hearing from politicians about the need to make “hard choices.” They’re defining the problem as keeping the programs the same and making cuts in them.

Naturally, there is resistance by taxpayers to take hits on what they believe are benefits for which they’ve paid taxes.

But when problem is redefined to fundamentally change the way we do these things, polls show openness to change.

Polling done by Pew just last September showed major support for changing Social Security to an ownership program rather than a government tax and spend program.

Fifty eight percent said they support being able to invest a portion of their Social Security taxes in a personal retirement account. Overwhelmingly, younger Americans want to do this. Seventy percent in ages 18-29 support the idea and 63% in ages 30-49 support it.

In work done by William Shipman and Peter Ferrara last year, reported in the Wall Street Journal, they calculated what a couple, earning incomes at the national average, would have earned if they could have invested their Social Security taxes in a broad index of stocks over their 45 year working lives from 1965 to 2009.

Despite a 37% drop in 2008, they still would have earned 75% more than they would have gotten from Social Security.

Perhaps more importantly, it would have been their money, in their own account, for their own use, or passed on to their own heirs.

What we’re calling a budget crisis is really a government socialism crisis. This is what needs to be addressed if we’re going to have a future.

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