How to Cut the Budget

This week the Tea Party conservatives launched their "Contract from America." And a group of conservative luminaries released the "Mount Vernon Statement." The former proposes to cut excessive spending, but doesn't say what, and the second is a noble expression of soaring generalities.

If you wonder why bold conservative reformers are so timid, you need only to step over to and check out the gory details.

United States Federal State and Local Government Spending
Fiscal Year 2010

Pensions: $0.99 trillion
Health Care: $1.09 trillion
Education: $1.04 trillion
Defense: $0.90 trillion
Welfare: $0.75 trillion
Protection: $0.35 trillion
Transportation: $0.27 trillion
General Government: $0.13 trillion
Other Spending: $0.58 trillion
Interest: $0.31 trillion
Total Spending: $6.50 trillion

These numbers tell us that when you talk about cutting excessive government spending, you had better be talking about the big four: Pensions (including Social Security and government employee pensions), Health Care, Education, and Welfare.

The government has utterly failed at these major programs. That's because of two inescapable facts of government: It always promises more than it can deliver, and it is always more interested in rewarding its supporters than in actually delivering a product. Business is different. It has to deliver the product before it pays its wages, and it has to deliver on its promises or politicians will know the reason why. 

In the end, we will have to take these programs away from government.  They are too important to fail.

But is it really possible to do all these social programs without government? What will happen to Grannie? What will happen to the poor? Don't we care about kids?

Let's think about how this is possible, just between you and me.  Let's call it the Back-Pocket Manifesto. Liberals, go away and watch Keith Olbermann for a while.

Social Security. In Chile, they have replaced most of their government pension plan with a true savings plan. It is heavily regulated, but it delivers such high returns to Chileans that many of them retire early. It is obvious that Fidelity and Vanguard could scale up to administer a national program of worker savings for the U.S. in very short order.

Education. We know that homeschooling works.  We know that school choice works. But there's more. In the third world, James Tooley shows in The Beautiful Tree that unregulated, off-the-books, private, fee-paying schools for the poor are outperforming government schools. To replace government schooling fully, we will need to put teenagers to work. According to Harriet Sergeant, we could ask Father Parkes, president of Cristo Rey, a Catholic parochial school in East Harlem, how that works. His students work one day a week on Wall Street.

From the age of 14, they join a team of five pupils, each performing clerical work one day a week. They know their salary pays "a big chunk" of their education. As one young man said, "They treat me like an adult."

Child sweat-shop workers back in 1913 thought the same. They hated the way they were treated at school.

Welfare. We already know that welfare can be reformed. We did it fourteen years ago. If we've forgotten, we can always go back to the ABCDEFG method used by social workers in the 19th century to get discouraged workers back to work. Then we'd have money for people in genuine need.

Health Care. This is the hardest nut to crack. Let's pose the issue in its starkest terms. Suppose we didn't have government-provided health insurance: What then? We'd still have modern life expectancy due to clean water, sewage disposal, garbage pickup, vaccination, asepsis, neonatal care, and antibiotics. There would still be Wal-Mart Care, which costs about 80 percent less than a regular doctor visit. People would be a lot more careful about carrying catastrophic health coverage. Maybe U.S. health care would look a lot like Singapore's, with medical savings accounts and prices about one-third of U.S. rates. Need a knee replacement? That's $12,000 to $14,000, about the price of a good used car.

But the real reason to dismantle the welfare state is a moral one. The only moral way to help the afflicted and relieve the poor is with personal action.  Simply writing a check, whether to the government or to a charity, is not enough. Herbert Spencer wrote in "The Proper Sphere of Government" of an analogy between established religion and established charity. "The form will always be substituted for the reality" in religion and in charity. "The payment of [taxes] will supplant the exercise of real benevolence, and a fulfillment of the legal form will supersede the exercise of the moral duty."

I'm not suggesting here that we should immediately throw all our beloved national welfare-state programs on the bonfire of the liberal vanities. I'm only pointing out that we could.

But when the day comes, and the liberal welfare state hits the wall, there will be wailing and gnashing of teeth. The end of the world is here, the apologists will wail.

No it isn't, well-informed conservatives will say, hauling out our Back-Pocket Manifestos. It says here that there are alternatives to the liberal government programs, and they work every time they are tried. 

There is a problem, we'll admit. There won't be many government jobs for liberals. That would be the end of the world as they know it.

Christopher Chantrill is a frequent contributor to American Thinker. See his and His Road to the Middle Class is forthcoming.