Illustration by Peter Linenthal

Illustration by Peter Linenthal

September 2012

Government

Steven J. Moss


Big government or small? America’s great debate,” was the question poised on a recent cover of The Economist magazine. It’s the reprise of a conversation Americans have been having since the nation was founded. But, at this point, it’s not the size that matters, it’s the performance. 

For the past fifty years the number of federal employees has ranged from a low of 4.1 million at the end of the Clinton Administration, to a high of 6.6 million when Johnson left office. No doubt, that’s a big swing. But government staffing levels isn’t where the money is, nor will it determine the quality of our future. Roughly two-thirds of all government spending — federal, state, and local — is for just four things: health care, pensions, education, and defense. We’re spending too much on health care and defense. But chances are we’ll need to either invest more in pensions and education, or, better, significantly reform these areas. And we’re not devoting nearly enough resources to protecting ourselves and the planet from emerging dramatic eco-system changes.

The health care sector — on which government spends $1.1 trillion a year — is a well-known sore point in American politics. There’s no doubt that too much money is being lavished on technology-driven, profit-focused, medicine. Upwards of 80 percent of federal health-care dollars are spent during the recipients’ last year of life. And hundreds of millions of dollars are expended on procedures and equipment that are not needed or overpriced. There’s no perfect fix to these problems. Coping with our fear of death, and bringing dying back into the mainstream, is one important step. You’re going to die; get over it. So too would be the adoption of a single-payer health care system, under which well-managed cost and quality control standards are implemented. 

Our pension system, mostly in the form of social security, is the government’s $1 trillion annual Titanic. Except, the iceberg — in the form of a fast aging population and low savings by working class and low income families — is clearly evident on the horizon. Current estimates have social security’s “lockbox” running a deficit by 2033, when I turn 73. But even if we start pouring more money into the trust fund, most people’s benefits will be barely enough to pay for rent, utilities, and a daily supply of Top Ramen. This year the average monthly payment is $1,230, providing an individual — who will typically have $110,000 in total assets, in the form of a still-mortgaged house — with just enough money to escape being officially poor. Forget about it if they have to support a partner, child, or live in San Francisco or another expensive location.

Barring creating a vast new population of seniors in poverty, there are only a handful of ways to address the age tsunami. Working people could pay (much more) in pension taxes, elderly people could wait longer to retire, and/or social security could be income-tested, with recipients receiving amounts according to their need. More dramatic reform could entail changing our pension policy instruments in ways that better match society’s, and individuals’, evolving requirements. Under this approach people would work — in some fashion, with increasing amounts of vacation and health leave and reduced hours — until they’re no longer able. Unemployment insurance, job training programs, and our education system would be modified to cater to support continual learning, to enable flexible adoption of new skills to meet changing employment needs.

More than $9,000 a year is spent on public education for every American between the ages of five and 24, roughly $950 billion a year, mostly through state and local governments But it’s not being spent well. Forget about test scores and teacher performance. Both are important. But there are much more fundamental problems with our education “system,” which almost completely fails to address the diversity of ways children learn, and the speed in which new skills need to be acquired in the emerging world. This government sector needs to be completely upended. When the dust settles, public education should consist of a rich eco-system of schools and learning experiences that encourages the best in each student, so that they, in turn, can help contribute to our colorful, complex, changing world. 

The roughly $900 billion spent on defense could be cut by 20 percent, and there’d likely still be fat, in the form of overblown weapons systems, unneeded bureaucratic entities, and excess personnel. More fundamentally, a half-century of wars, petty and large, have demonstrated that we’re just not that good at the endeavor. The greatest American victory in the 21st century — assassinating Osama Bin Laden — was accomplished with a handful of well-trained soldiers, aided by satellite imaging and modest air support. China is emerging as a global competitor, but that’s not our problem alone. 

The American military should be vastly shrunk and diversified, with the liberated funds invested in developing a flexible, resilient response to coming environmental threats, which will include more bouts of extreme weather, droughts, massive species dislocation, and mounting population pressures. 

In this respect, size does matter, but more important is intelligence. In the not too distant future, government — federal, state, local, and even smaller — is going to need to be both large and nimble enough to lead us through challenges that will be too massive for even the current, sizeable, public sector to cope with. Government needs to be both too big to fail, and smart enough to succeed.

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