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Fiscal Responsibility Versus Borrow-and-Spend Economics

Josh Levinger

I agree with the thesis of Tuesday’s article [Sept. 14] “They’re Different, and It Matters” by Ken Nesmith, but not the conclusion. The two candidates are different; one believes in individual freedom and fiscal responsibility, and the other believes in borrow-and-spend economics and an omnipotent government. Which one is which may surprise you. Because Nesmith’s arguments are mostly economic, I will rebut them in the same manner, although I may have to appeal to human decency and morality once or twice.

Health care is not the “responsibility... of the individual citizen.” Citizens are workers, and their productivity is inextricably linked to their personal health. It is in everyone’s interest, corporations and citizens, that we are a healthy nation. Because employers pay for the current system, the cost has a negative impact on the free movement of capital. President Bush’s solution is the end of government health care, and a change to complete privatization. But what will happen to the 40 million uninsured Americans, and the 8 million unemployed? Are they to live in squalor and sickness because they cannot pay for care? Is that how a moral nation treats its citizens? What happened to Rousseau’s social contract?

The alternative to complete privatization is a single payer system, or “socialized medicine.” Yes, government intervention would necessarily increase under this plan, but so would public health. While opponents of this system are quick to complain about the inefficiencies of a public health care system, this ignores the inefficiencies and injustice inherent in a private system. Any for-profit health care provider will have layers of bureaucracy to determine if a particular patient merits a particular treatment. Under a public health care system, a treatment is performed if it is medically necessary. While this might seem more expensive, note that Canada spends far less on their health care system as a percent of GDP than we do (9.5 percent vs. 13.9 precent in 2001), while achieving a similar provision of care. A public system helps the economy by guaranteeing that workers are healthy and productive. Our current system makes employers pay for their sick workers, and makes companies think twice before adding jobs. Given that Bush has presided over the loss of nearly two million jobs, one would assume he would jump at any opportunity to lower the barriers to job creation.

Social security was one of the most contested issues of the last election, and it continues to vex politicians today. Nesmith calls it a “pyramid scheme,” and it is in that we use today’s funds to pay today’s debt to retirees. The financial crisis stems not from poor accounting by the Social Security Administration, which has a large surplus saved to pay future benefits, but from Congress, which has borrowed $1.4 trillion of this surplus to pay for tax cuts and spending increases. When they have to pay this money back as the baby-boomers begin to retire, we will either have to borrow money from someone else, decrease spending, or increase revenue by raising taxes.

Here is where the candidates differ. John Kerry advocates “common sense accounting.” Find yourself in a hole? Stop digging. Don’t borrow money to pay for spending now when you know you’ve got large expenses in the future. Surely you’d expect the only president with an MBA to understand this, even if it is from Harvard. Bush’s solution involves shredding the common safety net, and replacing it with a giveaway to corporations. Private savings accounts sounded like a great idea four years ago, when the stock market seemed unstoppable. After that period of “irrational exuberance,” and too many scandals to list, this seems a little less brilliant. Private savings accounts will be administered by Wall Street management firms, which charge exorbitant fees for their mutual funds. According to investment legend John Bogle, they also perform on average 2 percent worse than the market as a whole. Those who have extra money to invest in the stock market are still welcome to do so. But for those millions of Americans who can’t afford to save, the government takes 6.2 percent of their pretax income from both them and their employer to pay for their future well-being. If you make more than $87,900 a year, you’re credited back any excess you paid. This means that Nesmith’s concern about rich retirees paying more than their fair share is misplaced. The poor pay for their own retirement, and the rich are allowed to invest their excess income privately. The government just helps the process along, and charges far less overhead than private investment firms.

Education was also a point of contention in the last election, and Bush claims to have done something about it. In reality, the No Child Left Behind Act is the largest unfunded federal mandate ever placed on the public school system. It requires high standards and “accountability,” but doesn’t aid failing schools with extra financial assistance. Schools that fail are merely shut down and replaced with ones run by for-profit corporations or vouchers for religious schools.

It is in our economic interest that all young people are educated to similar standards. Vouchers and religious schools, while they educate students to their parents’ wishes, are not held to these standards. In Florida, a test-bed for national voucher policy, nearly one third of the schools accepting vouchers were not accredited. While the public school system (of which 71 percent of MIT undergrads are a product) may not be perfect, more funding and real federal help are the solution, not utopian nonsense like No Child Left Behind.

And before conservatives start whining about the “nanny state,” let me remind you who believes the government should be able to tap your phone and review the books you read without your knowledge or consent. Who wants to stop dangerous terrorists like Ted Kennedy from flying, without providing a system to challenge the secret No Fly List? Who wants to write discrimination into the Constitution, when it took so many years to rid ourselves of the stain of miscegenation laws? Who turned the largest surplus ever into a deficit of $422 billion for fiscal year 2004? Who sent us to war over weapons of mass destruction that Colin Powell now says may never be found, and still refuses to project a final cost for the war and reconstruction? Who fired his own Secretary of the Treasury when he dared to offer such an estimate; an eerily accurate $200 billion? Is this sound economic policy, firing the one man who gives straight advice?

George Bush has been the worst president in recent memory, and this nation can hardly afford another four years. Since Ken and I clearly disagree, I’d like to propose one of our finest methods of settling political disputes. In the spirit of Zell Miller, Aaron Burr, and Andrew Jackson, I challenge him to duel at high noon on Killian Court. Weapons may be of his choosing, although I suggest the AK-47, legal because Bush let the Assault Weapons Ban lapse on Monday. The two candidates most certainly differ on this issue, and to Ken Nesmith, that should matter greatly.

Josh Levinger is a member of the Class of 2007.