We all know the economy is bad, but it’s still possible for most people to get a decent job and make an honest living.  So, why are so many people dependent on the government for assistance?  Are the conditions really so bad that people have no choice?  Or, have we become a nation of slackers?  How many of our citizens are truly needy and how many are just working the system?

Misguided Policies & Politics

To me, America is starting to look like a sinking ship, because too few are pulling on the oars.  Whenever a country tries to redistribute the wealth and income from one class to another, disaster is soon to follow.  In America’s case, not only is wealth being redistributed from the working class to the poor, it is also being appropriated by the rich.  This two-sided attack has decimated the middle class and the strong economy it once created with its wages and purchases.

The colossal failure of our leaders, past and present, is impossible to deny.  The facts and figures cannot be disputed by any logical person who contains any shred of objectivity.  The broken promises and partisan finger pointing aren’t solving any of our economic problems.  They are contributing to our demise.  Our politicians are neither leaders nor are they representatives of the people.  They are agents of the special interests who fund their campaigns.  Both political parties have bankrupted our nation, in a selfish attempt to cling to power.  Now, the bills are coming due.

Failure by the Numbers

Not only are these statistics bad, many are historically unprecedented.  The harsh effects of these problems are being hidden under massive deficits and economic easing.  But, this will all blow up in our faces, sooner or later.

• 46 million people receive food stamps
• SAT reading scores are the lowest in 40 years
• The Federal deficit is over $16 Trillion
• 47% of Americans don’t pay Federal income taxes
• Median household income dropped 8% in five years
• 65% of the Federal budget is spent on entitlements
• Student loans for college tuition exceed $1 Trillion
• 35% of Americans are now clinically obese
• Over 41% of jobs are considered low-income
• The U6 unemployment rate is close to 15%
• Nearly 2.4 million people are incarcerated
• Almost 15% of Americans live in poverty

Corruption, Graft & Influence

The common cause behind most of these miserable statistics are the special interests that undermine our nation.  Our government is openly for sale and this benefits others at a heavy cost to the citizens.  First, there is a small campaign donation, which yields a contract, an earmark, a new law or a tax loophole.  The small donations lead to super-PACs and the small grants become huge loan guarantees.  Soon, there are billions of dollars flowing from our treasury to connected individuals and companies, all at taxpayer expense.  We only have to follow the trail of money to understand how our government spends so much and gets so little in return.

Political Pandering

Politicians can’t get elected by campaign financing alone.  They have to appeal to large blocks of voters, who often control the direction of a political party.  Many of these demographic voters have little regard for others who don’t share their values and opinions.  Whether politicians promise tax breaks to the rich, subsidies to farmers, bailouts to banks or expensive benefits to public employee unions, taxpayers are stuck with the tab.

Potential Solutions

That is enough with all of the doom and gloom already.  Americans didn’t become the leaders of the free world by sitting around complaining about our problems. We did it by creating solutions. Here are some of my solutions.

Third Political Party – The Republicans and Democrats have a stranglehold on our political process and have used their duopoly to benefit themselves and their donors, instead of voters.  A viable third party would break the stalemate and return power to the voters, by tipping the balance on critical issues.  We should demand fair representation, instead of ideology.  We need to elect politicians who are open to discussion and compromise.  We deserve a government that represents voters, instead of political parties and special interests.

Public Campaign Financing – Until recently, the campaigns for the Presidency were financed with public funds, in order to reduce the influence of political donors and give each candidate an equal amount of funding.  The massive amount of money pouring into the campaigns has caused the candidates reject public funding and the spending limits.  I believe the federal government would save a lot of money with public funding of all elected offices, because donor often receive much more than they give.  This would require a constitutional amendment, since campaign finance has recently been deemed free speech by the Supreme Court.

Replace the Electoral College – Two hundred years ago, it was necessary for delegates to travel to Washington in order to cast votes on behalf of their districts.  Now, we have computerized voting systems.  The current system erodes the integrity of each person’s vote and allows political parties to manipulate the system.  For example, I am a conservative California voter and most of my votes are nullified when all of the delegates are given to the winning party.  Each state has their own rules and delegates are able to vote against their district’s wishes.  There should be one equal vote for each citizen and all state primaries should be held on the same day.  That is the fairest way to elect our representatives.

Flat Income Tax – The complex Federal income tax system is the payoff point for many large businesses and special interests.  Hidden deep in the massive volumes of tax code are special credits, which are available only to a select few.  This is why some people pay a lot of taxes and others pay close to zero.  Flattening the tax code would not only make the tax distribution fairer, it would take away one of the direct perks for campaign donors.

Curbing Entitlements – I’m very sympathetic to the disabled, the disadvantaged and the unemployed.  But, the massive increase in the number of recipients makes me suspicious.  I find it hard to believe 46 million people need food stamps in order to survive, when 35% of our population is obese.  Sure, times are tough, but it’s not life and death.  Most of the people I know who receive food stamps have expensive cell phones and new cars on payments.  I know a number of able-bodied people who are receiving disability benefits and they are in great physical condition.  They just don’t want to work.  They even have handicap placards, so they can park up front at the golf course.  It’s hard to blame people when the government is showing nightly TV commercials, encouraging everyone to sign up.  I believe we should stop advertising for entitlements and start to verify the true need of each recipient.

The Bottom Line

The bottom line is that America was founded on a capitalistic system that rewarded the courageous and the innovative.  And, it has worked for more than two hundred years, while the rest of the civilized world faltered.  Now, we are adopting the socialist policies that collapsed the Soviet Union and are bankrupting Europe.  They aren’t going to work in America.  They haven’t worked in the past and they won’t in the future.  Idealism is one thing; Incentive is quite another.

“When you see that in order to produce, you need to obtain permission from men who produce nothing – When you see that money is flowing to those who deal, not in goods, but in favors – When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – When you see corruption being rewarded and honesty becoming a self-sacrifice – You may know that your society is doomed.”

Ayn Rand – Atlas Shrugged, 1957

Recommended Reading

Consumerism Commentary – 6 Milestones for Entering the Middle Class
Don’t Quit your Day Job – The Definitive Guide to Protest Voting
Financial Samurai – Definitions of a Middle Class Income

This post was featured on the Carnival of Personal Finance over at Tie the Money Knot.  My post was selected as this week’s Editor’s Choice.  You have to check it out.

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