Federal spending and debt threaten future prosperity. Justin Bogie writes:
The Congressional Budget Office projects that the fiscal year 2018 deficit will hit $804 billion, pushing national debt to over $21 trillion. It's a crushing tide of red ink.
To put those numbers into context, consider the typical U.S. household, which last year earned $60,336. If that typical family spent like the feds, they would have entered the fiscal year more than $300,000 in debt and piled on an additional $12,000 on top of that. [...]
Federal debt borrowed in credit markets is on pace to consume the entire U.S. economy in just over a decade. And if you include what the federal government has "borrowed" from Social Security and other government trust funds, the total national debt already exceeds our gross domestic product.
Over the next 30 years, both federal revenues and spending are projected to grow. But spending will increase at a rate of about four times faster than revenues. Both deficits and the government's overall debt will continue to rise.
This can be fixed, but tax cuts and spending cuts will have to go hand in hand. Cutting taxes and increasing spending at the same time is a sure recipe for fiscal disaster. By ignoring the spending problem, Congress is ensuring that this year's tax cuts will be temporary at best, and the growth potential from those cuts will never be fully achieved.
[Justin Bogie, "Growing National Debt Threatens the Current Economic Boom," The Daily Signal, October 5]
The U.S. military is not equipped for the threats it will face. Dakota L. Wood writes:
The sustained counterinsurgency, counter-terrorism, security/stability, and train/advise/assist missions of the past 17 years haven't required U.S. forces to deal with an enemy that possesses combat aircraft, a navy of any sort, armored formations, missiles, or even multiple launch rocket artillery. In short, we're out of practice.
Russia and China have these capabilities in large numbers. Worse, they're rapidly improving them each year, augmenting them with unmanned systems, cyber warfare tools, space-based systems, robust conventional missile systems and, let's not forget, deep inventories of nuclear weapons.
The Army is just now getting a handle on what it will take for its operational units to gain competency in major land operations. It has invested heavily in realistic training for its heavy brigades at the National Training Center at Ft. Irwin, Calif. That's good, obviously, but the learning curve has been steep, and they are only now discovering just how far they need to go to regain the big-battle competence of the Army they used to have.
The Marine Corps is wrestling with the implications of a naval campaign against a major competitor like China. Initial insights indicate that its portfolio of ground equipment and weapons, and supporting vessels operated by the Navy, may have to substantially change to be relevant in highly contested waters.
The Air Force is challenged by too few planes and a large deficit in pilots. During the Cold War, pilots would typically need 200 or more training flight hours to be considered competent for the rigors of air battle against their Soviet counterparts. Today, the average fighter pilot gets less than 140 hours per year. F-35A pilots are averaging roughly 75 hours a year.
The Navy has plans to grow its fleet from 285 ships to 355. But it takes time to build ships, even after you get the necessary funding, so we shouldn't expect this needed fleet to be reached until the year 2050. By comparison, China is on track to achieve a fleet of 350 ships by 2020. With no reduction in the demand for U.S. navy ships in key seas stretching from the Sea of Japan to the North Atlantic, the Navy is hard pressed to catch up on years of deferred maintenance, which limits its ability to improve ship availability for the training it needs to prepare for "great power competition" and to slow the aging of the vessels its does have in the fleet.
[Dakota L. Wood, "Our Shrinking and Overworked Military Can Barely Pass Inspection" Chicago Tribune, October 4]
Forcing other companies to pay like Amazon will be good only for Amazon. Ryan Bourne explores the problem with using Amazon's wage floor of $15 per hour as a guide to minimum wage policy:
Whatever the thinking, Amazon thinks its business model can cope. But this tells us nothing about the feasibility of pay hikes for the low paid across the whole economy through raising minimum wage rates. Remember, the most robust evidence from Seattle still suggests that statutory pay hikes reduce job opportunities and maybe even lower overall incomes for the low paid as a cohort.
Sadly, lots of proponents of hiking minimum wages are prone to motivated reasoning here. They imply minimum wage increases bring no trade-offs. They want to claim that wage hikes benefit both workers and businesses—that firms will see big increases in productivity and greater attachment from workers such that firms' bottom lines don't suffer. So when a major company decides to voluntarily increase pay, it is just further evidence for their assertion. It just makes sense.
But this is wishful thinking. While some firms, such as Amazon, might feel that raising pay is right for the business, it seems unlikely that campaigners know what is best for all companies, and that employers are simply being irrational in missing out on productivity gains. Some companies do indeed choose to become "high pay" employers, taking on larger fixed costs in the hope they can recruit and retrain better talent.
But these benefits cannot possibly apply to the economy as a whole. If you keep raising the regulated pay floor, eventually opportunities will diminish, in particular for younger and less skilled workers, who are more risky for employers to take on. What is more, some businesses face such tight margins that they could not possibly do what Amazon has announced.
Indeed, Amazon's positioning today implicitly admits this. Within the press release announcing their own pay hikes, the company says that it is going to also lobby for the federal minimum wage to be raised for everyone else too. In other words, now that it has raised its own per hour labour costs, it wants its competitors' labour costs raised too.
[Ryan Bourne, "Amazon's Pay Rise Has No Lessons for Minimum Wage Policy," Cato Institute, October 3]
Work can help solve the opioid crisis. Robert Doar writes:
On Wednesday afternoon, by a vote of 98-1, the Senate passed a bill containing several measures meant to combat the opioid crisis, a public health epidemic that has taken the lives of hundreds of thousands of Americans over the past few years. [...]
Perhaps most important of all is the bill's provision for a grant program that would provide job training, housing, and health care to those attempting to overcome their addiction. People with substance abuse disorders need care and temporarily comprehensive assistance, but they also benefit from getting back into regular work. Work provides a routine, a sense of purpose, camaraderie with coworkers, and can keep recovering substance abusers from relapsing. As Dr. Scott Wetzler recently wrote:
Studies show that unemployment following substance-use treatment is strongly associated with relapse. Work, by contrast, can enhance self-esteem and pride through accomplishment, provide a routine that can serve as a distraction from internal preoccupations, and, since most employment settings involve other people, also help develop important social skills. Employment can remove a substance user from problematic social circles that might enable relapse and instead create new pro-social peer groups to support abstinence.
[Robert Doar, "A Bipartisan Achievement on Opioids: Congress Recognizes Employment as a Crucial Component of Recovery," American Enterprise Institute, October 4]
Innovation is saving lives on the highways. Christian Britschgi writes:
According to NHTSA, 37,133 people were killed in traffic collisions last year. That's about a 1 percent decline from 2016, when 37,806 people were fatally injured. It's also a 2.5 percent decrease in the fatality rate, given that Americans drove an additional 50 million miles in 2017. Adding to the good news are preliminary stats from the first part of 2018, which suggest that this year auto collision deaths are on track to decline by as much as 3 percent. [...]
[T]he long-run trend shows an ongoing decrease in deaths from auto crashes.
In the 1975, 44,525 people died in crashes, for a fatality rate of 3.35 deaths per 100 million vehicle miles traveled. That fell to a low of 1.10 in 2011, thanks to the travel-suppressing effects of the Great Recession. That rate has ticked up along with economic activity, but at a fatality rate of 1.16 deaths per 100 million vehicle miles traveled, it's still below mid-2000s pre-recession levels.
This is impressive given record high levels of employment, and it suggests that—even accounting for increased economic activity—auto fatalities will continue to fall.
One element of this decline is better safety technology, says Russ Rader of the Insurance Institute for Highway Safety (IIHS), a research organization funded by insurance companies.
"Vehicles are much more crashworthy than they used to be," says Rade. They're more likely to sport multiple air bags, and they're more likely to have technologies such as electronic stability control, which helps prevent drivers from losing control in emergency situations.
The IIHS argues that newer crash prevention technologies could bring fatalities down even further. A 2017 study from the organization found that relatively new lane departure warning technology lowers the rate of sideswipe and head-on crashes by 11 percent—and it brings down the injury rate from those crashes by 21 percent. Another IIHS study found that automatic breaking reduced front-end collisions by 40 percent.
[Christian Britschgi, "Woohoo! People Are Driving More and Dying Less," Reason, October 5]
Something to do: Come hear Roger Scruton talk about "the foundations of conservatism, the role of private property and markets in a free society, the proper role of government in the economic sphere, inequality, justice, the problems inherent in socialism, environmental conservatism, and why he is a reluctant capitalist." An Interview with Roger Scruton, October 11, 11 a.m. to noon, The Heritage Foundation, Washington, D.C.
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