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Cato Daily Dispatch for December 30, 2004

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Social Security: Doing Nothing Costs Trillions More
Crime Federalization Costs Offender 84 Years
Pentagon Proposes $60 Billion in Budget Cuts

Social Security: Doing Nothing Costs Trillions More

In his column today, Robert Novak writes that the transition costs of moving Social Security to a system of individual accounts "are 'significantly smaller' than the costs of doing nothing about the estimated $12 trillion liability in the Social Security system."

He's correct, according to Cato senior fellow Jagadeesh Gokhale. In "Privatize -- It Will Be Good for Us All," Gokhale writes: "The so-called 'costs' of reform are already there. They're part of the current system and will continue to grow unless reforms take them fully into account. The full, official measure of the government's commitment to pay future retirement benefits in excess of future payroll taxes amounts to $12 trillion (in present value terms) under the current system. And, just like debt, this cost grows with interest as time passes. Those who say Social Security doesn't need reform need to specify where that $12 trillion is going to come from.

"Under the current system of budget accounting, all of this cost remains hidden. Indeed, because the Social Security trust fund currently holds government IOUs, many believe that Social Security is well funded and not in trouble; and this partly explains the eye-widening reaction when someone suggests that the 'transition cost' of a reform plan is $2 trillion."

Crime Federalization Costs Offender 84 Years

The front page of today's Wall Street Journal tells the story of James McFarland Jr. In 1998, the Journal says, "McFarland robbed four Fort Worth, Texas, convenience stores, emptying cash registers of sums ranging from $50 to $1,500. Although brandishing a handgun, he never fired a shot and no one was injured."

Unfortunately for McFarland, a U.S. attorney moved his case from the local prosecutor to the federal court system. As a result, McFarland received a sentence of 97 years instead of 13.

In Go Directly to Jail: The Criminalization of Almost Everything, Cato senior editor Gene Healy writes: "To prevent an excessive accumulation of federal power, the Framers refused to grant plenary police powers to the federal government; instead, the Constitution grants Congress authority, pursuant to various enumerated powers, to fashion criminal statutes to protect distinctly federal interests.

"... Prosecuting firearms offenses is a local issue, one that the Constitution properly leaves to states and localities. It is unwise to squander federal resources in the pursuit of offenders that the states and localities are perfectly equipped to handle. Even more important, we cannot afford to squander our constitutional heritage of limited government."

Pentagon Proposes $60 Billion in Budget Cuts

"The Pentagon plans to retire one of the Navy's 12 aircraft carriers, buy fewer amphibious landing ships for the Marine Corps and delay the development of a costly Army combat system of high-tech arms as part of $60 billion in proposed cuts over the next six years," according to the New York Times.

"The proposed reductions, the details of which are still being fine-tuned and which would require Congressional approval, result from White House orders to all federal agencies to cut their spending requests for the 2006 fiscal year budgets, which will be submitted to lawmakers early next year."

The Cato Handbook for Congress offers several recommendations for cutting the defense budget, including the adoption of a more restrained foreign policy and the termination of peacekeeping missions.

"Adopting a foreign policy of military restraint overseas, buying the forces needed to fight one regional war, and reducing the budget for national defense by more than a third would help to keep the United States out of unnecessary foreign wars," according to the Handbook. "Such potential quagmires have little to do with vital American security interests and incur exorbitant costs -- in both resources and American lives (those of both U.S. military personnel overseas and civilians at home, who will be the victims of terrorist attacks in retaliation for an interventionist American foreign policy). A smaller military would also help safeguard U.S. liberties at home."

Wyatt DuBois, editor, wdubois@cato.org