Inauguration Day: To Where From Here?

Our government is writing checks our future can’t cash.

Today, January 25, 2025, Donald Trump will be sworn in as President of the United States.

A friend asked me how I felt post-election. My answer: “Cautiously less pessimistic.”

Trump’s political tagline “Make America Great Again” may be the greatest political tagline in history. I wish I’d thought of it. However, taglines are neither philosophy nor policy. If I tried to hone President-elect Trump’s “philosophy” into words, I’m not sure I could. You can loosely define it as “populist,” though I view populism as more of a political tactic than a point of view. What should our policies be going forward? What policies will make a Republican victory meaningful rather than a slide in a slightly different direction?

What will “Make America Great Again”?

Good Ideas

Good policies flow from good ideas. ¹

Make America Great Again

As a philosophical starting point, we should never doubt the greatness of this nation and its animating principles. It is truly exceptional, and the founding ideas of individual liberty, limited government, self-determination, and a prosperous free market economy are uniquely American.

These principles should never be doubted; they should be touted at every turn.

The world needs a champion for each of them, and only America’s unique history and culture can give them full illumination as a guiding light. We should wear American exceptionalism with pride, not boastfully, but with conviction as a just reward for the achievement of our Founders and the following generations of Americans. However, it is up to us to keep earning that just reward. (For more on the principles of American exceptionalism, please see: https://4heavenonearth.substack.com/p/july-4-1776-one-perfect-moment).

It’s unclear to what extent these ideas motivate the “MAGA” movement, but if American Greatness is the goal, individual liberty, limited government, and a prosperous free market economy must be center stage in any policy proposals.

Winning Elections

Observation suggests a pattern to American elections. I’ll share a starting premise: I believe America is a largely “conservative”[1] country. By this I mean a desire for a measure of freedom and independence, skepticism of power, especially political power, a preference for lower taxes and lesser, more commonsense regulations. In broad strokers, less government intrusion and more freedom. You could also add a belief in secure borders and American sovereignty.

In each election cycle, Republicans talk about one version or another of such things. Americans respond to these promises including concern over spending and deficits, excessive regulations, curbing government power, and secure borders. Republicans win and then fail to deliver, adding more debt, larger deficits, and, at best, nibbling around the edges of tax and regulatory policy.

Republican failure to deliver on promises yields the opportunity for Democrats to offer things like “Hope and Change,” warm sounding promises with no substance and nothing to actually deliver. Americans shift horses on the nice sounding promises, then suffer under four or eight years of bad policy. Like clockwork, they once again listen to the same promises from Republicans, vote for them, who fail once again to deliver, and so the cycle goes. Wash, Rinse, Repeat.

2020 might seem excusable because of Covid-19. However, Republicans delivered bigger government and bigger deficits by virtue of not providing clear, responsible leadership through Covid-19 and allowing those who only seek more political power to dominate. It was just a different version of the cycle.

The above is a simplified analysis, and you could drill down deeply on any piece, but Americans regularly respond to a conservative-oriented message. If Republicans had the courage of their convictions, they could break the cycle and truly “Make America Great Again” for the long haul with more freedom and less government.

Good Policy

Below are abbreviated thoughts on complex subjects. But good policy reduces government and expands the sphere of freedom. Always.

Deficits and Debt

No matter how you slice it, America and the world has a massive problem with government deficits and debt. U.S. National debt is at $36 Trillion and growing while annual deficits routinely exceed $1 Trillion. Global government debt is about $100 Trillion. To borrow inspiration from a phrase in the movie Top Gun, our government is writing checks our future can’t cash.

When the U.S. Government borrows money, that represents the creation of new money and inflation and draws resources out of the private sector and into the hands of political and financial elites, while the middle class shrinks and struggles. To further complicate it, Social Security and Medicare have total estimated unfunded liabilities of $75 trillion² in and of themselves. There is no tax scheme that can pay these bills.

Federal revenues in fiscal 2024 (ending 9/30/2024) were projected at $4.9TR while outlays were estimated at $6.5TR resulting in a budget deficit of $1.6TR. The actual final deficit was closer to $1.8TR.

What the $1.8TR number tells any family or small business owner with some commonsense is clear: that amount needs to be cut from the federal budget. It’s worth noting that outlays in 2019 (pre-Covid) were $4.4TR[2]. Had we maintained that level of spending, or even returned to it after the 2020/2021 timeframe, the U.S. would be running massive surpluses, paying down debt, and experiencing no inflation. All it would have required is some minor commonsense and restraint. Both are in short supply in D.C.

Massive deficits and debt are the single greatest threat to global peace and prosperity. It is unsustainable and a massive adjustment will eventually occur in the form of some sort of debt crisis, with unpredictable economic impacts, likely sooner than later. Continually increasing inflation is one of the prices already being paid. The sooner we grapple with hard questions, the less the pain there will be later, but the pain is unavoidable, and shows up in many different forms through the economy and society.

The United States has lacked principled leaders with the political resolve to make deep cuts that are needed, regardless of party. If we don’t make them, outside forces will impose a solution.

The Scope of the Administrative “Swamp”

When Trump and others refer to the swamp, we instinctively know what it means. More specifically it means the some 3,000,000 federal bureaucrats who are unelected, largely unaccountable, and can’t be terminated. It exists for its own sake and its own power. This was nowhere more evident than in the first Trump Administration when Trump’s own people turned to do battle against him and his policies, even helping to spy on his campaign for reelection, in favor of preserving their own corner of the swamp. To protect their fiefdoms, federal employees would even lie to appointees about what could and could not be done. Time will tell if the second Trump Administration will apply the lessons learned and directly take on leviathan.

The swamp, though unelected, issues tens of thousands of regulations with the force of law that bind up our lives and businesses, making life harder and more expensive while rewarding the extended swamp of politically and financially connected elites, including specifically the banks, Wall Street, and large federal contracting companies. Consider also most of these “swamp” employees fall under the federal executive branch of government via federal departments. At least we know where to look first for personnel cuts. It remains to be seen how the reversal of the Supreme Court’s Chevron decision[3] helps reduce the power of the regulatory state.

The swamp doesn’t need to be drained. It needs to be scoured out. That means, first and foremost, cutting off the money, shutting down entire departments and agencies, and terminating the employment of tens or even hundreds of thousands of federal employees. If you simply terminated 10% of the executive branch, no American working a real job would notice their absence. DOGE—Trump’s unofficial Department of Government Efficiency, headlined by Elon Musk and Vivek Ramaswamy, may be a good start. Waste is bad. Big government is worse. Without reducing the size, scope, and power of the federal government—and taking away the money—through Congressional action, any improvements will be short lived. Executive orders only live until the next president takes office.

Tax Policy

The principle should be this: The only purpose of tax policy should be to raise revenue for essential government functions in the least distortive manner possible. It should not favor one player over another, should not hinder growth, and should not be used for social engineering. To this end I suggest the following:

· Eliminate all personal deductions/credits and lower overall rates to simplify the tax code and restrict social engineering. People can make their own decisions about how to spend their money without spending other people’s money. This also helps economic growth.

· Eliminate all credits designed to promote any given choice. Government shouldn’t be making or influencing those choices. Central planning of the economy does not work—regardless of the form, the beneficiary, or the party in power.

· Eliminate the corporate income tax. The corporate income tax has only pernicious effects. It reduces wages, reduces business investment, raises consumer prices, and encourages excess debt. Literally everyone loses from corporate income taxes. Failing elimination, a low rate such as 5% will still yield most of the benefits of no tax.

· Eliminate capital gains taxes. Capital is the life blood of the economy. For maximum growth, capital must be able to flow fast and furious to the highest and best uses. Everyone benefits. Taxing it freezes capital in place or siphons it off from the productive private sector to the unproductive public sector. Again, worst case, a non-distortive rate of 5% would be a good start.

To deal with the budget problems noted above, robust economic growth must be part of the equation. In order of importance, deregulation, tax simplification, and government spending cuts are all essential.

Tariffs

Tariffs are a tax but deserve their own entry because of the attention they receive from President-elect Trump. The principle is simple: Tariffs always hurt the imposing country the most.

First, tariffs are a tax on your own people. Only U.S. citizens pay for tariffs. These costs, paid by the U.S. importer, become baked into the prices we pay. Higher tariffs equal higher taxes via higher prices.

What’s worse is they undermine the benefits of trade. There are approximately eight billion people in the world. If you have the opportunity to A) Benefit from the talents of 345 million people; or B) Benefit from the talents of 8 billion people, there is only one rational answer: you want to benefit from the talents of billions, not just millions.

Tariffs are ultimately used to reward inefficient, uncompetitive businesses at everyone else’s expense.

The biggest factor in the decline of U.S. manufacturing jobs is an increase in efficiency—total output remains approximately the same or higher on a lower employment base. That frees up resources for higher and better uses. It’s also a function of comparative advantage—the jobs for designers of iPhones in the U.S., for example, are higher order goods and more valuable than the production jobs of iPhones elsewhere.

The biggest challenge that faces American manufacturing is government taxes, and business, labor, and environmental regulations. Regulations should be simple, efficient, non-intrusive, and few in number. This leads to more jobs and higher wages, regardless of industry—manufacturing or otherwise.

Social Security

According to the Congressional Budget Office, the Social Security Trust Fund will theoretically be “insolvent” by 2031. I say theoretically because the government is already running trillion-dollar deficits—we are already out of money. Earmarking a funding stream for Social Security via payroll taxes is just a bookkeeping gimmick. The government has been spending that money elsewhere for decades while leaving a dusty IOU in the Social Security “trust fund.” The resources simply aren’t there.

Saving Social Security is a complicated, actuarial analysis, but the basic policy elements that must be included in some measure for a start to any solution are obvious:

· Push back the retirement age. When Social Security was established, average life expectancy was close the same as SS eligibility age[4]—63.1 years. Life expectancy is now 79.25 years.

· Privatize it for younger workers (under age 40?) and anyone else who volunteers. 6.2% of income going into private accounts will be worth hundreds of thousands of dollars when someone retires after forty plus years of work. The beneficiary not only earns income from the principal but owns the principal value itself. It can be inherited, if unused, and left to children or charity. Millions of Americans would be able to build generational wealth who never considered it possible before. No government pension plan can ever compete with that under any circumstances. It’s simply not mathematically possible. The employer’s matching 6.2% tax will have to stay in the system to help fund existing obligations.

· Means testing for upper income earners. This is completely unfair. I get it. These are the people who have “paid in the most.” It’s unfair, but it’s also unavoidable. To put it pointedly, they could have advocated more strongly for privatization thirty or forty years ago. If we are going to save the system from itself and our neglect from collapse, we can’t starve an 80-year-old we’ve made completely dependent on it for the sake of an 80-year-old with $150k in non-social security retirement income so they can get a few bucks more for them before it collapses. I hate this kind of unfairness. I hate the financial collapse of the United States even more.

· Benefit growth has to be slowed.

· Spin off Social Security. Strategically, Social Security should be spun off from the federal government into a “non-government enterprise” with a mandate of balanced books and actuarial common sense.

Immigration

Immigration is highly beneficial for the economy. It contributes to economic growth and the available labor supply. It is also essential to have more younger workers to deal with the budget issues above.

Remember this principle: The human mind is the ultimate resource. You want access to as much of that resource as possible. That means free trade abroad and quality immigration at home.

Suggested approach:

· Aggressively deport by any means necessary illegal aliens engaged in violent criminal activity.

· Do not allow unauthorized migrants to cross into the United States. If Mexico or Canada, for example, wants to let them on their soil, that is their business, but it is where they can stay ala a version of Trump’s “remain in Mexico” policy.

· Develop a rigorous path for so-called Dreamers—people brought here as children to ultimately achieve citizenship (no criminal history and not dependent on government, for starters).

· End birthright citizenship for the children of illegal aliens. It was not the purpose of the 14th Amendment after the Civil War. It will also end one incentive for illegal immigration.

· Develop an aggressive and open worker visa program. If someone wants to work, we should welcome them—you can never have too many hardworking people. However, they should follow a legal process with no access to government benefits. This provides crucial labor and helps eliminate another incentive for illegal immigration if a worker knows they can easily come back next season, etc. without difficulty. The Krieble Foundation produced an excellent solution years ago called the “Red Card.” See the interview with the Reason Foundation here: https://reason.org/the-red-card-a-private-sector-solution-to-americas-illegal-immigration-problem/

Federal Departments

There are arguably only four departments authorized by the Constitution: Treasury (taxes and paying the bills), Defense (protecting from foreign invasion), Justice (for a limited list of truly federal issues and crimes), and State (foreign relations). We currently have fifteen departments! And approximately 430 federal agencies—in a country based on the principles of individual liberty and limited government.

There is plenty of low hanging fruit such as the Department of Education—close it down by making declining block grants to the states over three years. This allows the states to adjust their budgets as they see fit and can get approved by their citizens.

There are other obvious candidates such as Commerce, and many departments could likely have their functions consolidated and thousands of federal workers terminated so they can return to the productive and useful private sector for employment—making them another source of economic growth.

Welfare Programs

The United States federal government manages thirteen major “anti-poverty” programs with as many as one hundred sub-programs, plus Medicaid and unemployment insurance. Although arguably none of these are authorized by the Constitution, to the extent they exist, they should be limited and simple, and a hand up not a hand out.

List of major poverty programs[5]:

According to https://singlemotherguide.com there are eighty-three federal welfare programs![6] The number fluctuates from year-to year.

All such programs, to the extent they exist, should be redesigned into a hand up instead of a lifetime hand out. We must also stop rewarding irresponsible behavior. For example, stop paying more money to an individual every time they choose to have another child out of wedlock. This is a cottage industry in and of itself. These kinds of programs belong either in the states where they are closer to the people, can be flexible, and responsive or, better, reside in the sphere of private charity and family.

Poverty spending also doesn’t reduce poverty. If anything, it exacerbates it or at least makes it endemic:

Further, according to www.federsafetynet.com, “Total welfare costs have risen from $2,271 per person in poverty in 1968 to $29,927 per person in 2023. That totals $118,706 for a family of four, even though the Poverty Threshold for such a family is $31,200.” And yet, poverty hasn’t declined.

Source: poverty and spending over the years

Government poverty programs are an abject failure—assuming your goal is to end poverty. The only cure for poverty is a job and personal responsibility. This needs to be combined with monetary and Federal Reserve reform and the elimination of government deficits to end inflation. Inflation is an ever-accelerating treadmill that makes it hard for people to get ahead, especially if they are lower-skilled workers.

Elections

One citizen, one ID, one vote, in person over a 3-to-4 day period, such as Saturday through Tuesday. Many people advocate for a single day. The realities of work and childcare may make a 3- or 4-day process more reasonable in a beneficial way that allows voters to participate. However, long, drawn out processes with mail-in ballots and no voter ID is primed for fraud and makes an audit of an election a complete impossibility. All Americans benefit from honest, accurate, legal elections.

Regulations

There are over 90,000 pages in the federal register of regulations. The cost of federal regulations is estimated at over $1.9 trillion annually. Regulations are hurdles to productive achievement. Most regulations also treat every person as though they are a criminal just waiting for the opportunity to commit a crime; presumed guilty before they prove themselves innocent. Reducing the administrative state and regulatory burden is essential for higher growth and a better quality of life for all Americans.

Sound money.

Inflation robs workers of their gains in productivity. Sound money makes it much harder for government to create inflation.

1. Eliminate deficits. When the money supply is expanded to buy government debt, your dollars lose their value, i.e., there is inflation, and those dollars stolen from working people go into the pockets of financially and politically connected elites.

2. Pass a balanced budget amendment with a proscription against debt outside of explicitly declared war by Congress.

3. Reestablish at least a basic gold standard to prevent governments from destroying their currencies. (Too many variations of a gold standard to explore here, but here’s a great start: https://cdn.mises.org/Case for a 100 Percent Gold Dollar_2.pdf)

To Where From Here?

Our ability to create a virtual heaven on earth is within our reach. Rising incomes, falling costs, practical elimination of poverty, and limited crime are all possible.

Freedom is the answer.

Human beings always do what is natural to them in the absence of perverse incentives: they get up in the morning and work hard to make a better life for themselves, their families and, as a result, their communities. It is possible, it can be done, but liberty and property rights must be protected in the absolute.

President—elect Trump and the Republican Party have an apparent mandate to shake things up and advance freedom through spending cuts, deregulation, and tax reduction and simplification.

Will they do so in a way that Makes America Great Again?

If they do, everything is possible. If they don’t, the bill on all those uncovered checks is going to come due and the future will pay a heavy price.

Mark me down as cautiously less pessimistic. But not by much.

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[1] The actual definition of “conservative,” a term I don’t love, could be debated, but I use it as defined herein.

[2] The Federal Budget in 2019: An Infographic | Congressional Budget Office

[3] Supreme Court strikes down Chevron, curtailing power of federal agencies - SCOTUSblog

[4] Life Expectancy in United States of America 1950-2024 & Future Projections

[5] https://federalsafetynet.com/welfare-budget/

[6] List of 80+ Federal Welfare Programs

1. For more read, It’s the Ideas that Matter in Public Policy https://4heavenonearth.substack.com/p/its-the-ideas-that-matter-in-public

2. https://www.cato.org/blog/medicare-social-security-are-responsible-100-percent-us-unfunded-obligations