Politicians are always looking for ways to fund things. There is currently a stupid idea going around called Transfinancial Economics. It says that instead of taxing people, the government should just print the money for programs. For obvious reasons this couldn’t possibly work. However, this got me to thinking. Are taxes the only way? Lotteries have been around for a while, but the money they generate is minimal. It’s been proposed that we invest money in the stock market for Social Security. Bush proposed letting individuals do it. However in his 1999 State of the Union; President Clinton suggested letting the government do it, saying:
Specifically, I propose that we commit 60 percent of the budget surplus for the next 15 years to Social Security, investing a small portion in the private sector just as any private or state government pension would do. This will earn a higher return and keep Social Security sound for 55 years.
As you can see, the states ALREADY invest in the stock market for pensions. They have been for years. If there are any people who think they shouldn’t; they haven’t made much noise. If you are one of the people who believe they shouldn’t then you probably should not read the rest of this...
The fact that you are still reading this indicates either that you believe in the states investment or you just want to see where I’m going with this. In either case: The economist Milton Friedman once commented that if Social Security taxes had been invested in the stock market from the beginning, today the trust fund would be worth $7 Trillion. The question is this: Why limit these investments to just retirement programs?
If Washington made direct investment in the market this would of course lead to accusations of government interference in private business. So instead we should build on a practice that already exists. If Washington provided funds to the states for investment; the eventual profits could be spent on other priorities.
Where would this money come from? Once we end this stupid war and the unneeded tax cuts, we might be able to return to those Clinton era surpluses and pay for it that way. We suggest investing $30 Billion a year over ten years. Since we already have a $9 Trillion debt; adding $300 Billion over a decade will make little difference for this worthy experiment. However, the likelihood is that it will not add to the debt. This is an investment. Over the long run the stock market always goes up, so we're guaranteed to break even and almost certainly will make a profit which could be used to pay down the debt before it's spent on priorities like Health Care and Education. Either way; we must take advantage of this opportunity to start building up a substantial nest egg for the future.
As far as any concern about how this would affect the economy is concerned; again, the states ALREADY do this for pensions. So why not have them do it for H&E?