Tuesday, November 20, 2012

Ask Not What Your Country Can Do For You, But How Well It Does It

Ask Not What Your Country Can Do For You, But How Well It Can Do It

“And so, my fellow Americans: Ask not what your country can do for you – ask what you can do for your country.”

That was President Kennedy’s great inauguration speech. That was the Democratic Party 5 decades ago. That was the soaring rhetoric of a great speaker.

That was then.

This is now.

The November 6 election formalized the change to a society which asks what the country can do for it, from free Obama phones, free contraceptives, free lunches to free medical.

Let’s look at prime examples of what the government is doing for us.

The Post Office, the deliverer of traditional snail mail, reported a loss of $15.9 billion, billion – not million, dollars, an increase of 10.8 billion dollars from last year. The operating loss was 2.4 billion dollars.

The Post Office wants to eliminate Saturday delivery while constantly raising prices. Constant price increases accompanied by declining service is a hallmark of failure.

FedEx and UPS are profitable.

The Pension Benefit Guaranty Corp., the ultimate guarantor of American pensions, incurred a deficit of  $34 billion for the fiscal year ended September 30, 2012.  It has been operating at a deficit for 10 straight years.

Fannie Mae and Freddie Mac, the mortgage providers seized by the federal government four years ago, have required $137 billion from the federal treasury to stay afloat.

Freddie and Fannie, along with the Federal Housing Administration (FHA) back 9 out of every 10 mortgages in the United States. The FHA does not buy mortgages, unlike Fannie and Freddie, but it insures 1/3 of the mortgages issued in America.

Warnings were issued when Freddie and Fannie failed that the FHA was going down the same path unless it changed its way. It continued down the perilous path. It just reported, after the election, that its liabilities exceed its assets by $16.3 billion because of rising mortgage deficiencies. 9.6% of its $1.08 trillion guaranteed mortgages are either at least 90 days in arrears or in foreclosure. Perhaps 1/6 of its insured mortgages are in arrears.

Let us not forget Amtrak. It received a $1.2 billion subsidy in 2012 and $1.8 billion appropriation this year. Only 5 of Amtrak’s 46 routes this year are expected to turn a profit.

Amtrak cannot even make money off food and beverages. It lot $834 million over the past decade on its food and beverage service. It sells a soda for $2, but the cost per soda, including labor, is $3.40.  It charges $9.50 for a hamburger, but its cost, including labor, is $16. Carl’s. Jr. profitably sells a $6 Burger for $4.99.

Amtrak now seeks $7 billion for upgrades to D.C.’s Union Station.

Amtrak is illustrative of mass transit in this country. The transit districts struggle to provide essential services to the urban communities at a reasonable cost to the riders. Fares go up, and routes are cut around the country. There's a limit to the public subsidies.

The same scenario exists with out great public universities. States cut the financing, tuition and costs escalate, and classes are cut.

The problem with liberalism, social democracy, that it promises more than it can deliver. The demands are infinite but the resources limited. The public fisc turns out not be a cornucopia.

As government promises more and more, it delivers less and less until Greece today and California tomorrow fails.

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