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The Big Lie of 2008, Change Will Happen
22 January 2008Clearly the theme of this election cycle is change. A year ago I would have said security. But the American people want change, at least that is what our candidates keep telling us. We need change and they can deliver it.
I doubt it. First none of them are talking about the 8,000 pound elephant in the room, namely the huge promises the government has made to retirees. No one except Ron Paul the invisible major candidate of 2008.
Spending for Social Security, Medicare and Medicaid — three programs that go overwhelmingly to older Americans — already represents more than 40 percent of federal spending. A new report from the Congressional Budget Office projects these programs could equal about 70 percent of the present budget by 2030. Without implausibly large budget deficits, the only way to preserve most other government programs would be huge tax increases (about 40 percent from today’s levels). Avoiding the tax increases would require draconian cuts in other programs (about 60 percent). Workers and young families, not retirees, would bear the brunt of either higher taxes or degraded public services.
A study by the Pew Charitable Trusts found that states have promised retired workers $2.7 trillion in pension, health care and other benefits during the next three decades. Only about $2 trillion has been set aside; the rest would come from annual budgets.
For all the years the federal government has been collecting money via taxes for infrastructure they have just decided they need more, a lot more, to the tune of 40 cents a gallon more. Up from 18 cents a gallon. In the midst of the highest gas prices we have ever seen, they need more. What have they been doing with the trillions we have paid?
This pressure for increased revenues will continue and get worse, infrastructure will be short changed to pay for the promises our government has made. We see it in Connecticut with the bonding of the teacher’s retirement fund. That is really bad economic policy. And in a state that already has one of the highest bonding debt in the country. Considering we have the highest tax rate in the country we have to ask, WHAT HAVE YOU BEEN DOING WITH ALL THE MONEY?
For all the talk of “it is for children” and “change for our children” it is clear we as a country have short changed our children by promising too much to our elderly. Now that our elderly have grown accustomed to these levels of benefits and entitlements they will never give it up.
Attempts at sanity and balance were made and those leaders who tried were punished by populists such as Rep Claude Pepper of Florida and I knew back then we were turning down a very dark road. We saw the rise of the Senior Citizen lobby a lobby so powerful that almost all debate was effectively killed.
We will see generational warfare. We are going to pit the young against the old. The old know the stakes and have been very jealous of their programs. The young might be starting to wake up but it is too late. As Connecticut has had to borrow to meet obligations, the Federal government has already started, started years, decades ago.
So the leaders of 2008 talk of change, but it will be easy change, not painful change. No one will get hurt. All promises will be kept. And that is the biggest lie of all, promises will not be kept.
In 1917 Moody’s started rating governments on their bonding issues, the US has been AAA since 1917. But now Moody’s has warned the US will lose it’s AAA rating. The standard to which all others have been judged will fall.
The economic books will be balanced, not even the greatest economic power the world has ever seen can wave it off.
One Response to “The Big Lie of 2008, Change Will Happen”
January 22nd, 2008 at 1:05 pm
And the more they put it off with band aid reforms and policies the worse it will all get. The solution to inflation and debt is not more credit availability.
The only change we need now is someone in the Oval office and lots others in Congress who understand the criticality of lower spending and lower taxes and smaller government in general, and who has a firm grasp of sound monetary policies.
We need to stop handing billions out to countries abroad and pay attention to keeping our own house in order. Stop penalizing businesses for making a profit and stop the contrived trade agreements. It would also help to get the millions off of social services who are not citizens in this country.