The Tripod

Congratulations to Connecticut's Senator Joe Lieberman, who apparently is the only member of that estimated body that believes anything that happens to this country after 2020 is relevant to policymaking. He has vowed to filibuster the health care spending bill (there is very little "reform" contained therein) unless the new government health care entitlement, a.k.a. the "public option" is stripped from the bill. He has shown great backbone in refusing to back down from this position; when asked if he could support any of the "triggered" or "opt-in" variations of the public option he was quoted in the Wall Street Journal as saying, "the answer is no," and, "I'm going to be very stubborn on this." Joe Lieberman may be a hawk on defense, but he is no enemy of big government, so why such a strong feeling? His stated reasoning is very enlightening: "With our debt heading over $21 trillion within the next 10 years...we've got to start saying no to some things like this." The good Senator is quite right, but that is only the tip of the iceberg. $21 trillion is a rosy estimate of where our debt will be in 10 years, as it assumes no new government programs. But, just to be clear, that still represents a doubling of the debt. According to The Economist, Kenneth Rogoff of Harvard University says, "there is every reason to worry that the banking crisis has simply morphed into a long-term government-debt crisis."

For many years now, the coming demographic implosion of entitlement programs (eg. Social Security and Medicare/Medicaid) in the relatively distant future, 2040 or so, has hung over our heads, but we have paid little heed to this apparently distant problem. Meaningful health care reform would try to ameliorate this problem by cutting the amount our government owes through entitlement programs (indeed this was an original goal of Democrats), but perversely the bills now increase the amount our government will be forced to spend in the future by hundreds of billions, if not trillions of dollars. Cost-control in the current bills consists of trying to hide the immense spending through accounting tricks, like not having any spending kick in for three years and then include those three years in a ten year cost estimate.

As a result of the immense increase in federal spending in the past decade, started under President Bush but now accelerating under President Obama, that far-away date of 2040 is approaching more rapidly. The Economist editorializes, "in a few years the AAA rating of Treasury bonds, the world's most important security, could be in jeopardy." Publicly held debt, just 37 percent of GDP two years ago, has already jumped to 56 percent of GDP, and this is perhaps the most crucial measure as it shows our debt compared to our capacity to pay it off. The IMF expects that figure to reach 100 percent within the next decade if politicians do not restrain themselves (and it is almost a certainty that they will not). At that time we will have to spend $700 billion a year just to pay the interest on the debt (compared to $200 billion a year now).

We are between a rock and a hard place, as our ever-increasing entitlement payments push spending ever higher, and, as we borrow a trillion dollars a year to pay for them, our debt interest payments are piling up at the same time. When asked to cut spending, Democrat's lament the fact that only 1/8th of Federal spending is non-discretionary, non-military spending. Even now the Obama administration is moving forward with plans to implement a Federal Value Added Tax (VAT), a consumption tax like those found in many European countries. Unable to effectively cut spending, and with tax increases counterproductive or at best politically inexpedient, ultimately the course of action adopted by almost all mainstream politicians regarding the looming debt crisis is to bury their heads in the sands. This ignores the obvious solution. By the time these entitlement programs become insolvent, we will be unable to do anything at all, buried under a mountain of debt. The most minimal step that any politician with any care for our future at all can take is to freeze any growth of entitlements beyond current levels, as Sen. Lieberman is trying to do. But, if Social Security and Medicare are to exist for today's college students by the time we reach retirement, a drastic restructuring of our entitlement programs is absolutely necessary, and that means massive cuts. There is no hiding from this, as we are even now spending at unsustainable levels. At some time these cuts will have to be made, or we will simply be unable to pay.

We are running a government on a demographic model that fits America during the time of Keynes and FDR, when the future population and economic growth of our nation served as a way for us to pay down the debts; when Social Security was conceived, it's spending was sustainable. The opposite trends now hold true. Now that our entitlement spending is not sustainable, should we not be rethinking the role that government plays in providing for retirement? If it is impossible for the government to insure the younger generation under Social Security, shouldn't we be looking at alternatives? Private pension plans are now easily available to the average worker, 95% of companies provide a 401k plan to their employees. Rather than believe the false promise that government can provide for us, we should be saving (for) ourselves. Abandoning Social Security would leave some of the elderly and disabled without a guaranteed safety net, but will it be any worse when those programs reach insolvency, and then tens of millions who were promised the government aid will suddenly be told to fend for themselves? Government no longer needs to take on these liabilities, they are better left to private interests that will plan for them rather than spend-and-borrow politicians who fritter away the entitlement funds. The fact that Congress is now debating how to expand our entitlement programs with the healthcare bill, rather than about how we can reach long-term fiscal sustainability, shows just how self-interested, short-sighted, and negligent our government and Congress is.

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