opinion@dailylobo.com
As of Tuesday, the United States has a national debt of $16.7 trillion that is only increasing and an economy that isn’t. Last year, we spent 35 percent more than we received in revenue. And the year before that, and the year before that. For the fourth year in a row, we have deficits in excess of $1 trillion. We are operating without a budget and haven’t had one for more than three years. Without a budget, there is no national plan for how we spend taxpayer dollars — the spending just happens.
To date, the Federal Reserve has printed $2.7 trillion — created it out of thin air — reducing the value of every dollar you earn. It plans to continue to create additional money to the tune of $40 billion per month through 2015 — an additional $1.5 trillion. If it stops there, the Fed will have created $4.1 trillion. Just for the record, as of Oct. 12, there was $1.14 trillion in physical U.S. currency circulating in the world, i.e, M0 funds. Adding in the M1, M2 and M3 funds — M1 is money in checking accounts and the part of M0 not held by private banks, M2 is M1 plus money in market/savings accounts and M3 is certificates of deposit plus M2 — there was about $10 trillion total before the Fed started. The Fed assures us that everything is OK, it’s in control and it knows what it’s doing.
We spend almost 60 percent of federal taxpayer money on programs to assist people who the politicians think are just too damn stupid to take care of themselves. That’s why they created all those programs. You know the ones — Medicare, Medicaid, Social Security, assistance programs, etc. For the two largest, Medicare and Social Security, they take part of your paycheck every month and assure you that when you reach retirement age, the government will take care of you. The only problem is it spent the money.
The physical manifestation of the Social Security and Medicare trust funds is a binder filled with nonnegotiable bonds — read: worthless paper — which are essentially IOUs “backed by the good faith and credit of the United States.” Unfortunately, the U.S. credit rating is slipping. There are fewer governments and agencies buying U.S. Treasury notes today, and I suspect the number of buyers will continue to decrease further over time, if they’re smart.
We’re in a hole, a deep one. It’s getting deeper every day. We have a president who is a proficient excavator. Prodigious, in fact. He wants to add 30 million people to the health care rolls and tells us with a straight face it will save us money. He will fund it in part by eliminating $700 billion in fraud, waste and abuse in the very program that he’s trying to expand. Hello, is anybody home?
The president wants to expand programs that have been in place for 45 years that we know don’t work. We know because we have empirical evidence of their failure. The government even publishes the evidence every year: just check census.gov/hhes/www/poverty/data/incpovhlth/2010/figure4.pdf. From 1959 to 1968, the poverty rate fell from 23.5 percent to 12.5 percent, more than 10 percentage points in nine years. In nine years we went from having 40 million people in poverty to fewer than 25 million.
Then the government stepped in. In 1965, seeing the rapid fall of the poverty rate, the government passed the famed “war on poverty” legislation. It went into effect in 1967, after the 89th Congress was safely out of office. From 1968 to 2012, we’ve gone from 12.5 percent living in poverty to more than 15 percent; from 25 million people to more than 45 million people. Crisis averted. How could the country have survived with a poverty rate at 3 or 4 percent?
This is not a rant about the president. Make no mistake; we didn’t get in this mess just because of what he’s done. There are 100 years of politicians who came before him. But he does advocate for solutions that will exacerbate the problem. The adage “If you’re not part of the solution, you’re part of the problem” comes to mind.
One thing is for certain. Politicians will never provide you with a solution to your problems. They want you to have problems. They need you to have problems. If you don’t have problems, you don’t need the politicians, which scares the hell out of them. We continue to dig.
How bad are the problems? If we don’t change course soon, we have a 50 percent chance of seeing our country fail, i.e., go bankrupt, in the next four years. That probability goes to 90 percent if you expand the time frame to eight years. The math dictates these answers. If you can’t live spending 35 percent more than you make every year, then chances are neither can any government. But they always seem to try.
When the wheels come off, it will not be pretty. What happens when the 47 percent of people in this country who depend upon the government for their daily subsistence don’t get the money they are expecting, or if the money they get is worthless? History is a pretty good predictor of what happens next. Look up the Weimar Republic, Zimbabwe, Argentina or Greece. How they got into the mess they were in is very similar to how we got to where we are today. There is a difference, though. In all of those cases, a country or countries stepped in to help them through the crisis.
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What country can or will step in to save the United States?
We cannot continue to spend at the rates we are spending. And make no mistake: It is a spending problem. There is a $121 trillion unfunded liability in Medicare and Social Security, the two largest items in the federal budget. So we have to cut spending.
If you want to balance the budget today by cutting nondiscretionary spending, here’s what you have to do. You have to zero-fund and eliminate the following: the legislative branch, the judicial branch, the executive branch, the departments of Agriculture, Commerce, Education, Energy, the Interior, Homeland Security, Housing and Urban Development, Justice, Labor, State, Transportation and Veterans Affairs. In addition, you will have to zero-fund the Army Corps of Engineers, the Environmental Protection Agency, the General Services Administration, international assistance programs, NASA, the Office of Personnel Management and the Small Business Administration. And finally, you have to cut the Department of Defense by 50 percent. What does all this mean? It means the only path to fiscal stability and responsibility is through cuts to Medicare, Social Security and the assistance programs.
We need to fundamentally rethink what we want or need from government. If we do not, we will have a whole different set of problems in just a few years. I am not suggesting we should not have a safety net. It’s just that the safety net should not have to catch the entire population. We’re smarter than that.
Oh, by the way, if you’re looking for someone to blame, which seems to be something we need, or if you need to hold someone accountable, the answer is as close as your nearest mirror. While all these problems may have been caused by someone else, it was our responsibility and we failed. A government of the people, by the people and for the people, so on and so forth.
