According to the CBO, the Clairvoyant Bureaucratic Office, “federal debt will be growing faster than GDP, a path that would be ultimately unsustainable.” Our national debt is already bigger than our economy.
The key source of upward pressure on the federal debt is expanded federal spending in the form of Obamacare, its gluttonous siblings Medicare and Medicaid, and its senile cousin Social Security. Because of government encroachment into the health care industry, health care spending will double over the next twenty-five years to 14 percent of GDP.
In order to stop the Social Security trust fund from defaulting and return to sustainable levels of unfunded liabilities by 2025, future and current Americans will have to incur a 25 percent cut in their benefits.
The CBO hearing had the tone of a doctor’s appointment for a self-destructive addict. The doctor says, “You know you can’t keep overspending like this, America,” and the government nods sheepishly and then scampers off to print more money.
This news arrives in the same week congressional investigators revealed that the federal government made about $100 billion in “improper payments” to people who do not qualify for government services. The largest offender? The Department of Heath and Human Services.
Such hemorrhaging of cash would be unacceptable for a business held accountable by its shareholders, but waste has become an acceptable part of government’s redistributive techniques. With all this talk of the “cost-saving benefits” of Obamacare, it’s easy to forget that it costs money to redistribute money.
During the Great Depression, President Roosevelt mandated that the current workforce pay for the older financially devastated population by promising workers they would get paid by future generations of workers, and so on and so forth. However, because the overall population is aging, there aren’t enough young workers to pay for old workers. The pyramid scheme has to collapse at some point. Whether it collapses gradually, in the form of less return on investment for each of us, or collapses all at once, is what remains to be determined.
Workers are forced to pay into the system in the form of FICA taxes withheld automatically from paychecks. Any excess money in the Social Security system is applied to buying Treasury bonds. In this way the government loans this surplus to itself, pushing the economic hangover further down the road.
“Isn’t this socialism?” Senator Gore asked Secretary of Labor Frances Perkins during a Senate Finance Committee about Social Security in 1935. When Perkins rebuffed him, Gore asked again, “Isn’t this a teeny-weeny bit of socialism?”
Our $17 trillion debt is roughly equivalent to the combined GDPs of New York and D.C. times ten. We could start by selling both cities—comprising many of our financial and political miscreants—to the highest bidder as a way out of this mess. If we are going to be irrational, let’s at least be rational about our irrationality. That will kill two birds with one stone—or should I say “with one loan.” We can keep the Statue of Liberty.