Abolish the Federal Debt Limit

One trouble with government programs is they mislead people.  Recipients believe they are getting a benefit when, in effect, they are unwittingly being placed in harm’s way.  Time and time again, under the influence of a benevolent hand of government, otherwise able and intelligent people are compelled out onto a crackling tree branch.

Take Social Security, for instance.  Several generations of hard working Americans have adjusted their saving and retirement planning because of this program.  Why save and invest for your golden years when Uncle Sam has your back?

The working populace has been promised monthly checks in retirement in exchange for compulsory wage garnishment.  For some, this promise is already coming up short…no COLA in 2016.  But, perhaps over the next decade or two, it will be entirely broken or, at the least, severely compromised.

“Benefits for older Americans — especially through Social Security and Medicare — account for the largest part of federal spending today and for the lion’s share of the spending growth that will occur in coming decades without changes in policies,” explains former Congressional Budget Office Director Douglas Elmendorf, in a recent op-ed in The Washington Post.

“That growth is not surprising: With baby boomers moving into retirement, the number of beneficiaries of those programs is surging.  Indeed, in the Congressional Budget Office’s current-law projections, all federal spending apart from Social Security, Medicare, defense and interest on the debt will amount to about the same percentage of gross domestic product 25?years from now that it did 25 years ago.  At the same time, federal debt is now larger relative to the economy than at almost any point in our history and is on an upward long-term trajectory.

“Therefore, cuts in Social Security or Medicare benefits, or increases in the taxes used to finance those programs, will almost certainly be needed to put federal debt on a sustainable path.”

Getting Shredded

For at least 35 years it has been a known fact that Social Security is unsustainable.  But the political approach of elected leaders has been to make like an ostrich and bury their collective heads in the sand.  This, unfortunately, is how these things go.

The program was first put in place to help people.  Who can fault Congress for that?  They thought they were doing something good.

In truth, they didn’t really know what they were doing.  The moral hazards and unintended consequences of Congress’s actions were never considered.  Hence, they have a great big mess on their hands.

When it comes down to it people would be better prepared for retirement if Social Security was never created to begin with.  They’d have been forced to save and invest rather than spend every cent they make, and then some.

Now, many soon to be retirees are about to discover that the safety net they thought they’d fall in to is actually the hopper feed of a giant tree chipper.  Alas, after deferring to Social Security their entire working lives, they find themselves staring headfirst at rotating steel knives.  What we mean is they are about to be shredded.

Right now, each citizen’s share of the national debt is $57,179.  If you tack on household, business, state and local governments, and financial institutions, the total debt per citizen jumps to $203,259.  But that’s nothing…

The combined unfunded liabilities of Social Security, prescription drugs (Medicare Part D), and Medicare have eclipsed $98 trillion.  That amounts to $828,161 per taxpayer.  Without a doubt, that’s an unethical and intolerable burden for young adults just entering the workforce to carry.

But there’s no political way elected officials can reform these entitlement programs.  And even if they could, they’re all mathematically flawed anyway.  Thus they will expand into arrears until the final break down.  Here’s why…

Abolish the Federal Debt Limit

Politicians know that promising handouts is what gets them elected and keeps them in office.  Because, the unspoken truth is, the electorate wants bailouts, safety nets, and free drugs from the government.  Voters don’t want to hear about belt tightening, budget cuts, or prudent spending.  Politicians that base their campaign stump on these sorts of things always lose.

The experience of the last 100 years of elections is that people always vote themselves largess out of the public treasury.  The majority of voters looks around and sees economic and social problems dogging them…and they want the government to spend money to fix them.  On top of that they want a free lunch.

The convictions of the people do not want government to preserve and foster a free society.  They want the government to promise fantasies and deliver miracles.  Voters want reduced taxation and increased public spending.  They want promises of greater prosperity and entitlements for a cushy retirement.

Naturally, a requisite and deliberate national policy of government deficits has been adopted to temporarily deliver the better life the convictions of the people demand.  Remember, this is what the will of the people want – it’s what they always vote for.  The evidence is everywhere…

The collective will wants money grants for schools, museums, and nature centers.  They want farm aid and railroad subsidies.  They want green energy…and they want everyone else to drive battery powered cars.  They want free food and retirement checks forever.  Most of all, they want all these things and they don’t want to pay for them…they want someone else – that’s you – to fund it all.

Quite frankly, the government committed itself long ago to a system of mass public spending; there’s no turning back now.  Thus, while individuals are generally appalled by the nation’s staggering debt levels the collective voter continues to demand more than their share of government pork.  Collectively, everyone wants something for nothing.  Collectively, everyone wants to live at the expense of everyone else.

You know the consequences.  Tax revenue falls short.  Deficits grow.  Debts pile up to the moon.  The Federal Reserve stretches out the farce by stretching out the dollar.  Individual liberties are traded in for federal safety nets that are now fraying at the edges.

According to Treasury Secretary Jack Lew, the federal debt limit will be exhausted by November 3.  Certainly, a last minute compromise will be reached to raise the debt limit…it always is.  But the increase won’t be nearly enough.

Preferably, the federal debt limit should be abolished.  Why pretend there’s any inkling of fiscal responsibility?

Then, without any lasting restraint, the government can spend us to complete oblivion.  Only then can freedom and personal responsibility finally supersede big government and entitlement programs.

Sincerely,

MN Gordon
for Economic Prism

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