When Medicare Part-D was debated in Congress, previous to its egregious passage, the legislators debated its cost over the first 10-years. Originally projected cost of over $600 Billion the program has actually come in at just over $395 Billion (according to current estimates)...Some suggest (even argue) that this is a good thing and on the surface it appears so until one recognizes that any entity perpetually spending money it doesn't have (even if the projected deficits are only half of what they were projected to be) eventually goes broke. The U.S. is just that..."BROKE"!!!
Oh, and by the way, the cost beyond ten years which no one bothered to debate will be an estimated $8.1 Trillion over seventy-five years. That is one-eighth (1/8) of the current amount that is needed at today's treasury rates to cover every unfunded liability the U.S. government is responsible for over the foreseeable future. Yes, if we had +/- $64 Trillion on hand today we'd be just fine...Today we have ZERO on hand. Thus, the definition of "unfunded liabilities" of the U.S. Government...
"Houston, we have a problem!!!"
Wednesday, March 9, 2011
Tuesday, March 8, 2011
Year 2019: "Hey Lady!!! THAT DOG WON'T HUNT!!!"
In just eight plus years it will be 2019.
I know you wonder why you should care. Let me get right to that point.
2019 is the year, if nothing fiscal meaningfully changes, that the federal government will spend 92% of the entire budget to 1) service interest on the National Debt and 2) to make entitlement (social security and medicare) payments. EVERY OTHER PROGRAM, including Defense, Education, National Parks (YOU NAME IT...) will have to fit into the little tiny 8% sliver of the pie.
I hope Nancy Pelosi, every big government liberal and every elected official regardless of label is both sober and listens intently to the next, all-important line...
"Hey Lady!!! THAT DOG WON'T HUNT!!!"
I know you wonder why you should care. Let me get right to that point.
2019 is the year, if nothing fiscal meaningfully changes, that the federal government will spend 92% of the entire budget to 1) service interest on the National Debt and 2) to make entitlement (social security and medicare) payments. EVERY OTHER PROGRAM, including Defense, Education, National Parks (YOU NAME IT...) will have to fit into the little tiny 8% sliver of the pie.
I hope Nancy Pelosi, every big government liberal and every elected official regardless of label is both sober and listens intently to the next, all-important line...
"Hey Lady!!! THAT DOG WON'T HUNT!!!"
"HOUSTON- WE DEFINATELY HAVE A PROBLEM"
For purposes of defining a few problems let's consider that in 2010 the federal government needed to have on hand, at current treasury rates, over $62 Trillion dollars to fund its future (currently unfunded) total liabilities. Guess how much they have on hand? You guessed it, by definition of the word "unfunded" the answer is $0...Yes, you read it right, ZERO!!!
In 2010 the public debt to GDP figure sat at approximately 62%. If you throw in all the unfunded liabilities of the entitlement programs, the percentage swells to over 90%, currently. Consider that the European Union requires its members to keep their public debt to GDP figures at 60% or below to avoid penalty and even a threat to their membership and standing. Thus, at present, Lithuania could join the European Union but the United States could not. How embarrassing!!! I can't believe I am actually using the EU as a benchmark. What is the world coming to???
At the current rate of U.S. fiscal deterioration it is projected that the public debt to GDP ratio in 2040 will be 303%. Hmmm..."Houston, WE HAVE A PROBLEM!!!"
Perhaps setting a realistic target to keep our debt at or below 60% of GDP would be something to preliminarily shoot for!!! (Do you think?) Keeping our debt at or below this relative threshold would at least give us and the world some confidence that the U.S. was positioned to react to events of genuine crisis should they occur- and they will.
They always do!!!
In 2010 the public debt to GDP figure sat at approximately 62%. If you throw in all the unfunded liabilities of the entitlement programs, the percentage swells to over 90%, currently. Consider that the European Union requires its members to keep their public debt to GDP figures at 60% or below to avoid penalty and even a threat to their membership and standing. Thus, at present, Lithuania could join the European Union but the United States could not. How embarrassing!!! I can't believe I am actually using the EU as a benchmark. What is the world coming to???
At the current rate of U.S. fiscal deterioration it is projected that the public debt to GDP ratio in 2040 will be 303%. Hmmm..."Houston, WE HAVE A PROBLEM!!!"
Perhaps setting a realistic target to keep our debt at or below 60% of GDP would be something to preliminarily shoot for!!! (Do you think?) Keeping our debt at or below this relative threshold would at least give us and the world some confidence that the U.S. was positioned to react to events of genuine crisis should they occur- and they will.
They always do!!!
FIRST, STOP THE BLEEDING!!!
Additional budgetary mechanisms are critical in the context of a BALANCED BUDGET AMENDMENT which I wholeheartedly support (with the admission that some provision must exist to allow for deficit spending to respond for genuine short seasons of national crisis such as declared war and/or severe economic downturns etc.).
First, we must get serious about "PAY-GO" which policy forces any proposal to be "paid for" before it can be included in legislation. This should include everything from tax-cuts to the latest, greatest social program. If the legislature can't "pay as they go" then they can't propose the conservative or liberal item for consideration. That forces tough decisions today and causes us to continually weigh our priorities in the context of a balanced budget.
Second, the use of "discretionary spending caps" makes much sense. These caps limit the amount (usually as a percentage of the last budget" that all discretionary spending measures can increase their budgets from year to year. Admittedly, this and other suggested budgetary constraints are preventative and seem only to treat symptoms rather than the fiscal disease we suffer from but they do absolutely make it difficult for the situation to get much worse which is the first law of triage.
Stop the bleeding and apply tourniquets, please!!!
First, we must get serious about "PAY-GO" which policy forces any proposal to be "paid for" before it can be included in legislation. This should include everything from tax-cuts to the latest, greatest social program. If the legislature can't "pay as they go" then they can't propose the conservative or liberal item for consideration. That forces tough decisions today and causes us to continually weigh our priorities in the context of a balanced budget.
Second, the use of "discretionary spending caps" makes much sense. These caps limit the amount (usually as a percentage of the last budget" that all discretionary spending measures can increase their budgets from year to year. Admittedly, this and other suggested budgetary constraints are preventative and seem only to treat symptoms rather than the fiscal disease we suffer from but they do absolutely make it difficult for the situation to get much worse which is the first law of triage.
Stop the bleeding and apply tourniquets, please!!!
Balanced Budget Amendment
Thoughtfully, it becomes necessary to suggest that we are in need, in the worst of ways, a Constitutional Amendment that requires Congress to both pass and balance an annual budget. Federal lawmakers live in the maddening world of "continuing resolutions" and have parliamentary devices that allow them to shirk their duty as representatives of the people which have been duly elected to do the business of the people. With perpetual lack of accountability we somehow have tolerated this behavior and many see little problem with the fact that Congress failed the American People in their duty to act according to their constitutionally mandated fiscal responsibilities.
Thus, a balanced budget amendment should be enacted as quickly as possible to force the hand of legislators to do the tough business of governing without respect to upcoming election cycles or other political motivations. The requirement to pass a budget and to balance a budget annually would put an end to the "continuing resolution" non-sense that has for so long both "kicked the can down the road" and in addition, allows legislators to shirk their most critical responsibilities. The idea that the people have allowed this atmosphere to exist for as long as they have is not a flattering commentary. It is time to change the system fundamentally in this regard.
Now, having taken such a stance my only present worry concerning this suggestion is that there are times of real crisis comprising acts of war or perhaps severe economic downturns, to name a few, that constitute "short seasons" in which some deficit spending might (and I stress "MIGHT") be appropriate. How one would reconcile a need for this flexibility with the constitutional requirement that the budget must be balanced with revenue available without the necessity of borrowing to live with a priority placed on reduction and possible eventual retirement of public debt is a complex and difficult question. Some mechanism must make such reconciliation possible. Brighter minds than mine will need to implement such a judicious fix.
In the meantime, a BALANCED BUDGET AMENDMENT requiring at least these items is imperative.
Thus, a balanced budget amendment should be enacted as quickly as possible to force the hand of legislators to do the tough business of governing without respect to upcoming election cycles or other political motivations. The requirement to pass a budget and to balance a budget annually would put an end to the "continuing resolution" non-sense that has for so long both "kicked the can down the road" and in addition, allows legislators to shirk their most critical responsibilities. The idea that the people have allowed this atmosphere to exist for as long as they have is not a flattering commentary. It is time to change the system fundamentally in this regard.
Now, having taken such a stance my only present worry concerning this suggestion is that there are times of real crisis comprising acts of war or perhaps severe economic downturns, to name a few, that constitute "short seasons" in which some deficit spending might (and I stress "MIGHT") be appropriate. How one would reconcile a need for this flexibility with the constitutional requirement that the budget must be balanced with revenue available without the necessity of borrowing to live with a priority placed on reduction and possible eventual retirement of public debt is a complex and difficult question. Some mechanism must make such reconciliation possible. Brighter minds than mine will need to implement such a judicious fix.
In the meantime, a BALANCED BUDGET AMENDMENT requiring at least these items is imperative.
FISCAL REFORM: AN ATTITUDE OF COLLECTIVE SACRIFICE
With the necessity for fiscal reform never more urgent than today there are two concepts that stand paramount in the process. Those who understand, accept and uphold them are those who will ultimately lead and support a more prosperous future for future generations. Those who do not align ideologically and philosophically with them will at a minimum resist but worst case place the future of the Nation in jeopardy and in addition risk becoming completely irrelevant since fiscal reform is not only urgent but delay no longer a rational or sane alternative.
From a non-partisan point of view we must re-enthrone the following two ideals if fiscal reform is to happen in time to avert catastrophic fiscal disaster at the National- and therefore the personal level of each citizen.
01. Citizens must cultivate a "World War II like" commitment to "collective self-sacrifice" with a willingness to ration personal lifestyle, personal security, personal ease and personal indulgence for the good of future generations. Remember, we as a people have done hard things before and we need to rise to the challenge of overcoming these difficult challenges as an additional great generation. While the current younger generation cannot take much of the credit for causing the problem we can take responsibility to own the had solutions and must do so if we value keeping this Nation both prosperous and great. Recent generations since WWII have been far too overindulgent expressing their ultimate will through decades of legislation that have proven far too costly for than a temporary period of time. Yes, I refer to entitlements that can neither be afforded in their current state nor perpetuated equitably to future generations. I then am forced to ask, "Why would any American be willing to over-reach in a blatant effort to suck prosperity from future generations to gratify the here and the now?" Fiscal reform (namely, ENTITLEMENT REFORM) is not just a practical necessity, it is clearly a moral imperative.
02. Citizens must properly define the word "reform" in the context of fiscal reform. The word reform means "taking greater personal responsibility" for both the problems and for the solutions. We must own up to the fact that we can't depend upon government much but the most overarching protection of "life, liberty and the pursuit of happiness". Greater personal responsibility means less dependence on government and more dependence upon our own thrift and effort. We must provide, not the government. Anytime we depend upon government for something we lessen our own independence and our own liberties in the process- by definition.
We can do this...Again, we've done very difficult but urgently necessary things in the past and we have it within us to correct in installments the massive fiscal challenges we face over the next ten or twenty years and beyond. Are we up for the challenge...I know we are! Who is in?
From a non-partisan point of view we must re-enthrone the following two ideals if fiscal reform is to happen in time to avert catastrophic fiscal disaster at the National- and therefore the personal level of each citizen.
01. Citizens must cultivate a "World War II like" commitment to "collective self-sacrifice" with a willingness to ration personal lifestyle, personal security, personal ease and personal indulgence for the good of future generations. Remember, we as a people have done hard things before and we need to rise to the challenge of overcoming these difficult challenges as an additional great generation. While the current younger generation cannot take much of the credit for causing the problem we can take responsibility to own the had solutions and must do so if we value keeping this Nation both prosperous and great. Recent generations since WWII have been far too overindulgent expressing their ultimate will through decades of legislation that have proven far too costly for than a temporary period of time. Yes, I refer to entitlements that can neither be afforded in their current state nor perpetuated equitably to future generations. I then am forced to ask, "Why would any American be willing to over-reach in a blatant effort to suck prosperity from future generations to gratify the here and the now?" Fiscal reform (namely, ENTITLEMENT REFORM) is not just a practical necessity, it is clearly a moral imperative.
02. Citizens must properly define the word "reform" in the context of fiscal reform. The word reform means "taking greater personal responsibility" for both the problems and for the solutions. We must own up to the fact that we can't depend upon government much but the most overarching protection of "life, liberty and the pursuit of happiness". Greater personal responsibility means less dependence on government and more dependence upon our own thrift and effort. We must provide, not the government. Anytime we depend upon government for something we lessen our own independence and our own liberties in the process- by definition.
We can do this...Again, we've done very difficult but urgently necessary things in the past and we have it within us to correct in installments the massive fiscal challenges we face over the next ten or twenty years and beyond. Are we up for the challenge...I know we are! Who is in?
Wednesday, March 2, 2011
Austerity Measures in America...Pay Close Attention
AUSTERITY MEASURES IN AMERICA...??? Pay attention closely... David M. Walker and the David Brooks (NYT Op-Ed) have a few things to remind us about so that we are both guided by sound principles and not guilty of cutting our nose off to spite our faces!!!
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