June 30, 2009

Give up something - America's real choice (Part 2)

Finally, after a brief 27 day interruption, the second part of America's Real Choice.

I'm taking off my partisan hat right now. As much as I have issues with the agenda items of liberal Democrats (in the interest of full disclosure), there's a much bigger issue facing conservatives, liberals, and all of America. Every American, alive today, and those yet to be born for generations to come is affected by it. Truly, it's impacts spread across the globe. The issue is the National Debt.

An unsustainable American national debt jeopardizes the future of the country as an economic and military superpower. As the shining city on a hill, the bastion of freedom and democracy for countries around the world, as the defender of freedom, liberty and justice, America has not only a vested interest but a DUTY to keep itself from crumbling as did the Roman Empire and the Greek Empire before it. The United States is not an empire. It's simply a country that institutionalized freedoms, democracy, and justice for all. Nowhere else in the world are people as free to choose the path of their own lives as in America. No one should be denied what Americans have. Perhaps someday those freedoms will be universal. But if America fails to keep itself from going off the rails now (or ever), then that future becomes inherently jeopardized.

When the Roman Empire crumbled it was followed by the Dark Ages. They were indeed dark - progress halted and reversed, societies reversed. Barbarism flourished in many places. The crumbling of America would come at a time when there are a myriad of tyrants and potential tyrants lurking the globe. With modern day technology at their disposal, the consequences could include a nuclear catastrophe. They could mean that there becomes a separation of access to that technology (like the Internet) that be the exclusive domain of those in power, thus guaranteeing their power for millenia, not centuries. Of course with fewer having access to the knowledge base not only on the Internet but education as well, the worlds scientific progress would grind to a halt. While Luddites might appreciate that, think of where we would be without penicillin, insulin, aircraft, cell phones and other things that spread health, wealth, knowledge and communication. The future, would be bleak indeed.

So America must save itself. It must maintain it's 'leader of the free world' notion. The biggest threat does not come from without. It comes from within. Al Qaida can hurt America. Other nations in a war could hurt America - some gravely. But only America can kill America. And it's happening.

I've spoken about it in the past as Americans having to make a choice on what they want to do about the future of their country. I've also recently posted a couple of warnings about the coming economic collapse. Oddly, I'm not typically a doom and gloom guy. I'm normally a glass half full guy. I've always believed that if you put your mind to it you can achieve most anything. But facts are facts.

FACT: The current US National Debt stands at $11 trillion, over 85% of GDP.

FACT: The baby boom generation is starting to retire in the next year and a half. Some even began retiring in 2008 under the early retirement options.

FACT: Social Security costs are estimated to be $12.7 trillion

FACT: Medicare costs are estimated to amount to $30 trillion

FACT: To cover these costs by taxes alone would require almost doubling the taxes being collected on each American.

FACT: Federal and military pensions other mandatory spending amounts to $6.1 trillion in spending

FACT: Military spending costs over $500 billion per year. That does not include spending on Iraq or Afghanistan, the ending of that spending or rate of decline is not precisely known. That's $1667 per person in America.

FACT: Annual interest payments on the national debt is $400 billion. That's $1,333 per person in America.

FACT: Based on these numbers and the Obama budgets, the CBO projects a national debt of an additional $9.3 trillion or $20.7 trillion by 2019. That does not fully realize the impact of cap and trade costs.

FACT: By 2019 the population of the US will be approximately 322 million. Based on the numbers above, each person will carry $64,285 of federal government debt, excluding the Non-discretionary components.

FACT: The States have an additional combined debt of $1.85 trillion as of 2005. That's an additional $6,167 per person in America. and we haven't even considered personal debt.

FACT: When factoring National Debt per citizen with all costs loaded in, ranges depending on how it's calculated and who is telling you, from $37,000 to over $100,000 per citizen. If you look at the $53 trillion figure of all combined debt, and with a population of 306,000,000 it works out to over $172,000 per citizen. Dubious but still worth noting.

FACT: If the budget were balanced today and every day the government paid down its debt by $1 billion it would still take 197 years for the US government to pay off the debt it has accumulated to date.

FACT: By comparison, China's national debt (in US dollar equivalent) was $370.4 Billion in 2005. That's $285 per citizen in China.

FACT: By comparison, Japan's national debt in US dollar equivalent was $7.1 trillion, or a per capita amount of $55,000 per citizen. While a higher percentage of GDP than in the US, the current Japanese government was elected to reduce that ratio.

FACT: By comparison, Canada's national debt is approximately $403 billion US, or $12,026 per capita, and rising again after having been paid down by budget surpluses since the mid 1990's.

These are facts. Taming the National Debt is not a matter of choice, it's a matter of necessity. It will require some gut-wrenching changes to America. This is not about cutting pork-barrel spending insofar cutting those things does not solve the problem. Granted, that's part of the solution, but the problem is far bigger than even a billions dollars on this pet project or that.

Yes the current budget is making things worse. But the problem is larger than that too. Inevitably, it's going to get worse.

So now what? Really. I'm conservative and I'm strong on national defense, and a strong America. But the reality is, that like every single thing in the budget, it's annual allotment has got to shrink. I don't want that, but the alternative is no better.

Here's your choices - higher taxes, and/or reduced discretionary spending and/or scrapping or reducing entitlement programs.

All these choices risk political suicide. The public want things cut out of the budget that are ballooning the deficits and national debt, but they don't want to be personally impacted. The two are not mutually exclusive. Something has got to give. Politicians meanwhile are too comfortable avoiding the truth because it keeps them getting elected to promise more and/or to lower taxes. They've let the next Congress deal with it for decades. Time is running out.

America has some tough choices ahead. For too long collectively it has been putting it's head in the sand on the fiscal realities that it has created for itself. Every option has now become a dramatically painful one, and they will only continue to get more painful with every passing year. So what now? Double the tax rates? Halve the military budget? Scrap Medicare? None of those options seem possible. But they are pretty close to unavoidable. Nothing has prepared the nation for this.

There is only one alternative to the economic shock wave coming. The deficits have got to end immediately. Then the government has got to pass a Balanced Budget Amendment to the Constitution. That's the only way to give possible creditors security that the country will, while growing these unfunded liabilities over the next few decades, be able to emerge in a few decades on the right path. But that's still not enough. The federal government will have to negotiate long term favorable loan rates with it's debt holders. It will have to privatize or dramatically cut

Social Security, Medicare and Medicaid spending. Privatizing them would be better - it proves that they will be off the books in the future and therefor not a sword of Damocles hanging over America's head in perpetuity. Drastic, but even so, still likely not enough to avoid some economy-dampening massive tax increases or massive program cuts to everything the government does.

I'm not a fan of the methadone approach - the Congress should have it's ability to tax and spend curtailed. There should be a complete withdrawal of the ability for Congress to decide how much more to tax and how much more to spend, just for one year - cold turkey. Force them to lower taxes and fix spending to balance the budget for one year. Then lock them in the Congress or Senate chamber until they solve it. At the very least it would make for some great C-SPAN viewing.

These seem to be impossible choices to get a consensus on. More worrisome is the fact that those decisions will not be possible before 2012 and certainly not before 2010 given the current liberal climate of spending the country out of it's debt problem. Everybody is still waiting for the free lunch economy, and the clock keeps ticking.

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