My other piece of advice, Copperfield, said Mr. Micawber, you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and, in short, you are for ever floored. As I am!
Ah, Wilkins Micawber….if only you were in Washington to talk some sense to President Obama. The politicians might be able to conjure up some sort of last minute Debt Ceiling fix that can flatter the markets for a few microseconds but some would argue that it will really be like covering plague sores with heavy theatrical make up – and in a way the actor analogy is highly appropriate. Boston University’s Professor Laurence Kotlikoff sees the current situation as a piece of political theatre choreographed to distract the public from the cold stark facts of economic reality.
Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.
Kotlikoff differentiates between the “official” debt of approximately 14 trillion and what he calls actual net indebtedness of 202 trillion. The true extent of the government’s liabilities have been hidden by a deft piece of legerdemain, that oh so useful tool of the crooked accountant – relabelling.
Congress has been very careful over the years to label most of its liabilities“unofficial” to keep them off the books and far in the future.
But unofficial or not the liabilities are already there, dark clouds on the horizon that will never clear but will eventually blacken the whole sky.
We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.
This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.
This isn’t just a problem for America. It’s a problem for most of the western world. It’s the eternal confidence trick that promises rainbows and unicorns with just one rub of the genie’s lamp.
We shake our heads at the tortured self destruction of Amy Winehouse. We congratulate ourselves they we have never been weak enough to become enslaved to the drug dealers haunting the other side of the tracks. But in reality the massive amounts of debt carried by western governments are the symptoms of our own society’s addiction to robbing the future to pleasure the present.
Read the rest of Kotlikoff’s piece here – it paints a chilling picture but implicit within the message is the desperate need for political leaders who have the courage to tell the truth to their fellow citizens and the steel to confront the pied pipers of the Obama left or, as Jeff Randall of the UK Daily Telegraph calls them
media dons, Princeton’s Paul Krugman and British-born David Blanchflower, professor of economics at Dartmouth College, championing fiscal incontinence as the route to salvation.
In 1940, when Churchill promised the British people nothing but “blood, toil, tears, and sweat” it was the first time for decades that they had heard a politician treating them as adults by telling them the truth. They responded, not with despair but with a grim determination to confront the harsh realities of the present with a shared sacrifice so that future generations could live in peace and freedom.
That was leadership.
Where are the Churchills of the 21st century?