E-Newsletter No. 15
If not us, who?______If not now, when?
Last year, the US House of Representatives and US Senate approved legislation to suspend any limitation on the US debt until March 15, 2015. In effect, they wrote themselves a blank check to continue to borrow and spend funds over and above the amount that the government collects in taxes. Our Editorial Board is not very optimistic that any meaningful long-term fix to the country’s growing debt problem will be implemented within the next few weeks (but maybe we will be pleasantly surprised for a change).
Last month, we talked about the growth of the Entitlement State and the need to re-establish a Self-Reliant Society. These terms come from a book by Don Watkins, who is an author, columnist and professional speaker. The title of his book is RooseveltCare, and the subtitle is How Social Security is Sabotaging the Land of Self-Reliance. Mr. Watkins makes a compelling case for eliminating all entitlement programs, starting with Social Security. However, he acknowledges that accomplishing this goal is probably not politically possible, because according to a 2011 national poll, eight out of ten Americans responded that “Social Security has been good for the country”. However, keep in mind that this result is primarily due to the fact that politicians have bribed us – – not with our own money, but with the money of future generations.
RooseveltCare does not include any graphs or complicated accounting concepts. It merely tells the story of the role that Social Security and other entitlement programs have played in eroding the eagerness, energy, and optimism that once defined our country. Mr. Watkins makes the case that the Entitlement State is robbing his daughter’s generation of many of her hopes and dreams. One of his most pointed assertions is “I am not my grandfather’s keeper”. Flipping this around, our Editorial Board believes that more than eight out of ten people would be appalled by the thought of stealing money from our children and grandkids. But in effect, this is exactly what is happening. There is no money in the Social Security Trust Fund (or in the Medicare Trust Fund). The only “assets” in the Trusts are “intergenerational wealth transfer arrangements” (i.e., US debt). Every dollar that is spent today to provide these benefits comes directly from current employees’ paychecks. Each year, the shortfall between these cash outflows and the payroll taxes collected by the government is simply added to the country’s growing debt problem. And the amounts are projected to worsen each year because the number of active employees supporting the Baby Boom generation is now down to less than three workers for each retiree.
We will provide excerpts from Mr. Watkins’ book in next month’s newsletter. In the meantime, please note that RooseveltCare is available in PDF format over the internet. Mr. Watkins is providing this book for “free” (truly) because he feels that the current Entitlement State is unsustainable, and it is time for the country – its citizens and politicians – to finally address the reality that Social Security is a financial black hole, and begin to make the necessary changes.
US Debt Clock – – February 1st – $56,533 per citizen / March 1st – $56,615