You wouldn‚??t know it by listening to the political debate in Washington, but the United States government is essentially broke.
The $16 trillion national debt is just the beginning of the problem. The major entitlement programs have unfunded liabilities bigger than the national economy. Social Security is currently promising $8.6 trillion more in benefits than it has revenues to pay for. Extend that time horizon even further into the future and that number eclipses $20 trillion.
Medicare isn‚??t in much better shape. Last year‚??s Trustees‚?? report estimated the net unfunded liability for the program that pays for our seniors‚?? health care at $42.8 trillion. The trust funds are stuffed with IOUs.
We‚??ve already seen this happen at the state level, where government workers‚?? pension benefits are crowding out other budget priorities. Medicaid is also bankrupting states. An aging population plus rising health care costs is causing government to grow on auto pilot.
People‚??s eyes tend to glaze over looking at such big numbers. It has also been difficult to get the voters‚?? attention because the dates when Social Security and Medicare were projected to be in trouble were so far into the future.
But now the future is almost here. Within a decade, interest payments on the national debt may exceed the entire military budget. Think about that: money we should be spending protecting the country from future Osama bin Ladens will instead be paid to our creditors.
Medicare is already paying out more in benefits than it collects in taxes. Social Security ran a deficit in fiscal 2012.
And that‚??s assuming interest rates don‚??t return to where they were before the 2007 financial crisis or spike even higher. Higher interest rates would make it even more expensive to service the debt.
Unless there are structural reforms, it is likely that the quality of these programs will worsen at the same time taxpayers are expected to contribute more to pay for them.
The Senate Democrats took four years to produce a budget and it achieves deficit reduction mostly through nearly $1 trillion in tax increases.
Sounds like a great bargain, right?
The problem is much bigger than money. Our current fiscal path limits our political options. We can‚??t have the kind of government programs we want, whether it is investing infrastructure, enhancing homeland security, or funding the cure for cancer, because the dollars are already spoken for.
Every dollar of federal spending is sucked out of the private economy, a net drain on the American people‚??s resources. That limits your freedom, as do the myriad regulations big government imposes.
Obamacare comes not only with new federal subsidies and mandates, but also a clearer government role in your personal lifestyle choices. The government wants to be able to tell you what health insurance you have to buy, how much water your toilet will hold, what light bulbs you can use, and what size soda you can drink.
No wonder they don‚??t want to answer questions about whether they can launch domestic drone strikes! No limit on federal power, even one extremely unlikely to ever be exercised, can be contemplated in public.
The people who say the present course is sustainable rely on two arguments: Trust us, we‚??re the experts. And there‚??s a sucker born every minute.
Think about the contradictions there.
The suckers‚?? argument is, ‚??Hey, people are buying our bonds now, so they always will.‚?Ě Uncle Sam can borrow money indefinitely, the liberal‚??s American exceptionalism.
The experts‚?? argument assumes technocrats can avert a fiscal crisis with the right policy adjustments at the last minute. The government can bid down health care spending and spend us into lower deficits with fiscal stimulus.
The economist and Paul Krugman gave us a preview of that would look like recently: ‚??death panels‚?Ě and ‚??sales taxes.‚?Ě
But the situation is not hopeless. The truth is, from Reagan to Gingrich to even the end of World War II, we have cut government spending before. We can learn from their mistakes. We can also build on their successes.
More often than not, the problem isn‚??t that big government can‚??t be curtailed. It‚??s that politicians seldom have the will to try.
Despite the results of last November, a growing number of voters doubt the experts. They don‚??t believe a sucker is born every minute. And they want their politicians to protect their pocketbooks‚??and their freedom.
W. James Antle III is editor of the Daily Caller News Foundation and author of Devouring Freedom: Can Big Government Ever Be Stopped?