28 October 2006

Hey, neighbours, can you spare a vote??

Okay, folks here in the States, we are coming down the home stretch...that is, if you're one of the 30% or so of those who still vote. In about 10 days from now (November 7, mark your calendars), we theoretically get a say about what we feel about a good majority of our political representatives. True, nothing short of an impeachment (which would only further divide our country, although I would argue there's certainly reason to investigate the whole administration) will remove George W. from office, but the upcoming election does give all registered voters a voice to weigh in on Iraq, domestic terrorism, the economy, illegal immigration, and a host of other issues. As a native citizen of this country and the proud descendant of Scottish, Irish, and Dutch immigrants and also Cherokee Native Americans, the family tree is littered with those who gave their lives to the beliefs and protections of this country and the dream it can be. Not voting...even as some sort of political protest...is absolutely not an option for me personally. I can only passionately urge the registered American voters of this blog to go out and vote yourselves, even if your vote 'cancels out' mine. Remember the line from The Pledge of Allegiance about "and to the Republic for which it stands..."? Well, voting and participating in that Republic is what that entire Pledge was talking about.

I know I tend to have a flair for the dramatic, but I truly do believe this election is pivotal...if for no other reason to evaluate where we are as a unified (or not) nation. I was raised the daughter of an Nixon Republican (Dad) and a FDR, Kennedy, and Clinton Democrat (Mama)...now I'm so disillusioned with both parties, I just try and vote for the person I think best for the job...what a concept in this day and age, but straight-ticket voting is simply not an option for me anymore. It will take more time perhaps in research, but it's my money and my future...and I think it's worth it overall. We are a nation so painfully divided, but standing off in separate political corners throwing knives and arrows at the others has so clearly not worked...let's take down the rhetoric a few notches, roll up our sleeves, and get down to the promise of 'nationbuilding'...our own, this time...again. That uneasiness we're feeling??...it's the stagnancy of not moving forward on anything anymore.

One of the issues I've been looking at with intense scrutiny this season (and Lord knows there are so many of them, truly, as I believe we're in one of the most divisive and perilous times this country has ever faced) is the money one: the whopping, totally out of control, and seemingly unchecked deficit. It is with increasing alarm that I keep hearing from Dubya et al that 'billions' (remember when 'millions' was a large number?) of US tax dollars are being used for this program, that program, and oh yeah, that program over there, too. I know we are a country of 300 million documented legals and 12-20 million undocumented illegals now, but I'm not hearing anyone (even on the local level) start talking the hard truth about who's going to pay all the bills when they come due (whether these programs are successful are not, there will always be bills to be paid). And I'm concerned that even now we may be too late without serious consequences.

I know the promise of my generation doing better than their parents (an American standard of financial prosperity and social accomplishment) is almost obsolete as we continue to slide backwards, but it's even more worrying knowing that my Social Security deductions will not be enough to support my dear Mama, recently turned 65 and now eligible for benefits: once the other baby boomers start retiring, I will need to support approximately three of them as it stands currently, for about an average of 22 years. Instead, my monies are dwindling and are being raided for other out of control entitlement programs. And, at the end, the Social Security, Medicare (health care for disabled and retirees), and Medicaid (health care for the indigent and children) programs, that we all agree are failing on a massive scale, will not be around for me in my later years should I need them...as it stands now. But, yet, because of promises made generations ago, we will (and I morally argue must) honour at least some of those obligations. The Social Security and Medicare systems will never be in place for me, though, without a massive overhaul. I have come to the conclusion that if it's my money being used, I think it's time I was able to hear the truth about this mess...a truth that no one wants to speak about whatsoever politically. If the deficit was a grieving/loss emotion, we'd quite forcefully be in the stage of denial. A stage that apparently no one in power here wants to move on, improve upon, and heal from. Except one brave soul whose job is politically protected...one David M. Walker of the GAO.

The following news article is some disturbing news for those of us who are wondering where the hell the money for Iraq, terrorism, Social Security, immigration reform, and countless other programs will be/is currently coming from. 'Monkey see, monkey do' could easily be the national financial slogan now. We (myself included, as well-documented on this blog) are doing too much of the spend, spend, spend routine ourselves, not only personally, but nationally as well...putting off the bankers until 'tomorrow'. (Actually, the fact that this is coming to a head during the campaign on 'Tara' and we're widely exhibiting Scarlett O'Hara's philosophies...suddenly gives the current political mindset more resonance. The fact that someone wants Oprah...Oprah...to sell the severity of this issue to the American public speaks volumes, too.) Ohh, boy, kids...the situation actually appears worse than I first thought.

(Editor's note: As you know, I try to provide full links to all of the articles and items I post here. This is, after all, standard net etiquette procedure. However, I am making an exception this time, as there seems to be a problem with anything I've posted from "My Way" news outlet. Apparently, the link becomes inactive relatively quickly, causing any unsuspecting readers to click the link and then get a message saying the article is no longer available...and then also be unable to call it up through an archives search, too. That in mind, I'm posting the article in full here and then will also link to the actual site address at its conclusion below. Hope this helps.)


GAO Chief Warns Economic Disaster Looms

Oct 28, 12:32 PM (ET)


AUSTIN, Texas (AP) - David M. Walker sure talks like he's running for office. "This is about the future of our country, our kids and grandkids," the comptroller general of the United States warns a packed hall at Austin's historic Driskill Hotel. "We the people have to rise up to make sure things get changed."

But Walker doesn't want, or need, your vote this November. He already has a job as head of the Government Accountability Office, an investigative arm of Congress that audits and evaluates the performance of the federal government.

Basically, that makes Walker the nation's accountant-in-chief. And the accountant-in-chief's professional opinion is that the American public needs to tell Washington it's time to steer the nation off the path to financial ruin.

From the hustings and the airwaves this campaign season, America's political class can be heard debating Capitol Hill sex scandals, the wisdom of the war in Iraq and which party is tougher on terror. Democrats and Republicans talk of cutting taxes to make life easier for the American people.

What they don't talk about is a dirty little secret everyone in Washington knows, or at least should. The vast majority of economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it.

There's a good reason politicians don't like to talk about the nation's long-term fiscal prospects. The subject is short on political theatrics and long on complicated economics, scary graphs and very big numbers. It reveals serious problems and offers no easy solutions. Anybody who wanted to deal with it seriously would have to talk about raising taxes and cutting benefits, nasty nostrums that might doom any candidate who prescribed them.

"There's no sexiness to it," laments Leita Hart-Fanta, an accountant who has just heard Walker's pitch. She suggests recruiting a trusted celebrity - maybe Oprah - to sell fiscal responsibility to the American people.

Walker doesn't want to make balancing the federal government's books sexy - he just wants to make it politically palatable. He has committed to touring the nation through the 2008 elections, talking to anybody who will listen about the fiscal black hole Washington has dug itself, the "demographic tsunami" that will come when the baby boom generation begins retiring and the recklessness of borrowing money from foreign lenders to pay for the operation of the U.S. government.

"He can speak forthrightly and independently because his job is not in jeopardy if he tells the truth," said Isabel V. Sawhill, a senior fellow in economic studies at the Brookings Institution.

Walker can talk in public about the nation's impending fiscal crisis because he has one of the most secure jobs in Washington. As comptroller general of the United States - basically, the government's chief accountant - he is serving a 15-year term that runs through 2013.

This year Walker has spoken to the Union League Club of Chicago and the Rotary Club of Atlanta, the Sons of the American Revolution and the World Future Society. But the backbone of his campaign has been the Fiscal Wake-up Tour, a traveling roadshow of economists and budget analysts who share Walker's concern for the nation's budgetary future.

"You can't solve a problem until the majority of the people believe you have a problem that needs to be solved," Walker says.

Polls suggest that Americans have only a vague sense of their government's long-term fiscal prospects. When pollsters ask Americans to name the most important problem facing America today - as a CBS News/New York Times poll of 1,131 Americans did in September - issues such as the war in Iraq, terrorism, jobs and the economy are most frequently mentioned. The deficit doesn't even crack the top 10.

Yet on the rare occasions that pollsters ask directly about the deficit, at least some people appear to recognize it as a problem. In a survey of 807 Americans last year by the Pew Center for the People and the Press, 42 percent of respondents said reducing the deficit should be a top priority; another 38 percent said it was important but a lower priority.

So the majority of the public appears to agree with Walker that the deficit is a serious problem, but only when they're made to think about it. Walker's challenge is to get people not just to think about it, but to pressure politicians to make the hard choices that are needed to keep the situation from spiraling out of control.

To show that the looming fiscal crisis is not a partisan issue, he brings along economists and budget analysts from across the political spectrum. In Austin, he's accompanied by Diane Lim Rogers, a liberal economist from the Brookings Institution, and Alison Acosta Fraser, director of the Roe Institute for Economic Policy Studies at the Heritage Foundation, a conservative think tank.

"We all agree on what the choices are and what the numbers are," Fraser says.

Their basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation. That's almost as much as the total net worth of every person in America - Bill Gates, Warren Buffett and those Google guys included.

A hole that big could paralyze the U.S. economy; according to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today.

And every year that nothing is done about it, Walker says, the problem grows by $2 trillion to $3 trillion.

People who remember Ross Perot's rants in the 1992 presidential election may think of the federal debt as a problem of the past. But it never really went away after Perot made it an issue, it only took a breather. The federal government actually produced a surplus for a few years during the 1990s, thanks to a booming economy and fiscal restraint imposed by laws that were passed early in the decade. And though the federal debt has grown in dollar terms since 2001, it hasn't grown dramatically relative to the size of the economy.

But that's about to change, thanks to the country's three big entitlement programs - Social Security, Medicaid and especially Medicare. Medicaid and Medicare have grown progressively more expensive as the cost of health care has dramatically outpaced inflation over the past 30 years, a trend that is expected to continue for at least another decade or two.

And with the first baby boomers becoming eligible for Social Security in 2008 and for Medicare in 2011, the expenses of those two programs are about to increase dramatically due to demographic pressures. People are also living longer, which makes any program that provides benefits to retirees more expensive.

Medicare already costs four times as much as it did in 1970, measured as a percentage of the nation's gross domestic product. It currently comprises 13 percent of federal spending; by 2030, the Congressional Budget Office projects it will consume nearly a quarter of the budget.

Economists Jagadeesh Gokhale of the American Enterprise Institute and Kent Smetters of the University of Pennsylvania have an even scarier way of looking at Medicare. Their method calculates the program's long-term fiscal shortfall - the annual difference between its dedicated revenues and costs - over time.

By 2030 they calculate Medicare will be about $5 trillion in the hole, measured in 2004 dollars. By 2080, the fiscal imbalance will have risen to $25 trillion. And when you project the gap out to an infinite time horizon, it reaches $60 trillion.

Medicare so dominates the nation's fiscal future that some economists believe health care reform, rather than budget measures, is the best way to attack the problem.

"Obviously health care is a mess," says Dean Baker, a liberal economist at the Center for Economic and Policy Research, a Washington think tank. "No one's been willing to touch it, but that's what I see as front and center."

Social Security is a much less serious problem. The program currently pays for itself with a 12.4 percent payroll tax, and even produces a surplus that the government raids every year to pay other bills. But Social Security will begin to run deficits during the next century, and ultimately would need an infusion of $8 trillion if the government planned to keep its promises to every beneficiary.

Calculations by Boston University economist Lawrence Kotlikoff indicate that closing those gaps - $8 trillion for Social Security, many times that for Medicare - and paying off the existing deficit would require either an immediate doubling of personal and corporate income taxes, a two-thirds cut in Social Security and Medicare benefits, or some combination of the two.

Why is America so fiscally unprepared for the next century? Like many of its citizens, the United States has spent the last few years racking up debt instead of saving for the future. Foreign lenders - primarily the central banks of China, Japan and other big U.S. trading partners - have been eager to lend the government money at low interest rates, making the current $8.5-trillion deficit about as painful as a big balance on a zero-percent credit card.

In her part of the fiscal wake-up tour presentation, Rogers tries to explain why that's a bad thing. For one thing, even when rates are low a bigger deficit means a greater portion of each tax dollar goes to interest payments rather than useful programs. And because foreigners now hold so much of the federal government's debt, those interest payments increasingly go overseas rather than to U.S. investors.

More serious is the possibility that foreign lenders might lose their enthusiasm for lending money to the United States. Because treasury bills are sold at auction, that would mean paying higher interest rates in the future. And it wouldn't just be the government's problem. All interest rates would rise, making mortgages, car payments and student loans costlier, too.

A modest rise in interest rates wouldn't necessarily be a bad thing, Rogers said. America's consumers have as much of a borrowing problem as their government does, so higher rates could moderate overconsumption and encourage consumer saving. But a big jump in interest rates could cause economic catastrophe. Some economists even predict the government would resort to printing money to pay off its debt, a risky strategy that could lead to runaway inflation.

Macroeconomic meltdown is probably preventable, says Anjan Thakor, a professor of finance at Washington University in St. Louis. But to keep it at bay, he said, the government is essentially going to have to renegotiate some of the promises it has made to its citizens, probably by some combination of tax increases and benefit cuts.

But there's no way to avoid what Rogers considers the worst result of racking up a big deficit - the outrage of making our children and grandchildren repay the debts of their elders.

"It's an unfair burden for future generations," she says.

You'd think young people would be riled up over this issue, since they're the ones who will foot the bill when they're out in the working world. But students take more interest in issues like the Iraq war and gay marriage than the federal government's finances, says Emma Vernon, a member of the University of Texas Young Democrats.

"It's not something that can fire people up," she says.

The current political climate doesn't help. Washington tends to keep its fiscal house in better order when one party controls Congress and the other is in the White House, says Sawhill.

"It's kind of a paradoxical result. Your commonsense logic would tell you if one party is in control of everything they should be able to take action," Sawhill says.

But the last six years of Republican rule have produced tax cuts, record spending increases and a Medicare prescription drug plan that has been widely criticized as fiscally unsound. When President Clinton faced a Republican Congress during the 1990s, spending limits and other legislative tools helped produce a surplus.

So maybe a solution is at hand.

"We're likely to have at least partially divided government again," Sawhill said, referring to predictions that the Democrats will capture the House, and possibly the Senate, in next month's elections.

But Walker isn't optimistic that the government will be able to tackle its fiscal challenges so soon.

"Realistically what we hope to accomplish through the fiscal wake-up tour is ensure that any serious candidate for the presidency in 2008 will be forced to deal with the issue," he says. "The best we're going to get in the next couple of years is to slow the bleeding."

Link as of this posting: http://apnews.myway.com/article/20061028/D8L1OC5G0.html

1 comment:

Erik said...

Thanks for your research and for posting this. I'd love to see a follow-up article on the missing trillions mentioned in the General Accounting Office reports every single year. Keep up the great work. Remember, the East Germans built their wall to keep out the fascists.