Too bad it wasn’t mandatory for every American to watch the segment 60 Minutes recently did on David Walker, Comptroller General of the United States. Walker heads up the Government Accountability Office, or GAO, which acts on behalf of taxpayers to assure a nonpartisan, honest assessment of government operations — especially government spending.
Walker bluntly stated that the most serious threat to the U.S. is not some guy hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility. You know he’s sincere when he says he has given up on elected officials to take responsible action. He truly believes the very survival of the U.S. is at stake if voters do not demand that their elected officials make some hard choices.
To overly simplify it, the catalyst for our fiscal predicament is the eat-drink-and-be-merry bunch affectionately referred to as “Baby Boomers.” They were born between the end of World War II and the beginning of the Vietnam War, when the “culture of consumption” somehow became synonymous with the American dream.
Those Florida retirement communities you see advertised on television — the ones where retirees are yukking it up, playing golf, enjoying aerobics classes, and sipping midday cocktails — are where an awful lot of Baby Boomers fully intend to be in the not-too-distant future. And when their time comes, they not only are not going to want to hear about work, they also won’t be in a mood to hear about medical bills. All they are going to be focused on is that it’s their turn to be supported by the people at the bottom of the pyramid.
Only one problem: The pyramid is upside down! And it’s going to continue to get wider at the top and narrower at the bottom with each passing year. GAO projections make it clear that just over the Horizon of Fiscal Hell, there won’t be enough wage earners to support the Arnold Palmer golf-community folks.
So, when does the sky begin to fall? It’s already falling! The first Baby Boomer stepped up to the Government Retirement Trough on January 1, 2008. And, along with 78 million other Boomers right behind him in the Entitlements Line, he’ll be looking for his Social Security and Medicare benefits.
Of course, every halfway-informed individual knows that the real culprit is health-care costs. Medicare expenses are five times greater than Social Security benefits. So what did President Bush and Congress do to begin whittling away at this draconian problem? They passed a prescription drug bill that added $8 trillion (that’s trillion) to what was already a $15-$20 trillion underfunding of the health-care system! If you or I did something equivalent to this in our own little worlds, we’d be incarcerated without a trial.
Washington insiders agree that most politicians fully understand the mathematics of impending doom, but they aren’t about to admit it to their constituents. The number-one objective of politicians is to get reelected, and they fully recognize that telling the truth would get them booted off the Washington gravy train rather quickly. They are well aware that voters despise truth, and, in fact, have a penchant for tarring and feathering truth messengers.
Which is why both liberal and (so-called) conservative politicians just keep kicking the entitlements can down the road, hoping upon hope that the painful truth won’t come home to roost until long after they’re out of office. Every politician you see on C-SPAN proposing a new sleight-of-hand “reform” of the Social Security and Medicare programs is lying — and he knows he’s lying.
Nearly thirty years ago, I warned readers about the inevitable collapse of the vote-driven entitlements system in this country, and proposed a simple solution to the Social Security scam. I said then, and believe even more strongly today, that both Social Security and Medicare must be 100 percent phased out. Better a phase-out than a monumental collapse that would not only cause a great deal of pain, but could very well bring about anarchy — which history tells us is likely to be followed by a dictatorship.
My suggestion was that benefits be slowly phased out at the rate of 2 percent per year. Thus, people just reaching retirement age, who have been paying into and counting on Social Security throughout their working years, would receive 100 percent of their originally promised benefits; people eligible the next year would receive only 98 percent of what was promised to them; and so on. In this way, F.D.R.’s wicked brainchild would disappear completely after fifty years, with fewer and fewer people relying on it each year along the way.
Unfortunately, humility forces me to admit that there is zero chance the powers that be will adopt a solution remotely resembling the one I’ve proposed. On the contrary, you can count on politicians to keep kicking the can down the road.
Which is why, if you are more than twenty years away from retirement age, you’d be wise to assume that when the can rolls to a halt at your feet, there won’t be anyone around to kick it any further. And that’s when you’ll want to have your own nest egg safely hidden away.
For me, this is going to be a slam dunk “I told you so.”