... Mike Walker, Col. USMC (retired)
Why The Election Does Not Matter
(I have been waiting for two months for the election to be over to send this)
We are about to witness the peak in the quality of Government services provided to Americans this decade, a process that began eighty years ago. Why? Because the Government entitlement programs – Social Security, Medicare, Medicaid, Food Stamp Program, Affordable Health Care Act – are fiscally untenable and it is utterly impossible to raise federal taxes high enough to keep up with the increasing costs of these programs.
The Global Competiveness Report was recently issued and America was ranked in seventh place. In 2008-2009, the United States was still ranked number one. We have fallen for the last four years, an unprecedented decline by the world’s largest economy. Why? Our national debt. It is NOT Obama’s debt alone – it is a joint House-Senate-White House-Republican-Democrat problem.
Here are the hard facts. Social Security in its current form is going broke. The situation facing Medicare/Medicaid is worse. Add in the expanding Federal Food Stamp Program and the Affordable Health Care Act and the rate of Federal spending on entitlements becomes unsustainable. The world realizes our government cannot keep spending over $1,000,000,000,000.00 per year more than it takes in. At some point in the near future everything else will become irrelevant. It will not matter who is the House Speaker, who controls the Senate, which party gains the White House or even who sits on the Supreme Court bench. Economic reality will trump politics.
The reaction by Americans broadly falls into four groups. A large block listens to the “don’t worry - be happy” politicians that long ago learned you can get an “economic expert” to say almost anything. A second group admits to a problem, but thinks the cure will be painless, like taxing the rich or cutting waste in government. Sadly, even if we tax people according to President Obama and eliminate Federal agencies like Ron Paul advocates, it will not significantly reduce the deficit. Both options are akin to rearranging the deck chairs on the Titanic. A third group neither understands nor cares to understand the numbers. To them, entitlements are a right and they deserve them. Finally, there is a dour group that realizes real solutions are painful. They understand that unaddressed “bubbles” do not go away they POP!
In the 1920’s, Wall Street created a “stock bubble” that burst in 1929, wiping out over three decades of gains and ushering in the Great Depression. In the 1990’s and early 2000’s, as Morgenson and Rosner convincingly proved, quasi-Federal agencies such as the Federal Reserve (in Boston) and Government-Sponsored Entities Fannie Mae and Freddie Mac decided to socially engineer the housing mortgage sector of the economy and when that “credit bubble” burst in 2007, we got the Great Recession. The “entitlement bubble” is next and lies squarely in Washington. At some point, the world's bond buyers will walk away from US debt as being too risky; the “entitlement bubble” will pop just like 1929 and 2007. There will be a crash. How bad will it be? It will probably be worse than the Great Recession but not as bad as the Great Depression.
The United States will revive. Here is why: We are not a socialist state. The private sector will be harmed, but will survive and become the engine for growth. When the Federal spending madness ends, we will still have fifty state governments, and only a few operate like Illinois. Local governments will also carry on. They are learning from the mistakes of Vallejo, San Bernardino and Stockton in California. That is what makes America fundamentally different from the Greece’s of the world. Our national government can do a lot of harm, but we still have our economic freedoms and that means we have the political means to clean up the mess that Washington made.
