Nothing Bad Ever Happens in AmericaIt's been a while since I've typed a really depressing missive on the economy (usually I save that for my monthly silver column), but
USA Today published an article that I really never expected. Brutal in its honesty, two things stuck out at me: that no politician was willing to be quoted saying "oh, nonsense," and the admission that the voters themselves are driving us to economic ruin.
WASHINGTON — The comptroller general of the United States is explaining over eggs how the nation's finances are going to hell...
To hear (David) Walker, the nation's top auditor, tell it, the United States can be likened to Rome before the fall of the empire. Its financial condition is "worse than advertised," he says. It has a "broken business model." It faces deficits in its budget, its balance of payments, its savings — and its leadership.
Walker's not the only one saying it...
But the problem is that he can only say it, honestly and in such stark terms, because he does not have to stand for re-election. The article goes on to describe some pretty heroic if rare efforts by Dems and GOP alike, liberals and conservatives alike, to get the budget under control. But as is so often the case, it misses the big picture, the real reason that the problem is not only inevitable, but fatal:
TANSTAAFL. There ain't no such thing as a free lunch. Every bill must be paid somehow.
Congress tried to cut $51 billion from the budget this week, but 'moderates' balked, claiming that the
poor would be hurt when the something they get for nothing is cut off. So it stays. Business also demands something for nothing in the form of export credits, R&D credits, technology credits. The middle class gets it in the form of child tax credits. The elderly get social security and medicare and subsidized drugs. Farmers are paid to grow native grasses. The list is endless, the demographics demonstrable, the result inevitable. We have accumulated more than
$51 trillion in unfunded liabilities, three orders of magnitude higher than the proposed cuts Congress found too large to bear. Those promises cannot be kept, yet the voters demand more promises.
Everyone wants something for nothing, and the fiscal waterline slowly creeps back, making the beach bigger. And we pitch our umbrellas, spread our blankets, and apply our government-subsidized suntan oils, not realizing that the receeding water is the forerunner of a tsunami.
The result is not simply higher interest rates or recession. We've all lived through recessions. Big deal. Modern recessions are simply excuses for the government to spend more. The real problem is that spending, once we decide that everyone can live at the expense of eveyone else, will accellerate until the nation is destroyed, until the dollar is worthless, until the hungry march in the streets (not the fatassed hungry we have today, but the rail-thin bloated-stomach hungry). No one wants to give up a free lunch today so their children will have food tomorrow.
Congress and El Presidente look at the problem coming, blithely promise $200b in aid for New Orleans, and agonize over cutting 1/4th of that amount elsewhere. The GOP ramps up the size of government 33% in 5 years, and Tom DeLay says there is nowhere else to cut except taxes. The Democrats, no matter what, find every program underfunded so long as it gives their voters free money.
When you start down the road to free lunch, it will never stop until the currency (made of paper just for this very thing) expands to nothingness. It will never stop until the government drowns in debt, cannot borrow, and prints the difference. It will never stop until those who have been raised to believe Uncle Sam gives us this day our daily bread storm the Bastille. If you take the road to hell, you'll eventually arrive.
The course we are on is fatal. TANSTAAFL. Someone will pay.
It's not going to be the rich. All you wide-eyed liberals who think that raising taxes on the rich is going to get them to pay their fair share are fooling yourself. The rich write the laws and they write the loopholes. When Jay Rockefeller pays marginal-rate taxation like the rest of us, then maybe. Don't hold your breath. All you wide-eyed conservatives who think tax cuts will allow us to grow our way to fiscal balance are fooling yourselves. You have proven that conservatives' spending propensity exceeds even that of liberals. You kept their free lunch programs and added your own on top.
It's going to be the poor who pay quite a bit, because they are stupid (yes, stupid) enough to become addicted to free lunch. They don't pay taxes, yet they cannot survive without what taxes pay. They are about to be tossed to the wolves. Those who are clever enough to adjust will survive. The stupid will, frankly, not. Blame Darwin. Natural selection is a bitch.
It's going to be the middle class that pays the most, like it always is. They will pay in lost pensions. They will pay in lost Social Security. They will pay in lost 401(k)s. They will pay in higher taxes and higher prices and lower real wages and shortages. They are going to find poverty, not from a lower wages (though plenty of jobs are going away) but because when the government breaks the dollar, all the dollars they saved won't buy a song. The foresighted will survive, the rest not so much.
How many other places has it happened? Argentina, Mexico, Germany, Italy, France, Russia, Sweden...the list is endless because the problem is as universal as it is inevitable. Everyone who combines a paper-money economy with a transfer payments free-for-all either breaks their currency, sees their government overthrown, or - if they are really lucky - gets both at the same time. Everyone who does not own real wealth, secreted away, is rewarded with a generation or two of eating dirt.
It's not coming today, not this week, maybe not even in the next handful of years. But it is coming. The government's own auditor calls it "a broken business model." Companies with broken business models fail. The head of the government's own accounting office compares our fiscal condition to that of late Rome. Late Rome had home-grown armies marching across it, collecting taxes at swordpoint. The end result was slavery and destitution for the vast majority, death for a number that will never be counted. The rich, whom liberals want to tax, became the royalty and nobility we threw off barely two centuries ago. They'll come out OK this time as well. There's no Thirteenth Amendment if there's no Constitution.
Of course this is alarmist. It is meant to be. If you're not alarmed by what the government, both parties, is doing - or even worse, if you think your party, given the chance to implement more of the same, could fix it - then sleep well, because this is America, and nothing bad ever happens here.
Until it does.
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