D. Dowd Muska

 

Tripling the Debt, and No Leadership in Sight

June 07, 2012

There isn’t a dedication in the Congressional Budget Office’s new report, “The 2012 Long-Term Budget Outlook.”

But if one individual deserves to be recognized in the latest examination of the federal government’s fiscal meltdown, it’s Ida May Fuller. The retired legal secretary was the first recipient of a regular Social Security benefit. In 1940, she began to receive monthly checks in the amount of $22.54. In a cruel joke on taxpayers, the money kept flowing until the old biddy finally died, three and a half decades later.

Ida’s Social Security “investment” makes Hillary Clinton’s cattle-futures windfall appear scrawny. Taxes paid: $24.75. Benefits received: $22,888.92.

No American can expect to reap the kind of return that Ida enjoyed, but nationalized pensions, coupled with socialized healthcare for the aged, remain obscenely generous.

The Urban Institute computes “the lifetime value of Social Security and Medicare benefits and taxes for typical workers in different generations at various earning levels.” For a single man who drew an average salary and retired in 2011 at age 65, the present value of the taxes he paid for “social insurance” is $359,000. Benefits received: $436,000.

For married households comprised of two average-wage earners, the yield is better. Taxes paid: $717,000. Benefits received: $913,000.

But it’s an old-school marriage -- one earner, average wage -- that fares the best. Taxes paid: $359,000. Benefits received: $805,000.

Medicaid isn’t included in the Urban Institute’s calculations, but it should be. The federal-state healthcare program for “the poor” covers a staggering 47 percent of long-term care.

It all adds up to a nightmarish debt scenario, because the days when most of D.C.’s loot was devoted to highways, G-Men, and submarines are over. “Federal spending for mandatory programs has accounted for a sharply rising share of noninterest outlays in the past few decades,” the CBO found, “averaging 60 percent in recent years. Most of that growth has been concentrated in the three largest programs -- Social Security, Medicare, and Medicaid.”

As the CBO’s analysis reveals, when it comes to entitlement insanity, we’ve only just begun. The population is growing older, and all evidence points to “growth in health care spending per beneficiary.”

So while publicly held debt -- just over $11 trillion -- is a disturbingly high 70 percent of GDP in 2012, it soon will rise to nearly unimaginable proportions. With expenditures on autopilot, and assuming the continuation of Bush-era taxes, Congress’s number-crunchers estimate that by 2037, debt will “balloon … to almost 200 percent of GDP.” Notably, the CBO warns that its calculation does “not include the harmful effects that rising debt would have on economic growth and interest rates. If those and other economic effects of federal policies were taken into account, projected debt … would increase faster.”

In the not-too-distant future, America’s profligacy crisis will surpass the peril faced today by the worst of Europe’s spendaholics.

Is anyone interested in fixing the problem?

The president and congressional Democrats push higher taxes on “the rich.” But their beloved “Buffett Rule” was discredited by the Joint Economic Committee, which concluded that over a decade, the measure would raise a paltry $46.7 billion. Besides, no tax increase -- even if it didn’t impact the behavior of workers and investors -- could ever pay for the goodies sought by the forces of Unlimited Government.

That leaves the right -- “conservatives” who either helped or looked the other way when George W. Bush boosted expenditures from $2.01 trillion in 2002 to $3.52 trillion in 2009. To anyone who’s paid attention, Republican attacks on the Obama administration’s deficits -- gaps that are largely attributable to the Great Recession and an anemic recovery -- sound bizarre. The “austerity” of the “Ryan plan,” passed earlier this year by the House of Representatives, would have added trillions of dollars to debt held by the public.

Ryan’s timid proposal faces certain death in a GOP-run Senate. (Too many squishy Republicans.) As for “President” Romney … please. He has no plan for Social Security privatization, and his “reform” of Medicare will have “no effect on current seniors or those nearing retirement.”

As usual, the only politicians who recognize the debt debacle -- and are willing to fight to avert it -- are libertarians. Yet Ron Paul didn’t win the GOP nomination, and it’s doubtful that Gary Johnson, ignored by Republicans and running as the Libertarian Party’s presidential nominee, will attain 1 percent of the vote in November.

Which will occur first -- a voter awakening, or federal-government insolvency?

The answer’s not far off.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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