Wednesday, July 27, 2011

Deluged by entitlement spending

If there's been one overarching theme to this blog through the years, it's been my Cassandra-like pronouncements that government spending on Medicare and Social Security is unsustainable. The federal government has made ever-mounting promises that it cannot possibly keep and now we're approaching the endgame.

From Opinion Journal: "The Road to a Downgrade - A short history of the entitlement state."
The forecast is for $8 trillion to $10 trillion more in red ink through 2021. Mr. Obama hinted in a press conference earlier this month that if it weren't for Republicans, he'd want another stimulus. Scary thought: None of this includes the ObamaCare entitlement that will place 30 million more Americans on government health rolls.

This is the road to fiscal perdition. The looming debt downgrade only confirms what everyone knows: Congress has made so many promises to so many Americans that there is no conceivable way those promises can be kept. Tax rates might have to rise to 60%, 70%, even 80% to raise the revenues to finance these promises, but that would be economically ruinous.

Yet Mr. Obama and most Democrats still oppose any serious reform of Medicare, Medicaid and Social Security. This insistence on no reform reinforces the notion that our entitlement state is too big to afford but also too big to change politically. This is how a AAA country becomes AA, the first step on the march to Greece.
Long before our looming downgrade, what was to be gained by our national self-delusion that entitlements could never be touched? A generation of Americans have been sold on this Ponzi scheme that has no way out except crushing taxes or slashed benefits, even if Washington taxed 100% of the income of the "rich." Reform was the only pathway to ensure that younger Americans had something to look forward to in their older years. Now that the road to serfdom has been well-paved, there's no way to avoid the wreck ahead.

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