Saturday, March 14, 2009

Thank heaven those kids can't vote

Mark Steyn has today's must-read with "The Brokest Generation." Here are the choice excerpts:

Because, as politicians like to say, it’s about “the future of all our children.” And the future of all our children is that they’ll be paying off the past of all their grandparents. At 12 percent of GDP, this year’s deficit is the highest since the Second World War, and prioritizes not economic vitality but massive expansion of government. But hey, it’s not our problem. As Lord Keynes observed, “In the long run we’re all dead.” Well, most of us will be. But not you youngsters, not for a while. So we’ve figured it out: You’re the ultimate credit market, and the rest of us are all pre-approved!

This is the biggest generational transfer of wealth in the history of the world. If you’re an 18-year old middle-class hopeychanger, look at the way your parents and grandparents live: It’s not going to be like that for you. You’re going to have a smaller house, and a smaller car - if not a basement flat and a bus ticket.

I mentioned a few weeks ago the calamitous reality of the U.S. auto industry. General Motors has 96,000 employees but provides health benefits to over a million people. They can never sell enough cars to make that math add up. In fact, selling cars doesn’t help, as they lose money on each model. GM is a welfare project masquerading as economic activity. And, after the Obama transformation, America will be, too. The young need to recognize that this is their fight. They need to stop chanting along with the hopeychangey dirges and do something more effective, like form the anti-AARP: the association of Americans who’ll never be able to retire.
The federal government has been on auto-pilot for forty years as more and more of the federal budget moves from discretionary spending to entitlement spending. This has limited budgetary maneuverability so that when we have a recession – since we can't scale back on spending – we're forced to borrow more money. This level of borrowing wasn't insurmountable after World War II because America was still a relatively young country (median-age wise) with many workers, supporting a much-smaller federal government (e.g. before Medicare, fewer retirees on Social Security.) The problem with our debt now is that the situation is exactly reversed: America is an aging country with fewer young workers supporting a Brobdingnagian-sized government.

Maybe one silver lining in the past is that most of the federal debt was money we owed ourselves; that is, money borrowed from domestic banks. Now China holds $1 trillion of U.S. debt, meaning they can make demands we would have ignored in the past. Bit by bit, this is how American power and freedom is parceled away.

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