For the 11th year in a row, the U.S. Government Accountability Office (GAO) was prevented from expressing an opinion on the consolidated financial statements of the U.S. government—other than the Statement of Social Insurance—because of serious material weaknesses affecting financial systems, fundamental recordkeeping, and financial reporting. [...] In a speech today at the National Press Club, [David M. Walker, the Comptroller General of the United States and head of GAO] said, "If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and there would be talk about whether the company's management and directors needed a major shake-up." [...] "The federal government's fiscal exposures totaled approximately $53 trillion as of September 30, 2007, up more than $2 trillion from September 30, 2006, and an increase of more than $32 trillion from about $20 trillion as of September 30, 2000," Walker said. "This translates into a current burden of about $175,000 per American or approximately $455,000 per American household."
Perhaps we could start by imposing Sarbanes-Oxley on the Federal Government.
I don’t want to defend it, nor do I want to encourage it.
But it needs perspective.
In the softest terms, GDP doubles every 20 years (it actually comes closer to tripling, but let’s keep it soft).
Right now the GDP is approaching $14 trillion, but let’s say it’s $13 trillion.
Projecting out, that would put the GDP at $26 trillion in 2027, at $52 trillion in 2047, and at $104 trillion (60 years out) in 2067, and let’s catch up a little with the actual rate of growth and say that fifteen years after that in 2082 (75 years out) the GDP stands at $208 trillion. Now take that $53 trillion shortfall and divide it by 75 years and you have an average annual shortfall of about $706 billion, which even by 2027 is starting to look small.
I know, I’m making assumptions, but probably to the low side. And I know that these entitlement costs won’t maintain the average but rise to it and beyond it as the decades pass.
Here’s my point. This has to be made a selling point for privatization of Social Security, because having a real piece of the GDP pie, even with modest growth, is far better than having the government cut you a "benefit."
It also shows how the economy will be capable of handling the so-called SS transition costs.
Every American can start to get invested from the time they are born, in the big pie, instead of in the fool’s gold of entitlement programs.
Now, I don’t know that prosperity really makes for a happier society. Indicators are that it doesn’t. But I also think that entitlements are culturally destructive, they tear at the foundation of family by constantly inserting government both into the family structure as a substitute for family and into individual responsibility as a substitute for that. But entitlements never really equal a substitute, they are in fact a diminishment always sold as a panacea, an escape.
The fact that the Federal bureaucracy is inefficient and wasteful should surprise no one. However, the number given, $53 trillion in liabilities, is based on many assumptions extending 75 years out. Does anyone think a straight line extrapolation out 75 years makes sense? Our ability to predict the future is quite limited. For example, who could have predicted blogs as recently as 10 years ago?
When people decry the growth of government liabilities, one point that never gets mentioned is the value of the assets owned by the Federal government. That number is exceedingly hard to obtain, but it should be clear to anyone that the gold at Fort Knox, hundreds of millions of acres of land, thousands of buildings, the Strategic Oil Reserve and much more is highly valuable today and will also grow in value over 75 years.
Currently, there is no political will to solve the problems in these programs — Social Security, Medicare — but they will be dealt with eventually. And, I agree with Martin McPhillips that they are not the doomsday scenario many imagine. The key question we should focus on is what policies will encourage economic growth?
And, I agree with Martin McPhillips that they are not the doomsday scenario many imagine. The key question we should focus on is what policies will encourage economic growth?
While I don’t think that they are doomsday scenarios on any straight line perspective, I do think that they are entirely rotten in their effect, and need to be excised before they get even worse. And I’m referring there to the potential "kill the goose that lays the golden egg" scenario. So, "restructuring" entitlements out of existence is the best economic growth policy that there is, and that can be done without sacrificing economic security safety nets but, rather, making them stronger by making them private and profitable.