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Entitlements: But right now, why everything is just fine ... (update)
Posted by: McQ on Monday, December 17, 2007

Or so our politicians keep trying to tell us:
The government is promising $45 trillion more than it can deliver on Social Security, Medicare and other benefit programs.

That is the gap between the promises the government has made in benefits and the projected revenue stream for these programs over the next 75 years, the Bush administration estimated Monday.

The $45.1 trillion shortfall has increased by nearly $1 trillion in just one year, according to the administration's "Financial Report of the United States Government" for 2006. And, it's up 67.8 percent in just the past four years. In 2003, the shortfall between promised benefits and revenue sources over a 75-year period was put at $26.9 trillion.

The shortfall includes Social Security and Medicare in addition to Railroad Retirement and the Black Lung program.
Of course the Democrats will try to convince us it's all about tax cuts and they can fix it. And Republicans, at least the fiscal conservatives, will tell you it is all about fiscal irresponsibility and government attempting things in which it has no business being involved. But the bottom line is there isn't enough money in the economy - all of it - to keep up with the mandated growth of entitlements as they're now structured.
When the gap in funding social insurance programs is added to other government commitments, the total shortfall as of Sept. 30 represented $53 trillion, up more than $2 trillion in just a year, the report said.

"Our government has made a whole lot of promises in the long-term that it cannot possibly keep," Comptroller General David M. Walker, the head of the Government Accountability Office, said Monday.
But will that show up in a debate? Well, only after we've determined what the candidate's favorite joke, favorite keepsake and favorite nickname is, or what they like to do on a lazy afternoon. And then, most likely, we'll be treated to a show of hands as to who thinks entitlements are in trouble.

There's a relatively simple answer to all of this, but not something which will ever happen and certainly not something any politician would recommend. Put the power of the purse and the resultant savings which accrue from the consumer also being the buyer back in the hands of the people and get government out of "entitlements". Grandfather up to a certain point, build a transitional system, and move away from these eventually bankrupting governmental programs.

Instead,we're actually considering giving more up to entitlements? What is the definition of insanity? Doing the same thing over and over again and expecting different results, right?

Well then we're insane. And unfortunately it doesn't seem there's a cure in sight.

Amazing. You have to wonder, what part of $53 trillion don't they understand?

UPDATE: Jon beat me too it (and I didn't notice it, sorry Jon), but I think the posts are sufficiently different to leave them both up. But I'm all for seeing his question answered: Anyone want to defend this?
 
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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. The key question we should focus on is what policies will encourage economic growth?
 
Written By: Kurt Brouwer
URL: http://www.fundmasteryblog.com

 
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