Tipping point in the rearview mirror
As America has been hurling itself toward fiscal Armageddon in recent years, pundits have described the economic tipping point we will reach some day in the future, a point of economic calamity from which our country cannot recover.
Optimists have said with patriotic fervor that America is so resilient that it will rebound from the debilitating effects of liberalism and the welfare state, we will come back as the economic and military superpower of the world.
Both are wrong.
The optimists are wrong in that our system is fragile and can be broken. I would argue we already broke it, that the tipping point was passed years ago.
I had a column bouncing around in my mind to write after Romney was elected, because surely there aren’t enough numbskulls to re-elect Obama, are there? With Romney and Ryan safely elected to take office in January, the subject of my column would have been this:
“We have a chance to turn our economic disaster around, but only a very small chance. And prospects are not promising, even with the capitalist A-team in the lead.”
If you can bear to follow my thinking, prepare to be upset.
Turn your mind’s eye to our government cutting entitlement benefits of any sort. The mere whiff in the news of cuts under consideration brings unbearable caterwauling, and the media herd stampedes to the to-be-injured parties with countless camera eyes determined to capture every tear for delivery to our living rooms with sympathy and tut-tutting.
So cutting is hard, we all know that. But how much cutting would it take?
Let’s ignore for the moment the “fiscal cliff” approaching at year end in which a multitude of taxes would be raised, begging for a recessional dip at a time we desperately need to fire up the engines of commerce.
Let’s also ignore for the moment that a Romney-Ryan pro-business America would encourage people with capital held in cautious abeyance to put it at risk to expand a business or start a new one, creating jobs and an expanding tax base to feed the federal appetite.
Let’s just deal with the tax base we have and the plain vanilla economic disaster we have created.
In 2012 our tax collections will be $2.5 trillion, but our geniuses in Washington are spending $3.8 trillion. We borrow from China and other investors 40 percent of every dollar our fed spends. The interest on that debt is $225 billion this year, but of course it grows every year as we pile on more debt, now $16 trillion and projected at $26 trillion in 2021.
If we separate federal spending into mandated programs (entitlements) and discretionary, you may want to keep the nitroglycerine pills handy if you have a weak heart.
Mandates include Social Security, Medicare, Medicaid, government employee pensions, military pensions, veterans compensation payments for injuries like I received, and so on, totaling $2,252 billion in 2012.
We could pay for mandates out of tax revenue, but there wouldn’t be any money left for discretionary items, which are broken down into security (armed forces, FBI, CIA, etc.) and non-security (departments of Education, State, Commerce, Interior, EPA and all the rest). We could pay for mandates but nothing else.
After paying for mandates, $1.3 trillion of borrowed money goes to discretionary items to fund the fed and armed forces, FBI, CIA, etc.
Amidst this monetary madness, the Congressional Budget Office has reported numerous duplicative and wasteful programs, but none have been eliminated to save money. It seems the closest thing on earth to eternal life is a federal program because cuts and politicians are camera-shy when the screaming starts.
The screaming over even small cuts is quickly magnified under the media microscope to the point politicians avoid cuts at all costs; they would rather ruin our children’s future by continuing to borrow mountains of money we cannot afford to repay.
We’ve all heard conservative politicians chatter about eliminating federal departments like Education, Commerce, etc., and while some such moves may be beneficial, the savings are not large enough to put a dent in the deficit problem. The heart of the problem is mandated entitlements we cannot pay for.
To solve our fiscal problem, we would need a MAJORITY of politicians with the courage to make MASSIVE cuts to entitlements, not just itty bitty symbolic cuts with a little bit of bleeding.
The cuts would need to be so deep the blood on the floor would be knee-deep, and the screaming would quickly become unbearable.
Where do we find politicians with that much courage? Maybe Romney and Ryan would have had the courage to endure the national screaming from deep cuts, but they would have had marginal help from Republicans with re-election on their mind, and stiff opposition from every Democrat.
Would they have been able to pull it off? I have serious doubts.
Now that Obama is safely in the White House four more years, none of that deep budget cutting will happen, other than small, symbolic reductions that solve nothing.
Even worse, business owners who have been holding their breath, along with their capital, hoping for a Romney-Ryan change to the anti-business climate, now will have to deal with an escalating war on business.
The Dodd-Frank legislation that is strangling small banks will continue to spit out the remaining trainload of new regulations still pending.
Taxes on successful people (small business owners) will be raised “to be fair.” The administration’s war on the American coal industry will likely pick up in intensity. Absurd carbon emission taxes and regulation are poised to be revived.
Obamacare implementation plods along, prompting employers with headcounts at the margin to fire employees and reduce the hours of part-timers to keep their headcount under the law’s threshold. Obama’s anti-business beat goes on.
So, what does all this mean other than the inmates have absolute control of the asylum?
Our national financial condition is a ship having struck an iceberg and taking on water, but instead of a heroic try to keep it afloat, our leaders are heading pell-mell for more icebergs while shuffling the deck chairs and telling us proudly of our re-arranged seats.
In the early 19th century, a deep-thinking Frenchman named Alexis de Tocqueville spent two years traveling around our new country and noting his observations of our system, hoping to learn and advise his countrymen on the transition from their old aristocracy to a new democracy. He wrote a brilliant book titled “Democracy in America” with many insightful observations, including this one:
“A democracy ... can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy ...”
That pretty much sums up where we are.
Half don’t pay income tax. Moochers are outnumbering the providers, and Democrats are doing a good job organizing the moocher vote machine.
Unprecedented numbers are on food stamps, many of them people who buy cigarettes, booze, tattoos, flat screen TVs, have cars and air conditioning, and our government spends our money advertising to encourage more people to apply for food stamps.
A friend recently witnessed a frantic crowd surrounding a government van as free cell phones were handed out in Union City. Wonder why they didn’t come to Peachtree City?
We have raised generations that don’t know the good life they live came from capitalism and individual responsibility, and last week they voted for free stuff and collectivism over individualism, instant gratification over the long-term good of the country.
Do I think America will recover? No, I don’t. To look into our future, tune in to Greece.
While liberals accelerate their coddling the weak, punishing the successful and snickering at nay-sayers like me and thinking us fools, America is crumbling, much like Rome burned while Nero fiddled.
But even if we had elected Romney, and even if he had pulled off the unlikely miracle of reversing our course of financial ruin, do you think we could have restored the foundation of our country that has been trampled for decades – a federal government limited to constitutionally enumerated powers?
Neither do I.
[Terry Garlock of Peachtree City occasionally contributes a column to The Citizen.]