The Perfect Ending

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After an agonizingly protracted battle, congressional leaders and the president reached an agreement to raise the debt limit, with some minor cuts in spending now and supposedly more cuts in the future, cuts that will be determined by a bipartisan panel.

There has been considerable rending of clothes and gnashing of teeth on both the left and the right sides of the political spectrum. But really, the agreement probably captures the mood of the majority of Americans.

As I have noted before, people are only just beginning to see the entitlement spending iceberg towards which the nation’s economy has been sailing for decades. But polls show that the public — including self-described Tea Party members — still strongly support the major culprits in the fiscal follies with which the country is beset: the entitlement programs, especially Social Security and Medicare.

In sum, the public is beginning to see the problem, but remains clueless — or, to wax Nietzschean for a moment, deliberately blind — to the real cause of the problem.

The agreement had immediate effects; though not ones, I daresay, that were comprehended by the supercilious solons who spawned it. And I’m not talking about the Standard & Poor’s downgrade.

First, as the US Treasury reported, the national debt immediately shot up $238 billion to a grand total of $14.58 trillion, officially hitting the mark of 100% of GDP. We as a nation have hit that mark only once before, right after World War II, the biggest foreign war we ever fought. We are now there again, in a time of comparative peace. As the report drily notes, this debt level puts us in the league of countries such as Italy and Belgium.

The second effect was not a stock market rally created by the exuberant joy of investors, relieved that disaster had been averted, but instead a massive sell-off, caused at least in part by the recognition that disaster looms.

All this brings to mind the old adage: a country gets the government it deserves.




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Comments

Rodney C.

Gary:
"As I have noted before, people are only just beginning to see the entitlement spending iceberg towards which the nation’s economy has been sailing for decades. But polls show that the public — including self-described Tea Party members — still strongly support the major culprits in the fiscal follies with which the country is beset: the entitlement programs, especially Social Security and Medicare."

Rodney:
What exactly is an entitlement program? Is it something for which a citizen was forced to pay, and now has a right to expect?

Though most government programs should have never been started in the first place, some of them (like the ones mentioned) actually seem to contain a combination of entitlement as well as welfare aspects. It is the welfare aspects of all government programs that should be attacked. Of course, if some adjustment in benefits and charges need to be made during some "entitlement" program phase-out, then people should be willing to do that too.

It just seems dumb to me to attack "entitlement programs" without making the distinction I've tried to outline. Nobody as yet seems to be talking about the welfare state proper in this whole debate.

Do I make any sense? Where is JUSTICE? People still have the right to what was, or will be, taken from them, and this right should not be made light of or discounted.

CrackerBarrel

Rodney,

Much as I think that entitlement programs like Social Security and Medicare should never have been implemented, your point about one being entitled to restitution for money that one has been forced to contribute is fair. I think that part of the SS phase-out should be to let contributors withdraw money from the plan until withdrawals reach the amount contributed, with interest. How much interest? I couldn't begin to come up with a figure. Typical savings bank rates over the years? More? Less? It's a knotty question. I would also favor means testing for those who are retired and collecting, like me, and sliding (downward) scales of contributions and expected payouts for those over, say 50, designed so that the program has a defined end date. Those under 50 shouldn't contribute or expect to receive.

Medicare is different. It has never been a plan where one contributed to one's own account in expectation of future withdrawals. It's just insurance. So give people a year or two to find alternate coverage, and end it.

I wonder how many readers think that my proposals aren't drastic enough, and how they would end the programs.

CB.

Rodney C.

CB,
thanks and maybe I just make a few quick replies about your thoughts.

You offered up some ideas on how to back our way out of the mess. No doubt getting out of the mess, without total collapse into some abyss, would be a very complex project. It might not be possible to make the solution totally fair, but it should be as fair as possible TO THE TAX PAYERS, even if that meant it took a little longer. The important thing would be to move in the right direction. I would be happy with that. It seems to me that a useful strategy in a solution would be the concept of "grandfathering". I think quite a few programs would "grandfather" well (if the country had the guts to do it). Some aspects of Social Security would probably grandfather well (the welfare aspects), while other parts might not. Some other phase-out plan would probably be needed. (remember, social security failed at least partly because it DID become something of a welfare program)

Please think hard about the idea of "just ending" medicare. People make decisions all their lives based on certain expectations, and they are forced to pay 2.5% of their earnings all their lives, rather than making some other plans. Some phase-out might be more fair even for medicare.

My original reply was to call attention to my perception that so much negative attention is being paid to, so called, "entitlement programs", while pure "welfare" schemes seem to get little attention. That just doesn't seem fair, even though it may be the case that the entitlement programs are a BIG problem. No doubt all the welfare schemes are also a BIG problem (have you noticed how many people are getting their rents, utility bills, food, medical, cigarettes, booze, cell phones, etc., etc. paid for today?)

I think VERY big cuts are possible with a lot of grandfathering and other ideas, and not just in entitlement programs. It is not fair to criticize those calling for big changes unless one has a specific example of a cut that would be an actual injustice.

Fixing this thing might well require a lot of pain. The question is: who should SPARED the pain? The answer is: the rational, long suffering producers who have been fighting in vain against this state of affairs for so many years.

Thanks

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