The left is to America as a wrecking ball is to . . .

| August 6 2012
Christopher Cook

One does not have to look to social issues to find justifications for the claim in the title of this piece. Those issues may exist, but in the end, they may pale in comparison to the destructive power of one thing:

Unfunded liabilities.

People worry about our debt, and rightly so. Our current national debt is approaching 16 trillion dollars. For perspective, that is one quarter of the GDP of the entire planet. No one has enough money to bail us out. No matter what we do, this debt is going to harm us . . . badly. We can raise taxes to crippling levels to try to pay this off, but that will kill economic growth and thus won’t bring in any more revenue. Or, we can print lots of money, devaluing our currency, which will allow us to pay the debt, but it will destroy the value of our currency and everyone’s savings, and it will turn us into a banana republic. The debt situation is really bad.

And yet, if you think that 16 trillion is a large number, try this number on for size: 84 trillion:

In 2011, the federal government reported owing “$10.2 trillion in public debt, accrued federal employee pension and other retirement benefits of $5.8 trillion, and other federal liabilities of $1.5 trillion,” the report states, totalling $17.5 trillion in liabilities — or more than 117 percent of GDP.

When Social Security and Medicare payments owed to current retirees are counted, $12.8 trillion is added to federal liabilities, bringing the total to $30.3 trillion — or a whopping 200 percent of GDP.

Add in the remaining expected obligations to non-retirees for Social Security and Medicare, along with other federal obligations, and the tally rises to nearly $84 trillion.

Now, add in the state and local unfunded liabilities, which are four trillion or more, just for public employee pensions alone.

This is a fiscal disaster. Government and public policy entities give us numbers on how high taxes would have to be raised in order to cover this, and the numbers they come up with are cripplingly high. But these entitles are using static analysis to calculate these numbers. Even if we could raise taxes to those levels, they wouldn’t actually bring in the money anticipated, because static analysis doesn’t take into account changes in the economy and taxpayer behavior based on the new rates.

Some analysts have placed the number of unfunded liabilities even higher—over 100 trillion—but whatever the exact number, the bottom line is simple: there is not enough money to pay for this. Only massive growth, coupled with abstemious spending restraint, can dig us out of this . . . and even that would take us decades.

The left got us into this mess. Yes, Republicans have played the weak-kneed, go-along-to-get-along role for far too long. But at all the major moments when the statist entitlement edifice was being built (New Deal, Great Society, etc.) the Republicans fought hard to stop it. On the public pensions front, as a general rule, this too is a creation of the left, as public unions are colluding almost exclusively with Democrats to negotiate unsustainable pensions and benefits on the backs of the taxpayers.

Our economic problem is largely a creation of the left; it is a direct outgrowth of statist policies they have been pursuing for 100 years. But then, the left are also the ones who will prevent us from digging out of the hole. It is they who, at every turn, prevent the “massive growth and abstemious spending restraint” required to fix this problem—either through policies they impose or reforms they prevent.

Economic growth requires low taxes and a simple, fair, minimal regulatory environment. Massive economic growth would require that government get out of business entirely, allowing the private economy to flourish. No more government involvement in health care. No more crony capitalism. No more pulling huge amounts of cash out of the private economy for this or that purpose. A libertarian paradise of largely laissez-faire policies would truly produce massive growth. But at this point, we cannot even get the simple, moderate growth that would be produced by just lowering taxes and reducing regulations, because the left plays the class warfare, business-is-evil card at every turn.

Spending restraint requires just that—spending restraint. The right is not free of blame on spending, but their culpability comes primarily from two places: susceptibility to the problem of public choice, and susceptibility to the climate of fear the left has woven around entitlement programs. Even mention the possibility of reforming entitlements and the left will destroy you politically. They’ve been doing an amazing job of electrifying the third rail of politics for decades. This may produce political cowardice among those on the right (and a small few on the left who know the gravity of the problem), but it’s an understandable cowardice.

And where the right has been poor on initiating spending, the left has been abysmal. Government taking money from taxpayers and spending it as it sees fit is definitionally what the left is all about. And they’ve been doing it quite well for almost a century. Add it all together, and we have a situation where one party spends (and allows for spending) more than it should, and the other party spends insane amounts as a function of its core operational principles. No one can speak up against the bulk of the spending, which is on entitlements and public employee pensions, because the left has made those areas off limits.

The left has largely created this problem, and the left is largely responsible for creating a climate in which fixing the problem is a political impossibility. And if left untreated, this disease is poised to destroy our economy, and the country along with it.

There is hope, however. Scott Walker and Paul Ryan have bucked this trend. Though the reforms they propose are comparatively minor, they were subjected to assaults almost unprecedented in politics . . . and yet, they’re both still standing. This means that the Overton Window has moved . . . a little. It’s going to have to move a lot more if we’re to fix this problem, but perhaps we’ve finally started heading in the right direction.

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  1. […] if to put a period on the sentence formed by the previous post . . […]

  2. […] debt is one quarter of the GDP of the entire planet, it’s small potatoes compared to the unfunded liabilities for our entitlement programs, which are estimated to be between $84 and 120 trillion.  Worse […]