Libertarians are fiscal realists. Everyone knows there is no such thing as a free lunch, yet when it comes to politicians and voters, the siren song of “free this” or “free that” is apparently too tempting, especially when melded with an important issue that the government says it will solve. If you look at the record, however, whatever politicians and government gets into is rarely if ever solved, and the problems around it always seem to grow. Readers would do well to note the pattern.
At any rate, entitlement spending is a massive problem of spending what we don’t have. The following critique is from Congressman Ron Paul on March 5, 2007, a libertarian in republican clothing, but libertarian nonetheless (and vilified by most republicans because of it). If you want more of this in all government, start voting libertarian — and fast, before things get worse.
The Coming Meltdown
David Walker, Comptroller General at the Government Accountability Office, appeared on the show â€œ60 Minutesâ€ last evening to discuss the federal budget outlook. If you saw the show, you know that he painted a very sobering picture regarding the federal governmentâ€™s ability to meet its future obligations.
If you didnâ€™t see the show, Mr. Walkerâ€™s theme was simple: government entitlement spending is like a runaway freight train headed straight at American taxpayers. He singled out the Medicare prescription drug bill, passed by Congress at the end of 2003, as â€œprobably the most fiscally irresponsible piece of legislation since the 1960s.â€
When it comes to Social Security and Medicare, the federal government simply wonâ€™t be able to keep its promises in the future. That is the reality every American should get used to, despite the grand promises of Washington reformers. Our entitlement system canâ€™t be reformed â€“ itâ€™s too late. And the Medicare prescription drug bill is the final nail in the coffin.
The financial impact of the drug bill cannot be overstated. Government projections that the program would cost $400 billion over the next decade were a joke, as everyone in Congress knew even as they voted for the bill. The real cost will be at least $1 trillion in the first decade alone, and much more in following decades as the American population grows older.
The Medicare â€œtrust fundâ€ is already badly in the red, and the only solution will be a dramatic increase in payroll taxes for younger workers. The National Taxpayers Union reports that Medicare will consume nearly 40% of the nationâ€™s GDP after several decades because of the new drug benefit. Thatâ€™s not 40% of federal revenues, or 40% of federal spending, but rather 40% of the nationâ€™s entire private sector output!
The politicians who get reelected by passing such incredibly shortsighted legislation will never have to answer to future generations saddled with huge federal deficits. Those generations are the real victims, as they cannot object to the debts being incurred today in their names.
The official national debt figure, now approaching $9 trillion, reflects only what the federal government owes in current debts on money already borrowed. It does not reflect what the federal government has promised to pay millions of Americans in entitlement benefits down the road. Those future obligations put our real debt figure at roughly fifty trillion dollars â€“ a staggering sum that is about as large as the total household net worth of the entire United States. Your share of this fifty trillion amounts to about $175,000.
Donâ€™t believe for a second that we can grow our way out of the problem through a prosperous economy that yields higher future tax revenues. If present trends continue, by 2040 the entire federal budget will be consumed by Social Security and Medicare alone. The only options for balancing the budget would be cutting total federal spending by about 60%, or doubling federal taxes. To close the long-term entitlement gap, the U.S. economy would have to grow by double digits every year for the next 75 years.
The answer to these critical financial realities is simple, but not easy: We must rethink the very role of government in our society. Anything less, any tinkering or â€œreform,â€ wonâ€™t cut it. A good start would be for Congress to repeal the Medicare prescription drug bill.