French political thinker and historian Alexis de Tocqueville once wrote, “A democracy cannot exist as a permanent form of government. It 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, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.” Sound familiar? Ring a bell?

This should do more than ring a bell; it should sound a huge alarm, one that causes your knees to buckle as you reflexively clasp your ears in anguish. In case you haven’t noticed, America has a big-time debt problem and it’s not getting any better.

Counting only funded liabilities, U.S. debt is estimated at close to $16 trillion[1]. That’s a 1 followed by 12 zeros. To put this in perspective, if dollars were stars, you’d need 4,000 Milky Way galaxies to match this kind of debt!  Oh, and since September 28, 2007, the federal government has managed to pile on an additional $3.94 billion per day.

It Gets Worse

And this doesn’t take into account unfunded liabilities. An unfunded liability is a future obligation for which there are no funds or assets set aside. All those Social Security paycheck deductions you thought were going into a special account with your name on it? It’s not there. There are no funds set aside to cover the debt owed to you. Rather, it is present and future generations who will pay these obligations as they come due. (This is strikingly similar to how a Ponzi scheme works, but that’s another story.)

Counting unfunded obligations, such as Medicare, Social Security, and other payments owed to seniors, retired employees and veterans, the figure representing total U.S. debt explodes to an incomprehensible $62 trillion! This amounts to around $528,000 per household[2]. Meeting these future obligations presumes there will be ample jobs and sufficient economic growth. But with the lion’s share of U.S. manufacturing jobs having gone oversees, and with many service sector jobs (call centers, data entry, information services, computer programming) following a similar trajectory, is it really wise to ‘bet the farm’ in such a manner? With these kind of mind-numbing numbers you’d think Americans might be a tad concerned. But the evidence suggests otherwise…at least insofar as the voting majority is concerned.

The Problem

The problem is that, while most Americans object to such obscene numbers, we are essentially locked into a toxic two-party system where candidates who don’t sing the party line are quickly discarded in favor of those who represent a continuation of the status quo. Collectively, these are the same people, who in January of 2012, voted to raise a federal deficit from its then-staggering $15.2 trillion ceiling to an even more staggering $16.4 trillion. Maybe some of us feel powerless to change the situation. Maybe some of us don’t care. But despite any misgivings or general apathy, reality marches on. And soon, it will be time to pay the piper.

To put it simply, we want the things we can’t afford collectively as a nation. We want universal health care. We want a global military presence. We want our expensive entitlement programs. Never mind the fact that our roads, bridges and general infrastructure are crumbling. Never mind the fact that we are borrowing hundreds of billions annually from the Chinese to finance a lifestyle we can no longer afford. The reality is that it is unsustainable. Sooner or later, it spells the end of the American standard of living-unless we do something to change it.

The Solution

Like any addict, America must first admit it has a problem, one that cannot be put off until a future time. “Just one more fix” will not work. We must face the challenge of curbing our spending habits and all that entails. We must accept the fact that there are some things we cannot afford. There will be some suffering. There will be some pain, at least initially. But America will adjust and adapt as it always has.

Moving Towards a Sustainable Budget

A breakdown of the U.S. budget[3] for fiscal year 2012 may surprise you. Did you know that around 56 percent of every tax dollar goes to “entitlement” programs related to healthcare, pensions and welfare? An additional 24 cents out of each tax dollar pays for military spending. Between entitlements and military spending that’s 80 percent of the budget! Everything else, such as roads, bridges, education, scientific research, transportation, etc. comes out of the remaining 20 percent. Is this really the most efficient and productive use of tax dollars? More importantly, are all of these things really necessary to ensure the safety and welfare of the American people? Or, to put this another way, is it possible that we could still be safe and still care for the needy without these huge federal expenditures?

Rediscovering Welfare

We can get back to greatness by rediscovering the American spirit that made us great in the first place. This was not a country where Americans were content to watch their fellow men, women and children starve to death. This was not a country where Americans waited for some bloated federal welfare program to rescue the needy. Such programs didn’t even exist in those days. This was a country where charities, church, friends and family used be enough. But somehow we lost our way when we started to believe that things like helping and caring should be outsourced to the government via taxation. If all entitlement programs suddenly disappeared, does anyone honestly believe that Americans would be content to watch their fellow citizens starve in the streets? The reality is that we don’t really need these costly government programs to help the poor and needy, at least not nearly to the same extent. Sure, unemployment insurance is necessary for many people.  And there will always be those who lack any social support whatsoever, as well as those who are incapable of taking care of themselves, such as the mentally or physically disabled. But at the very least, such social programs could be scaled down to a reasonable level, one that fits within the reality of what we can afford. Baseline budgeting, which automatically increases the amount spent on these already-unaffordable programs each year, does not work. There needs to be a complete re-think of the entire entitlement system.

Rethinking Our Global Military Presence

And what of our global military presence? Many Americans may not realize that the United States spends as much as on its military as China, Russia, the United Kingdom, France, Japan, Saudi Arabia, India, Germany, Brazil, Italy, South Korea, Australia, Canada and Turkey combined![4] Isn’t it time we ask ourselves why we need to spend billions maintaining bases in rich countries like Germany and Japan? And what about financially-able countries like France, South Korea, Saudi Arabia, Australia and Canada to name a few? Come to think of it, why does the United States need to defend anything other than its own borders to ensure the safety of its citizens? If anything, shifting funds away from global military operations and back towards domestic needs would make this country far safer. Can you imagine the entire U.S. military, with all those destroyers, carriers, tanks and troops defending our own borders here at home? How safe would that make you feel? I know I’d sleep better at night. Plus, we’d save hundreds of billions of dollars each year. America doesn’t need to spend its money policing the world. We need to re-think our military expenditures.

Accountability: A Government of the People

In the end, it is the American voters who are to blame for the current mess. We have failed to demand financial accountability and responsibility. We have allowed ourselves to be seduced by promises of “change” and “reform”, only to reap neither. Forgive and forget? That seems to be the status quo. How else would you explain career politicians? And when a political candidate comes along who actually WILL bring reform (see Ron Paul), we look the other way, as if the political primary process is some kind of beauty pageant. This is the reason the culture in Washington never changes. We must finally begin to hold the government accountable to the American people, since that is who it was intended to serve.

We must come to grips with the fact that our elected leaders are a mirror reflection of ourselves as a nation. The buy-now-pay-later mindset, or even worse, buy-now-let-someone-else-pay-later, has so infected the American mindset that we have forgotten the meaning of words like “responsibility” and “accountability”. It’s time to DEMAND accountability from our leaders. It’s time to accept the harsh reality that we cannot borrow our way into prosperity. The government does not possess anything that it has not been given by the people. Therefore the government cannot offer us anything that we don’t already have.

Do we really need the government to solve all our problems? Or are we capable of helping each other? Do we need a government middle-man to take our money, only to give it to someone else? If you want to help someone, why not just give the money to him or her directly? Why not just donate it to a charity? It worked once upon a time. It can work again.

References

  1. Source: www.brillig.com/debt_clock
  2. Source: www.usatoday.com/news/washington/2011-06-06-us-owes-62-trillion-in-debt_n.htm
  3. Source: www.usgovernmentspending.com/federal_budget
  4. Source: en.wikipedia.org/wiki/List_of_countries_by_military_expenditures

Mike Woods is a freelance author whose interests include real estate, technology, and business. You can find him at his Carmel, IN real estate site at: http://www.mswoods.com/Carmel-homes-for-sale-city.htm

Be Sociable, Share!