Washington Pulling Off The Big Con
Sometimes I think I am being "conned" by both sides of the aisle. For instance, this past week I heard the phrase that "Social Security is going bankrupt" about two times with every half-hour news program.
Well, Social Security is not going broke. It spends about what it takes in without borrowing.
Of course, the rest of the government is already bankrupt. It has to borrow about 45 percent of what it spends. When we compare Social Security with the rest of the federal budget, Social Security looks like Apple and the rest of the government looks like General Motors before the "crash."
Then, there is the "fiscal cliff." It is not a crisis of disagreement. The crisis is that both parties agree with the John Maynard Keynes "con" that government spending boosts the economy. Both parties want to keep government spending at current levels. The Democrats want to keep spending on social programs. The Republicans want to keep spending on defense.
Neither is there disagreement on how to pay for it. The disagreement is on how not to pay for it. The Democrats do not want to lose benefits. Republicans do not want Democrats to benefit from the money Republicans lose. In the past, the consensus between both parties is that neither has to lose because the benefits can be borrowed from China.
And, when the smoke clears from all the negotiations on New Year's Day, the China option may be the consensus opinion again.
But that is a con too. Most representatives know that the China option of borrowing money to keep government spending high is also not a viable option. That is because China is no longer the major source of our debt problem. Our problem is so severe that not even China can loan the United States enough money to keep the government solvent.
The source of government GDP funding keeping our economy alive through the re-election of President Obama was "quantitative easing" by the Federal Reserve.
This was a realization by the Fed that neither China nor anyone else would buy the amount of bonds America needed to sell to keep solvent. Therefore, the Fed issued bonds that it bought itself with money it simply printed without any backing. Our federal spending and our "recovery" were actually financed by the largest counterfeiting scheme since the Weimar Republic let the German presses roll after World War I.
Spending, both defense and social, will have to be cut. This will result in a loss of government jobs until these are replaced with private sector jobs. But, this has to be done.
The government can never tax enough to replace that portion of the federal budget which is either funded by borrowing from China or printing from the Fed.
Complaining about spending cuts reminds me of Lucy calling Ricky names when Lucy wants to buy a designer dress and Ricky replies, "I can' afford it."
Well, we can afford Social Security, because we pay for it. We cannot afford runaway welfare and expensive Navy ships because we do not pay for them. And we do not have the capacity to tax enough to begin to pay for both no matter how much the rich are soaked to coddle the poor and the Defense Department.
The politicians promise "a chicken in every pot." Well, we know that is a con. But do we know that both we and our grandchildren are being conned when we are told that the secret to a vibrant economy is to cut the Social Security for which we do pay and increase the weapons and welfare for which we do not?
The fiscal cliff discussions in Washington seem to center on what to spend and who to tax. They need to center on what not to spend and who to tax less. And, Social Security has nothing to do with it.
If the Congressional negotiators on the fiscal cliff come up with a "compromise" to raise taxes, raise the retirement age, raise the debt ceiling and keep defense and welfare spending constant, then you will know that while New York remains The Big Apple, Washington is, was and will always be, the home of The Big Con.
Robert M. Levy is chairman of the Moore County Republican Party. Contact him at Law52@prodigy.net.
More like this story