My last couple of posts have dealt with the topic which has been foremost in the minds of Americans over the last few months-the federal debt. At the end of my last post, I said I'd look at some cuts we could make to reign in the federal budget. Before I do though, let's review a bit.
To this point, I've demonstrated how, because borrowed money grows at an exponential rate our current practice of deficit spending is unsustainable. Eventually we'll all be working to simply service or pay the interest on the debt. Though I didn't mention it, given current deficits, in less than 20 years, servicing the debt will be the single largest government expense, eclipsing Medicare, Social Security and Defense. The only way to prevent our debt from growing to such a level is to deeply cut spendins. Unfortunately any meaningful cuts must be made to programs that most politicians in Washington don't want to touch with a ten-foot-pole.
Two major areas of spending make up over 2/3 of the federal budget. Entitlements, including Medicare, Social Security and federal pension programs account for about $1.9 trillion of the proposed $3.7 trilliion proposed 2011 budget. Defense adds another $738 billion. Together these programs, along with interest amount to about what the feds anticipate taking in this year. Everything else Washington will spend on things like education, roads, space exploration and Nancy Pelosi's chocolate-covered cherries next year must be borrowed-at interest.
So how does one cut these sacred cows without killing the animals? Let's take a look.
We'll start with Social Security because, though it's probably closest to everyone's hearts, it's also the easiest to fix. It must be eliminated-not all at once, but it's got to go.
Social Security is a scam that Bernie Madoff would have been ashamed to have dreamed up. Though one might argue Social Security was ole Bernie's inspiration.
Anyway, the sad truth is, we can't just chuck Grandma out on the street. That would be littering (for those of you offended by this, please reference "sarcasm" and "humor" in your handy Funk and Wagnell's). After all, our government sold her a bill of goods and it's our responsibilty to make sure they pay up. So if Granny's getting her check, she should keep getting it. Also if Granny was a child of the Sixties, and is almost eligible to receive her benefit, it would be bad form to yank it from her pot-stained claw when it is just within her grasp. I know some of you might think that the Baby Boomers deserve to be left in the cold to die for their role in screwing up our perfectly good country, and, in the abstract I might agree. However even hippies are human beings of a sort and it is beneath us to hold a grudge.
So, those already retired and those about to retire-say 60 and older get their checks based on current laws and policies. For all those 60 and under, the retirement age must be raised.
When Social Security was first formed, the retirement age was only a couple of years younger than the average life expectancy. However, thanks to our woefully inadequate healthcare system, the average life expectancy now outstrips the retirement age by more than a decade, with many retirees living well into their eighties and nineties. And, unless Obamacare isn't overturned, the average life-expectancy can be expected to increase, at least a little, for each new group of retirees. So, starting with folks who are now between 50 and 60 years of age, the retirement age should be raised 1 year, for folks between 40 and 50 3 years, between 30 and 40 5 years. Hopefully by the time the folks who are now 30 reach retirement age, Social Security will have gone the way of the hippy.
There must also be a means test. For all practical purposes, Social Security must be turned into a program only for the poorest of our elderly before it is eventually phased out. Not only are the Boomers who are about to retire members of the most spoiled generation in the history of the world, they're also one of the most affluent. Yet, they will all get a Social Security check when they retire. So, any person with a net worth and private retirement savings deemed sufficient to live on must not get a Social Security check.
Raising the retirement age and making Medicare means tested will also greatly lower the costs of that program. The program could see a major cost savings if real reform of government policies toward the healthcare industry were undertaken (not Obamacare). However, such reform is another topic for another day.
The next time we visit the debt topic, we'll look at Defense cuts.
To this point, I've demonstrated how, because borrowed money grows at an exponential rate our current practice of deficit spending is unsustainable. Eventually we'll all be working to simply service or pay the interest on the debt. Though I didn't mention it, given current deficits, in less than 20 years, servicing the debt will be the single largest government expense, eclipsing Medicare, Social Security and Defense. The only way to prevent our debt from growing to such a level is to deeply cut spendins. Unfortunately any meaningful cuts must be made to programs that most politicians in Washington don't want to touch with a ten-foot-pole.
Two major areas of spending make up over 2/3 of the federal budget. Entitlements, including Medicare, Social Security and federal pension programs account for about $1.9 trillion of the proposed $3.7 trilliion proposed 2011 budget. Defense adds another $738 billion. Together these programs, along with interest amount to about what the feds anticipate taking in this year. Everything else Washington will spend on things like education, roads, space exploration and Nancy Pelosi's chocolate-covered cherries next year must be borrowed-at interest.
So how does one cut these sacred cows without killing the animals? Let's take a look.
We'll start with Social Security because, though it's probably closest to everyone's hearts, it's also the easiest to fix. It must be eliminated-not all at once, but it's got to go.
Social Security is a scam that Bernie Madoff would have been ashamed to have dreamed up. Though one might argue Social Security was ole Bernie's inspiration.
Anyway, the sad truth is, we can't just chuck Grandma out on the street. That would be littering (for those of you offended by this, please reference "sarcasm" and "humor" in your handy Funk and Wagnell's). After all, our government sold her a bill of goods and it's our responsibilty to make sure they pay up. So if Granny's getting her check, she should keep getting it. Also if Granny was a child of the Sixties, and is almost eligible to receive her benefit, it would be bad form to yank it from her pot-stained claw when it is just within her grasp. I know some of you might think that the Baby Boomers deserve to be left in the cold to die for their role in screwing up our perfectly good country, and, in the abstract I might agree. However even hippies are human beings of a sort and it is beneath us to hold a grudge.
So, those already retired and those about to retire-say 60 and older get their checks based on current laws and policies. For all those 60 and under, the retirement age must be raised.
When Social Security was first formed, the retirement age was only a couple of years younger than the average life expectancy. However, thanks to our woefully inadequate healthcare system, the average life expectancy now outstrips the retirement age by more than a decade, with many retirees living well into their eighties and nineties. And, unless Obamacare isn't overturned, the average life-expectancy can be expected to increase, at least a little, for each new group of retirees. So, starting with folks who are now between 50 and 60 years of age, the retirement age should be raised 1 year, for folks between 40 and 50 3 years, between 30 and 40 5 years. Hopefully by the time the folks who are now 30 reach retirement age, Social Security will have gone the way of the hippy.
There must also be a means test. For all practical purposes, Social Security must be turned into a program only for the poorest of our elderly before it is eventually phased out. Not only are the Boomers who are about to retire members of the most spoiled generation in the history of the world, they're also one of the most affluent. Yet, they will all get a Social Security check when they retire. So, any person with a net worth and private retirement savings deemed sufficient to live on must not get a Social Security check.
Raising the retirement age and making Medicare means tested will also greatly lower the costs of that program. The program could see a major cost savings if real reform of government policies toward the healthcare industry were undertaken (not Obamacare). However, such reform is another topic for another day.
The next time we visit the debt topic, we'll look at Defense cuts.
