National debt is over $14 trillion, the federal budget deficit is $1.4 trillion and, depending on whose estimates are used, the unfunded liability or indebtedness of the federal government (mostly in the form of obligations for Social Security, Medicare, Medicaid and prescription drugs) is estimated to be between $60 and $100 trillion.
Those entitlements along with others account for nearly 60 percent of federal spending. They are what Congress calls mandatory or non-discretionary spending. Then there's discretionary spending, half of which is for national defense. Each year, non-discretionary spending consumes a higher and higher percent of the federal budget.
The spending path that Congress has chosen for the last half-century is unsustainable and will end up with economic collapse but little or nothing can be done about it unless I'm grossly wrong about the American people. Americans who detest our country and those who love our country are hell-bent, wittingly or unwittingly, on destroying it.
You say, "Williams, that's not only insulting but shows little trust as well. Explain yourself!"
For the past 30 years, federal tax revenues have averaged 18 percent of the GDP. Federal spending, nearing 30 percent of our GDP, is the problem. To get our economic house in order, there must be large spending cuts, not only in so-called discretionary spending but in non-discretionary spending as well.
To put this in perspective: Defense spending is called discretionary and totals $685 billion. Our deficit is $1.4 trillion. Defense spending could be entirely eliminated and we'd still have a massive deficit. Any congressman unwilling to make cuts in entitlement spending is not to be taken seriously about sparing our nation from economic collapse.
Millions of Americans don't want their entitlement touched, many of whom are senior citizens. Seniors will tell you that they were forced into Social Security and Medicare, and any congressman talking about cutting those and other entitlements will face their wrath at the ballot box.
By the way, according to one study, "Until recent years, Social Security recipients received more, often far more, than the value of the Social Security taxes they paid. For workers who earned average wages and retired in 1980 at age 65, it took 2.8 years to recover the value of the retirement portion of the combined employee and employer shares of their Social Security taxes plus interest."
Seniors are not the only group who can put the fear of God into politicians. There are massive corporate handouts through programs like the Export-Import Bank, Agriculture Department business and farm subsidies, and the Small Business Administration. Then there's massive Department of Education spending on K-12 education and higher education. The list of federal programs, described as taking the earnings of one American and giving them to another, numbers in the thousands.
Everyone who receives government largesse and special favors deems his needs as vital, deserving, proper and in the national interest. It is entirely unreasonable to expect a politician to honor and obey our Constitution and in the process commit political suicide. What's even worse for our nation is that voters ousting a politician who'd refuse to bring, say, aid to higher education back to his constituents is perfectly rational. If, for example, he's a Virginia politician and doesn't bring higher education grants back to his constituents, it doesn't mean Virginian taxpayers will pay a lower income tax. All that it means is that Marylanders will get the money instead. Once legalized theft begins, it pays for everyone to participate. Those who don't will be losers.
That's the nation's dilemma. The most important job for people who want to spare our nation from economic collapse is not that of persuading politicians to do the right thing but to convince our fellow Americans to respect the limits of our Constitution. In his speech to Virginia's ratifying convention, James Madison said, "Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it."
Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2011 CREATORS.COM
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11 Comments | Post Comment
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Good article but your point re how seniors feel about social security is lacking. I have paid into the system for 45 years and it is a factor in my retirement plan. If there had been no plan two things would have naturally arisen from the private sector: I would have saved more and my employers would have funneled their share of the payments into more direct compensation. You mentioned the 1980 retirees recouped their and their employers investment + interest in 2.8 years.
I'd like to see the source for that fact.
Lastly, In lieu of receiving my expected benefits I would gladly accept a refund of my 45 years of payments ((ncluding my employers) plus interest.
Comment: #1
Posted by: Jerry
Tue Jan 25, 2011 3:40 AM
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Re: Jerry Jerry many if not most of us in your situation feel as you do. That is exactly the problem Dr. Williams is talking about. We are now willing to infringe on the freedom of others, to make them pay, so we can get ours. Prtoblem is the country may not last long enough for us. It's always the same when you late in entering a pryamid scheme.
Comment: #2
Posted by: Tom
Tue Jan 25, 2011 8:26 AM
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Fact is Social Security has not contributed 1 dollar to the deficit. If anything the robbery of the Social Security Fund has starved off the deficit.
Pay it back but so many of you don't want to because then you could not abate the spendjng that got us in this fix.
As for those of you who like to use the pryamid cliche are if the spenders did not raid the SS Fund it would have been a legit policy. That is not disputable.
Comment: #3
Posted by: Ron
Tue Jan 25, 2011 8:47 AM
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Some opponents of constraints on state power have used the expression "the constitution is not a suicide pact".
Alas, the reality that Walter Williams describes is rather different: representative democracy is a suicide pact.
Comment: #4
Posted by: D. Saul Weiner
Tue Jan 25, 2011 11:34 AM
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Ron,
What is indisputable is that, even factoring in all prior contributions and expected future contributions to the "Social Security Trust Fund", the "fund" is projected to will be exhausted by 2042. Social Security is a microcosm of the entire federal budget. The point of this article is that the federal spending is not sustainable based upon historical tax revenues.
Comment: #5
Posted by: David
Tue Jan 25, 2011 4:44 PM
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Jerry: Here is the source for the payout quote. Geoffrey Kollmann and Dawn Nuschler of the Congressional Research Service in their report "Social Security Reform" (October 2002)
Yours and similar comments sadly prove that Williams is right. It will apparently take rioting in the streets and economic collapse to convince Americans that we have to give up the PONZI SCHEMES (look up the definition Ron). I still have hope but it is wavering this morning.
Comment: #6
Posted by: Alan
Wed Jan 26, 2011 6:02 AM
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Every critic of entitlements attacks Medicare, Medicaid and Social Security spending when speaking to the need to cut, or end, entitlement programs. These programs are easy targets because every pie chart on federal spending clearly illustrates the portion of the deficit going to these programs. Then there are the hidden entitlements, the pork that nobody really sees. The fact that corporations pay almost no taxes is an entitlement program. Foreign aid is an entitlement program. Any and all government bailouts are entitlement programs. Government subsidies for education, housing, transportation, healthcare, agriculture, public safety, private security, aid to cities, aid to states, etc., etc. - all entitlements. The critics just want to talk about spending, and they want the average citizen to do the right thing and shoulder all the tax burden. All citizens are now expected to both pay more taxes, and watch the programs, that might have benefited them in some small way, ended. Don't just say "lower spending." Spell it out. Specifically address the spending that needs to be lowered, much the way you address Medicare, Medicaid and Social Security specifically. Why is there never any mention of corporate entitlements in these discussions? Are these critics all cowards? Are the corprations you work for, or your corporate spnosors, going to yank all your blogs?
Comment: #7
Posted by: chollie
Thu Jan 27, 2011 8:32 AM
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Suggestions for Eliminating Social Security:
1. Allow repatriation of overseas profits at 5%. Use that 5% to pay back the IOU's currently in the SS "lock-box"
2. Allow individuals to "buy out" of SS. What you paid "in" can be offset as a tax credit when making IRA withdrawals.
Comment: #8
Posted by: Isabel
Thu Jan 27, 2011 10:40 AM
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A common mistake in people's thinking about taxation is to believe it makes any difference whether the government takes its cut out of your paycheck or out of your employer's revenues. In either case, the economic result is the same: You and your employer have produced some wealth and someone who didn't produce it will get to consume it. Dr. Williams is right to call such government-enforced redistribution "legalized theft".
As for Social Security, I receive it because not to accept it would be to allow someone else to spend the stolen loot, someone most likely less deserving than I am. I maintain I deserve it more because at least I admit I have no right to it, and I take every opportunity (like this one) to apologize to all the taxpayers (especially the young) who will have to toil for the next one to three decades to support me at the cost of their own standards of living. If the taxpayers choose to cut me off as is their right, I'll deal with it then.
Comment: #9
Posted by: Phillip Schearer
Thu Jan 27, 2011 7:39 PM
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Let's cut to the chase and stop discussing periferal issues. Ours is not a "representative democracy", it's a Constitutional Republic. The only chance for the U.S. to climb out of this hole is to return to Constitutional governance. Putsimply, if the Constitution doesn't specifically allow it, government is forbidden from doing it. Either the Constitution is "the supreme law of the land" or we exist at the whim of executive decree, judicial fiat, and legislative over-reach. All three branches of our government presently exceed the limits granted to them by the Constitution (examples - Patriot Acts I & II; Kelo v. New London, CT; undeclared wars being fought in Afganistan and Iraq; governent buyout of automobile and financial sectors of our economy, etc.). Whether the keepers of the keys agree or not, We the People are sovereign; and as such, we retain the right of force to maintain that sovereignty.
"We will not obey your evil laws." - Rev. Dr. Martin Luther King, Jr.
Comment: #10
Posted by: irishcoonass
Sat Jan 29, 2011 5:55 AM
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Chollie:
As to your statement that "corporations pay almost no taxes"... it is important to note that corporations are a legal fiction to allow for the reduction of risk. "Corporations" do not pay ANY taxes, since (strictly speaking) they don't exist. The SHAREHOLDERS of the corporation pay the taxes (through reduced dividends) and the CUSTOMERS of the corporation pay the taxes (through increased prices). Simply taking more money from "the corporation" merely flows downhill and results in higher prices for customers and lower yields for investors (which include everyone with an IRA, 401k, or even a savings account).
Other than that, I actually AGREE with much that you have said. We pay foreign aid to countries that hate us. We spend money on subsidies paying people NOT to produce crops (a practice I have never understood). There are plenty of other areas as well, and Dr. Williams' point is that we have to stop protecting sacred cows and understand that, no matter how well intentioned the effort, we simply CANNOT spend more than we make and expect to remain prosperous.
In the past, economic growth outpaced deficits and growing debt (two VERY different things). However, this is just like running up your credit cards because NEXT year you'll get paid more than you did THIS year, and you can pay the debt off then. Eventually you hit your "earning ceiling" and the piper demands to be paid.
We have reached that point in this country. Those with their hand out demanding that the producers support them have dragged our economic growth to a halt. I don't foresee that changing drastically at this point unless we desperately cling to FREEDOM and stop rewarding stupidity and trying to protect everyone from any potential form of failure.
Comment: #11
Posted by: Ric Crouch
Fri Feb 18, 2011 8:30 PM
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