Monday, July 11, 2011
A Real Bridge to Nowhere
During the 2008 election, vice-presidential candidate Sarah Palin was pilloried by the media for her initial support of the $400 million “bridge to nowhere” that would have been funded with federal taxpayer dollars. However, this is nothing compared to the vastness of the mounting debt crisis. A few hundred million dollars is laughable compared to a national debt that is measured in tens or even hundreds of trillions.
While discussing the national debt limit with a friend, he compared the looming debt limit to a car that is low on gas. He argued that just as you would not slam on the brakes when you realize that you need to stop for gas in 20 miles, politicians should not treat the debt limit as a crisis. This is a useful metaphor, and perhaps it has some validity, but even if the debt limit is raised, our nation will still be in dire straits.
Yes, the car of state, as it were, is low on gas. However, this is a better analogy for the problems of the private sector economy. Businesses in this country are burdened by a combination of too much uncertainty in all the wrong places plus plenty of bad certainty about over-regulation and excessive taxation. As a result, the economy is sputtering and we are on the verge of an even deeper double-dip recession.
However, the car of state is also being pushed by the government towards a bridge that has not yet been fully built. As in the climactic scene from “Back to the Future III,” we have already passed the point of no return, but unlike the movie, there is no such thing as time travel. The debt problem is not going to go away by itself. Instead of gliding gracefully across a bridge to the future, we are racing towards a bridge to nowhere.
As of today, the official national debt is hovering around $14.3 trillion, or about 98% of gross domestic product. Meanwhile, the balance sheet for Social Security, Medicare, and Medicaid contains about $115 trillion in red ink, or roughly eight times the current gross domestic product. Even if the government confiscated 100% of all income, assets, and property from every man, woman, and child in the nation, we still wouldn’t have enough to cover our current obligations.
As the deadline for a deal to raise the debt limit nears, the Obama Administration is asking Republicans to balance cuts in spending with tax increases, but increasing the debt limit and cutting spending will accomplish nothing unless politicians have the courage to reform the choking burden of entitlement spending.
Unlike the movie, it doesn’t make any difference if we go over the economic cliff at the magic Hollywood time-travel speed of 88 miles per hour or 5 miles per hour--the end result will be the same. If we are to avoid national bankruptcy, we don’t just need to slam on the brakes; we need to throw the engine into reverse. Current proposals call for cutting between $2 and $4 trillion from spending over the next decade, but unless politicians can add a few zeroes to those figures, we are only delaying the inevitable catastrophe.