Controlling entitlements

Thursday , May 10, 2012 - 11:41 AM

Robert K. Wolthius

The recent riots in Greece against the government's proposed austerity program and the defeat of the Sarkozy Government in France last week forebode the coming donnybrooks that governments, national, state and local are facing in the bitter fight over benefits and entitlements.

Central to the whole issue is the amount of money in the government treasury versus the amount of money obligated to the citizen beneficiaries. The bare fact of the matter is that the amount of money being paid to beneficiaries far exceeds the amount of money for that purpose in the treasury or scheduled to come to the treasury in the foreseeable future. The rest of the money is being borrowed or printed.

There are certain political and economic realities underlying this critical equation. First, an ugly truth is that a monetary benefit or entitlement once granted in a democratic government is very difficult, if not impossible, to reduce or terminate. There are some valid and some invalid reasons for this huge dilemma. Just about all Americans are at the public trough in one form or another: food stamps, Social Security, retirement, Medicare, Medicaid, education assistance, defense spending, transportation, etc. These sources of funding in some cases are the main source of income or life-sustaining programs.

Second, since the Great Depression of the 1930s, policies of both major parties in the United States have been based upon the simple practice of providing new benefits and increases to existing ones without adequately gauging the long-term cost. And finally, not in the past 75 years or so has the Congress or any administration had the political courage to confront intelligently the problem. Both political parties have talked about Social Security reform for decades knowing full well that it needs to happen, but instead they just keep kicking the can down the road. The same also holds true for Medicare. The political potato is too hot to handle.

The fact that President Obama has added $3.1 trillion to the debt in just the past two fiscal years and that the U.S. Senate has not passed a budget for three fiscal years is irrefutable evidence that the federal government either cannot or will not tackle the problem of benefits and entitlements. Meanwhile our foreign debt, much of it held by China, exceeds $15 trillion and every American owes over $50,000 as part of that debt.

We are headed for economic disaster, as are most countries in Western Europe. Most Americans realize that it cannot go on much longer. Families and private sector businesses know from brutal experience that when revenue falls far short of expenditures changes have to be made. Sacrifices, credit card use, luxury expenditures have to be adjusted, reduced or eliminated. Corporations fire CEOs; sports teams sometimes sack general managers or managers; families eat cheaper food, buy a less expensive car, cancel a vacation or move into a smaller home. But alas, no such draconian actions are required of our federal government. Yet such actions are long overdue for our bloated federal budget.

Of course it would be terribly painful. Just look at Gov. Scott Walker in Wisconsin, who faces a recall election over benefit reduction and the collective bargaining process that contributed to the deficits, or the numerous House Democrats who lost their seats in the 2010 election.

Never mind that many constituencies in America and beaucoup lobbyists in Washington will scream to high heaven. They will restate Obama's phony premise that we cannot reduce entitlements or we need to tax the rich and make them pay for our benefits. We could tax the rich out of existence and only make a small dent in the problem. They will scream as does one senior citizen lobby, "we earned it; it is ours" or demand that everybody else be cut, but not me. Many American groups, including several unions, will spend millions of dollars in the election process to defeat any would-be reformers or any politician who dares even think of cutting "my entitlements."



Some, like the majority of voters in Californi,a will elect a governor whose primary solution is to significantly raise taxes on businesses, even as he watches scores of them leave the state. Too many Americans would rather commit economic and fiscal suicide rather than confront the problem of a federal/public trough that is dangerously near empty. But reform can and must be accomplished. States like New Jersey, Indiana, Louisiana, and several other state and local governments have taken on the task with considerable success.

There are not many Americans left who lived through the 1930s, but there are a lot of us who have made it through Obama's failed presidency, who believe that the great federal imbalance between expenditures and revenue must be addressed. In fact, most of us have been doing it in our own lives for the last four years.

Americans remain an exceptional people, even if our inept and confused president thinks that we have become "somewhat soft or lazy." We hung together in the 1930s and then when World War II came, we produced an effort, both in combat and in the productive realm, which astounded the world. While it wouldn't be fun or easy I think most of us realize that we must come to grips with our economic crisis and our exploding debt.

What will it be America: collapse or reform?

As a starter I would gladly take a 5 percent cut in my federal entitlements.

Robert K. Wolthuis, PhD, lives in Pleasant View and is a former special assistant to President Ford. He served twice as a Deputy Assistant Secretary of Defense.

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