Ahhh, another round of hope and change was the air as the RNC closed down last night. That’s, of course, the all-too-necessary hype that’s become associated with any sales pitch in the greatest marketing behemoth on the planet.
Undoubtedly, I would have preferred a bit more sober realism, but that doesn’t close many deals in a land of jaded skeptics. In other words, I recognize the real limits on the ability of my fellow voters to digest bad news. No such thing as “sunny realism”, not in the selling of cereal and certainly not in politics.
To give credit where it is due, however, R&R at least broach the subject of the hazards of unimpeded debt growth, over-regulation, and central planning. They, moreso than their opposition, clearly do seem to understand this part of the equation. Still, not one word was spared regarding the role that the Federal Reserve has had in manipulating the cycle of financial disaster, nor of the real role that deficit spending has on the declining value of our labor, nor of now rather mature cabal between government and big business.
In fact, on this latter point, I should note that the RNC has clearly called for a return to the “Alter of American Values” an unambiguous reverence for all things business. Again, given the complexity of the issue, it’s not all that hard to imagine why we’ve been given the over-simplistic dilemma of “business is evil” vs. “business is good”. Most thinking (and skeptical) voters should know, however, that one of the greatest dangers of big government is that it will be co-opted by similarly big special interests.
At the moment, however, I simply don’t want to get bogged down in a knock-down drag-out fight between big business and big labor. That doesn’t do us any real good and either outcome will harm us individually and collectively. And, yes, it should go without saying that we ought to be quite mindful of the fact that the Fed – to the extent that they are a key part of our problem – is just that: a private big business interest.
So, in my opinion, it’s long past the time that these guys get a grip on some reality. Notably: What’s $16 trillion really mean? And if that’s just the tip of the iceberg, what aren’t we seeing below the surface….how about the nearly $150 trillion in unfunded liabilities?
Here are a couple of useful measure of what those numbers really mean.
First, that debt (the one that’s now doubling every 7-10 years) is already equal to roughly $50,000 per individual in the country, $130,000 per household, and $230,000 per actual taxpaying household. Note: the unfunded liabilities – the net present value of all of those unpaid-for promises due over the next 20 years or so already made by our generous politcal class – by extension are nearly 10 times that amount.
So, if you are one of the few who are still pulling the cart (and actually paying taxes), you’re looking at something in the neighborhood of $2.5 million in total current (net present value) debt obligations. That’s the reality.
According to the Tax Foundation, we’re talking about roughly 69 million taxpayers (the # of returns with positive AGI) with average income of roughly $100,000 per year. If you (the average taxpayer) were required to borrow all of the funds necessary to cover your $2.5 million share of these current and future obligations, you’d need to arrange a 20-year loan that, at 3.5% interest, would have annual payments of roughly $175,000 per year, which is only 75% more than you actually earn.
That’s just another way of saying that even a 100% tax rate on EACH AND EVERY TAXPAYER barely gets half the job done. That’s the reality.
On what planet might you imagine that such a problem could be ignored? So, it’s fine to prominantly feature the debt clock at your convention, but it might just be useful – at some point – to actually talk about just how deeply we’re stuck here, don’t you think?