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Tuesday September 2nd 2014

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Reader viewpoint: We cannot afford the path we are on

By Ryan Barnett…

President John F. Kennedy gave a notable speech wherein he broadly addressed many of the same arguments we are hearing today about continued movements toward socialism, American style.  Of interest is Kennedy’s description of European health systems as effectively being socialist “leaders” in progressive care.  But perhaps most interesting, is his quip that we were not moving toward cradle to grave health care – that would be silly.  The focus was geared toward “Medicare” for seniors. Kennedy preaches the value of “progressive” government as being behind things as fundamental of the settling of the west.  I believe he believed in the power of government to do good.

Yet, one might ask if the problems necessitating the Affordable Care Act came from government having stuck its nose into health care in the first place.  We can even go back to the genesis of health insurance (which historically is what has driven up health care costs) as being a benefit that was offered to employees because salaries were capped (by the government) with passage of the1942 Stabilization Act during World War II.

A brief time line of the social security system is also illustrative.  The Act was signed into effect by FDR in 1935 and benefits commenced in 1940.  Medicare was passed into law in 1965.  Cost of living increases systematically began in 1975, previously having been enacted by special Congressional action.  Prescription coverage ballooned under the Medicare Modernization Act in 2003 (projected cost over the 2006 to 2015 period is $549.2 billion dollars).  The program has grown, and grown, and grown.

The latest government accounts place unfunded Social Security and Medicare liabilities at $63 trillion dollars.  The problem with government programs has little to do with the good motivations behind them.  I believe Kennedy and many other social “progressives” since then are well intentioned.  The problem with all government programs is that they are black holes.

I am not an economist and I am sure that there are really fancy theories behind government debt and leveraging and trickle down, up, sideways – not to mention Keynesian economic models that I could not begin to get my brain around.  I do wonder though how government finance can be all that different from the budget meeting that goes on at my kitchen table.  If you don’t have the money for something, you don’t buy it.  And you certainly don’t borrow the money to buy it.  Much as a bunch of fancy financial terms were used to “explain” bad mortgage debt (creative financing, exotic products, etc.) – they were all double speak for stupid.  You can’t fix stupid. Doesn’t matter what you call it.

We cannot afford many of the social programs that we have in place.  We cannot afford the military that we have in place.  A mere 33% of Americans recognize that the United States spends almost as much on defense as the remainder of the world – ombined.  Uninformed citizenry is a whole different can of worms.  Yet, how many aircraft carrier task groups does a superpower need?

And does it make sense to borrow money from your potential adversaries to build weapons that would presumably be used to fight them?  The problem is not so much one of extreme political ideology or even good foreign policy.  Some camps want to pay for social programs we can’t afford.  Some camps want to pay for a military we cannot afford.

The crossroads we find ourselves at is one of common sense.  We cannot afford the path we are on.  And we’ll either make some drastic changes or we will pay the price.