That’s right. Trillion.
There is a reason, actually lots of them, why Washington is consumed with the latest Trumpian Tweet to the effect that Team Obama spied on Trump’s Presidential campaign. For one thing, if the charge is true, it would suggest that the Obama White House used the power of the White House to attempt to influence the election outcome in a way that is wholly improper, if not illegal. At the moment Trump & Co have produced exactly zero evidence that any of this is in fact true.
On the other hand, Andrew McCarthy, a former federal prosecutor argues there is a plausible case to be made that the Obama White House, and by implication Obama himself, did in fact orchestrate surveillance of the Trump campaign or Trump associates, if not Trump himself. McCarthy’s analyses are worth reading and are available here, here, here and here.
Now, back to the $100 trillion.
While Washington is busy (1) with its various conspiracy theories and (2) dreaming up new ways to waste your money, the present value of unfunded Social Security, Medicare and Medicaid obligations continues to grow unabated. Entitlements plus debt service now accounts for something in the area of 71% of all federal spending. The present value of unfunded entitlements plus accumulated federal debt amounts to about $100 trillion conservatively speaking, give or take a few trillion, as they say in Washington.
And it is slated to get worse as the population ages.
President Trump has grandly and repeatedly announced that he does not intend to act to curb the growth of entitlements. Bernie Sanders and Elizabeth Warren have gone him one better. They want to increase entitlement spending. They will of course “pay for” all of this by “taxing the rich.”
That will be difficult since U.S. GDP amounts to a mere $20 trillion or so. Clearing the books will require finding an extra $80 trillion, after all earnings have been confiscated. As it turns out the total dollar amount of wealth held by households and non-profit organizations is about $107 trillion, so government could just come along and confiscate all private wealth to balance the books on entitlements. And have a little left over. Probably to start a new entitlement program.
By now it should be obvious even to diehard Progressives that the nation’s finances are simply out of control and that there is no conceivable way that government can pay all its bills. Unless there is major reform the government is simply going to default.
More likely there will be a series of partial defaults, taken one step at a time. It will begin by pushing back the retirement age, which is the equivalent of rescheduling a loan because the funds are not available to pay off the principal. And where medical services are concerned government will begin by rationing, and will simply deny medical care to those not deemed worthy of it. There is no escaping this outcome without substantial reform.
The Administrative State resembles nothing so much as an elaborate Ponzi scheme; its survival depends on a suspension of disbelief. But because the Administrative State is a structural fraud, it is inherently incapable of taking the action needed for reform before the whole thing comes crashing down. Which is why the mandarins in Washington would rather talk about anything but entitlement reform. In this they bear a striking resemblance to Wylie Coyote who is just fine when he runs off a cliff—that is, until he looks down. Which may not be too far from where we are today.
There is a Choice
So that leaves a choice. We can dismantle the fraud that is the Administrative State and replace it with market liberalism and limited government. Or we can continue on and follow the path of Greece and Venezuela.
Unless there’s an extra $100 trillion lying around that nobody knows about except Wylie Coyote.
JFB
