USA Today reports that the federal government added $5.3 trillion in new financial obligations in 2010 bringing the total of unpaid for financial promises to a staggering $61.6 trillion dollars. That amounts to $534,000 of debt per American household.
USA Today breaks down the country’s unfunded financial obligations as follows:
$24.8 trillion for Medicare
$21.4 Trillion for Social Security
$9.4 trillion for the Federal Debt
$3.6 trillion for Military Retirement Benefits
$2.0 trillion for Employee Retirement Benefits
$0.4 trillion for Other Misc. Payments
These numbers are mind blowing and they are only going to get worse. With the baby boomers reaching retirement age and trying to collect on those promised benefits these numbers will skyrocket over the next 20 years.
So what are we doing about it? So far… not much. The politicians babble on about “the complexity of the problem” and “the difficult decisions that need to be made.” The truth is the financial problems we face are painfully obvious and the solutions really quite simple. The difficult part is facing the voters once you have made the hard but necessary decisions.
Like any other failing business or household, we need to cut our runaway spending AND increase our revenue. Everyone not running for reelection knows this; and when faced with the alternatives is more than willing to do it.
So what are the obvious solutions? Here they are in no particular order of importance:
We need to cut military spending. As hard as it may be to accept, we can no longer afford to be the world’s policeman. Our military budget is larger than the economies of most other countries. The world has changed. Gone are the days of massive armies and armadas. Wars are fought with Black Ops and drones. Bin Laden changed our lives with three airplanes and some box cutters. He was brought down by CIA intelligence and a small group of Navy seals; not a Normandy type invasion. We can start by pulling out of Afghanistan…now. We cannot afford to continue to spend $2 billion per week to rebuild their country when our own country is deteriorating. Yes, Al Qaeda will probably move back in when we leave. But they are going to return if we leave in 5 years, 10 years, 20 years or tomorrow. We went in there to disrupt al Qaida and kill the people who attacked us on 911. Al Qaeda has been driven from Afghanistan and bin Laden is dead. Declare “Mission Accomplished” and bring the troops home.
We need to increase the retirement age. When Social Security was started the retirement age was 65 and the life expectancy 62. Now people are living much longer while the retirement age has remained relatively stagnant. The baby boomers are now reaching retirement age which will only exacerbate the problem. The status quo is unsustainable. Everyone knows that for the program to remain viable in the long term these deficiencies must be addressed now.
Medicare is more of a problem than Social Security. But pushing Medicare off the federal ledger onto the states is not the answer. The problem is the cost of health care and the inefficiencies in the delivery system. Obama’s plan did not go far enough. We favor a single payer solution. But if you don’t want to follow every other industrialized country down the single payer path then you have to either reduce benefits or reduce the cost. It is hard to consider reducing the benefits for our elderly. So that leaves the cost. Paying $20 for an aspirin or $835 per night for a semi-private room is ridiculous. If you are going to leave the system as is then the government needs to step in and regulate the amount of money that can be charged for services rendered.
The debt ceiling needs to be increased. To consider anything different is disingenuous and reckless. If you think our economy is heading over the cliff now see what happens if the government has to start borrowing at 3% or 4% instead for the current rate of almost 0%. The Republicans need to stop the charade and get on with the serious business of fixing the items noted above.
Last but not least, we need to increase revenue. Yes, we need to amend the tax code. General Electric and Exxon can no longer be allowed to get by without paying taxes. Amending the tax code will result in some revenue increase…but not enough. We need to increase taxes. If taxing the wealthiest 2% does not generate the necessary funds then all of the Bush tax cuts need to be repealed. Will increasing taxes hurt the economy? No! Clinton raised taxes and the country prospered. Bush lowered them and the results are plain to see. Corporations are not investing in America now, even at these low tax rates. Where are the jobs that will supposedly be lost if taxes are increased? If businesses won’t generate tax revenue through their own efforts than the government must do it for them.
This is what needs to be done. If you put a few folks not seeking reelection into a room they will come up with the same solutions. The problems are obvious…the remedies equally so. All that is needed is the leadership to make it happen.