Nancy Pelosi and Democrat leadership permanently reside in “Fools’ Paradise.” The chairmen of President Obama’s fiscal commission just released a report proposing sweeping changes to Social Security, Medicare and the tax code. The plan would reduce the deficit by nearly $4 trillion over the next decade by making dramatic spending cuts and overhauling the tax code by lowering tax rates while wiping out some deductions, such as for mortgage interest. Pelosi and union leaders called it “simply unacceptable.”
What is acceptable? Drowning in our current raging, rising deficits? At the Federal level, unfunded liabilities for Medicare/Medicaid and Social Security total over $80 trillion, roughly six trillion more than the world’s gross annual product. For state and municipalities, indebtedness plus unfunded public employee pension liabilities exceed four trillion dollars, or $41,000 per household. Very soon every tax dollar will be consumed by entitlement programs. You want to increase funding for education by cutting the military budget? No problem; military spending will have to be cut – to zero! But so too will funding for education, parks, transportation, police, fire, libraries; everything but entitlements will have to be eliminated.
Is there a way out? Yes, states and municipalities can default on their debt payments. “Experts” who say this won’t happen consider only bonded indebtedness but ignore the unfunded pension liabilities tsunami. These experts suggest the Feds should rescue states and municipalities, yet they ignore the super-tsunami of unfunded Federal entitlement liabilities. Who rescues the rescuer?
Public employee pensions, “negotiated” between public employee unions and politicians (who are also public employees) seeking their contributions and votes, will be swept away by waves of municipal bankruptcies. In California pension costs rose 2,000% from 1999 to 2009, while state funding for higher education declined. That’s unsustainable.
Piloting the “Ship of Fools,” Nancy Pelosi calls that simply acceptable.