The country’s top-notch credit rating is in danger of being downgraded, Moody’s is warning—and if a ratings agency that completely failed to predict the financial crisis is sounding the alarm, we should all be afraid.Moody's does not like to downgrade anyone and typically waits until it's too late to pull the trigger. Their warnings are no joke. Neither are our unfunded liabilities to our existing social program behemoths. We will never be able to pay for the things we promised, not no way, not no how. We will end up making deep cuts in our social spending. It is impossible to avoid it.
Here’s how you know the massive amounts of debt compiled by the Bush administration, and the even greater debt loads promised as part of Barack Obama’s agenda, is reaching crisis proportions: Even the Wall Street bond-rating agencies are now sounding the alarm bells.
The only question is when and under what circumstances. We can either do it by choice and start soon, or we can wait for a Greek-style fiscal collapse and do it in a panic. If we pass the Obamacare monstrosity it will just hasten the day of panic, shortening the amount of time we have to decide as a society to voluntarily cut back on our social spending. The timing of our action will determine the depth of the cuts. The sooner we get started, the higher we will be able to draw the line determining what gets saved.
A society that was aware of the impending danger and had compassion for the poor, the elderly and the handicapped would start now. A society that was greedy and selfish would pass Obamacare and continue the party until the country fell apart.
4 comments:
The rating agencies seem to be a lot like the rain forecasting device that works like this: when it's wet, rain is coming! When it's dry, no rain for a while!
The thing is, it seems straightforward enough to me to balance the budget:
1. Index social security to the average life expectancy instead of just letting it kick on at 65[*]
2. Make Medicare/Medicaid a real insurance operation (turn the Medicare/Medicaid taxes into actual premiums, and let people opt out of it if they feel so inclined - with the understanding that if they opt out, they don't get to opt back in again when they get old and sick)
3. Steel oneself for the howls of outrage, and line up another job for after you get voted out of office.
Easy! The only question is how to encourage the congressfolks to actually grow a spine. Maybe we need to create some sort of pseudo-party organization to provide new employment for politicians who do what is best for the country at the cost of their political careers.
[*] It has occurred to me that when people talk about Social Security as a Ponzi scheme, that isn't quite correct. When Social Security was set up, I understand that 65 was pretty close to the average life expectancy. So, it was expected from the outset that a lot of people would never live long enough to collect it, and those that did generally died within a couple of years. This is more like a continuous tontine - one of those deals where a group of people all throw some valuable into the kitty, and the last survivor gets everything. The difference is that a tontine is sustainable, while a Ponzi scheme is not; all the Ponzi investors eventually expect their money back, while a tontine expects a fairly aggressive attrition of the original investors. So, all we need to do is set the SS retirement age as being equal to the average life expectancy, and it goes back to being what it was originally - a way to keep widowed old ladies who are too sick to work from being reduced to eating cat food in the last few years of their lives.
Jeff, your point is dead on. In the linked article, it talks about the ratings agencies giving certain governments great grades right up to the point where they defaulted.
Tim, you're absolutely right. However, my developing argument on this blog is that the nature of our society has changed. Social Security was indeed meant for the end of life. Now it's seen as something we're all entitled to, just like so many other things. An entitlement is something you don't have to earn and the number of those we think we have is growing. All the while, we are learning to hate those who actually earn it who then bail out leaving us with no one to pay the bills.
See also: California, losing the middle class of
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