Last week Barack Obama made what some of his media acolytes called a "soaring" speech accepting his party's nomination. If by soaring they meant the enormous costs of the lavish promises he made, they were right. But that of course is not what they meant.
If Obama implemented all his promises, the annual cost of funding them would be some $287 billion dollars according to a study by the authoritative National Taxpayers Union Foundation.
Among his proposals are the extension of health insurance to more people (part of a $65-billion-a-year health plan), developing cleaner energy sources ($15 billion a year), curbing home foreclosures ($10 billion in one-time spending) and adding $18 billion a year to education spending.
Figures of that magnitude tend to deaden one's senses — they're beyond the average person's ability to grasp their reality. But the figures are real, and figures don't lie — they leave that to demagogic Democratic politicians.
Given that reality, it's important to our fiscal survival they we take a very careful look at America's ability to foot the bill Obama plans to hand us. When you do that you come up against some frightening danger signals.
The following are remarks made by Dallas Federal Reserve Bank President Richard W. Fisher in a speech on May 28, 2008:
He began by saying he's been on the lookout for danger signals and having found them he said he sees "a frightful storm brewing in the form of untethered government debt. I choose the words — 'frightful storm' — deliberately to avoid hyperbole.
“Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct."
Among the danger signals: "The amount of money the Social Security system would need today to cover all unfunded liabilities from now on — what fiscal economists call the 'infinite horizon discounted value' of what has already been promised recipients but has no funding mechanism currently in place — is $13.6 trillion, an amount slightly less than the annual gross domestic product of the United States.
"The good news is this Social Security shortfall might be manageable. While the issues regarding Social Security reform are complex, it is at least possible to imagine how Congress might find, within a $14 trillion economy, ways to wrestle with a $13 trillion unfunded liability.
"The bad news is that Social Security is the lesser of our entitlement worries. It is but the tip of the unfunded liability iceberg. The much bigger concern is Medicare, a program established in 1965 . . ."
He explains that the cost "of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion.
The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security." Scarily, he adds that's more than six times the annual output of the entire U.S. economy.
Getting nervous? Try this. Added together "the unfunded liabilities from Medicare and Social Security, comes to $99.2 trillion over the infinite horizon. Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent."
OK, how do we pay for these shortfalls? Let's say that every U.S. citizen who is alive today decided to fully pay "for this unfunded liability through lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would receive promised benefits in perpetuity."
Ready for this? If we split the tab "With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four — over 25 times the average household's income."
Got a spare $330,000 per person in the household budget?
Fisher stated, "Clearly, once-and-for-all contributions would be an unbearable burden." Other solutions involve "addressing the entitlement shortfall through policy changes that would affect ourselves and future generations."
How about a permanent 68 percent tax hike from individual and corporate taxpayers — it “would suffice to fully fund our entitlement programs. Or we could instead divert 68 percent of current income-tax revenues from their intended uses to the entitlement system, which would accomplish the same thing."
If however we decided to cut government spending, he notes, "total discretionary spending in the federal budget, if maintained at its current share of GDP in perpetuity, is 3 percent larger than the entitlement shortfall. So all we would have to do to fully fund our nation's entitlement programs would be to cut discretionary spending by 97 percent."
So what's discretionary spending? Just a few minor expenditures for "defense and national security, education, the environment and many other areas, not just those controversial earmarks that make the evening news. All of them would have to be cut — almost eliminated, really — to tackle this problem through discretionary spending. "
To sum it all up, "No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations."
To foot that bill "someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight."
And Obama wants to pile another almost $300 billion on the mountain of federal debt the government can't even begin to pay? What's he smoking these days? Or what does he think we're smoking?
Phil Brennan is a veteran journalist and World War II Marine who writes for Newsmax.com. He is editor and publisher of Wednesday on the Web (http://www.pvbr.com) and was Washington columnist (Cato) for National Review magazine in the 1960s.
He also served as a staff aide for the House Republican Policy Committee and helped handle the Washington public relations operation for the Alaska Statehood Committee which won statehood for Alaska. He is also a trustee of the Lincoln Heritage Institute and a member of the Association For Intelligence Officers.
He can be reached at firstname.lastname@example.org.
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