While Washington pretends to grapple with the burgeoning debt crisis, all eyes are focused on a staggering figure of $16 trillion.
However, as scary as that number is, it doesn’t even begin to tell the true story of where Washington is headed without deep spending cuts and at least something resembling a freeze on borrowing.
The problem is what Washington euphemistically calls “unfunded liabilities.”
“Unfunded liabilities” are the projected costs of Social Security, Medicare and federal pensions minus the projected revenues to support them.
Do you want to guess what they are for the next 75 years without drastic reforms?
The answer is $87 trillion. That doesn’t include other so-called “entitlement programs,” which Democrats in Congress and Barack Obama say can’t be touched.
Add the current debt to that figure and you are looking at $103 trillion, which is quite a bit higher than the gross domestic product for the entire world!
And, again, that doesn’t count a lot of the planned overspending Washington is wedded to as of today.
“Why haven’t Americans heard about the titanic $86.8 trillion liability from these programs?” Chris Box and Bill Archer asked in the Wall Street Journal.
They blame the U.S. government for intentionally misleading the American public about what a rotten job it has done as a fiscal steward.
There are only three ways out of this mess:
Growing the economy dramatically and quickly – something that seems like a far-fetched idea when Washington politicians are talking about raising taxes, including those on capital gains. Nothing will slow the economy faster than a hike in capital gains taxes because there is little incentive for people with money to invest it if the government is going to confiscate the return on those investments. The money has already been taxed once, when potential investors earned it. Taxing it a second time at an exorbitant rate will bring the economy to a screeching halt.
Just start confiscating wealth from Americans like it has never been confiscated before. But this is a very short-term and short-sighted solution. Because once you go down that road, the economy comes crashing down.
End borrowing and cut spending – forcing government to live within its means and return to constitutionally limited government. Washington is doing a million things it is not authorized to do under the Constitution – and that’s why it is broke.
In case you’re thinking this crisis is still 75 years off, think again.
The $16 trillion debt tab is already equal to or greater than the gross domestic product of the entire United States. That means if you tried to solve the debt problem in a year through higher taxes, you would have to tax every dollar earned by everyone in the country at a rate of 100 percent.
Somehow I don’t think that would sit well with anyone.
Yet, practically no one in Washington – Democrat or Republican – is talking seriously about stopping the borrowing, or even slowing it down. Neither are Democrats, who control the White House and the Senate, willing to talk about cutting entitlements or even slowing their growth.
That’s why we’re on a fiscal cliff.
It’s not because Washington doesn’t have enough money to do what it is supposed to do.
It’s because Washington wants more money to do things it is strictly prohibited by the Constitution to do.
We’ve got to stop borrowing now – and force Washington to live within its means and return to the Constitution that guided America so well for so many years.
Are you with me?
Then let Washington hear from you – or at least Republicans in the House of Representatives who claim to want to reach the same goal. They have the power to say no to more borrowing, even though they only control one-half of one branch of government.
There’s no point in even talking to Democrats about this. They obviously look forward to the day America goes off the fiscal cliff.