A good friend had a moment of brilliance a couple days ago. Terminate Medicare and Social Security. No cuts. No new formulae. No delayed increases. End them, PERIOD.
For a moment, forget the political feasibility. Think about it.
The country has incurred debts it can’t repay. Our balance sheet, as it were, can’t be fixed short of a tectonic shift in our thinking. The estimated net worth of all of the households and businesses in America is estimated at between $60 and $75 trillion. Our total unfunded liabilities (i.e. the future cost of all promises made by the US Government under Medicare, Medicaid and Social Security) is approximated at $114 trillion. TILT!
Now, go back now to political feasibility: what’s the likelihood that the men and women of this country will stand by and let our government TAKE all of our wealth and give it to itself to pay for those promises? Not bloody likely, eh?! But that’s what we’re letting them do, all day and every day.
Social Security and Meidcare are inaccurately described as an insurance program – funds we pay into in exchange for a promise of future payments to support us in retirement. They are more accurately described as a Ponzi Schemes. You pay retirees’ benefits now, future workers will pay for yours later. Only the math doesn’t work.
So, eliminate the programs and, drum roll . . . the resultant creation of wealth will fulfill the promises. The stock market will soar. Commodities’ prices will decline. The US Dollar will rise in value against all other currencies. The wealth produced will dwarf the liability of the ‘broken promises’ because we will have freed ourselves to keep those promises.
See, we owe all that money to ourselves, right? Asked that way, the question sounds a little different. We made those promises to ourselves. This approach suggests that we let ourselves pay ourselves back instead of relying on the anti-productive government machine to do so. We’re the unsecured creditors in the US Government bankruptcy. But we’re also the shareholders (to stretch the metaphor) – we own the place (the country, not the government) AND we are the assets that have been pledged to fulfill the promises. Let’s foreclose and take the assets back. Let’s let ourselves off the government hook so we can go back to producing wealth.
It will cause some dislocation and serious discontent, of course. But those are manageable and safety-nets raised by newly-freed men and women of America will care for the elderly and the sick who are temporarily displaced – we always have. On the other hand, the inevitable catastrophe we face as a result of politicians’ constant tinkering with the cancer, repeatedly moving the tumor from one part of the corpus to the other, is not manageable. It’s deadly.
Let’s keep the promise. There is no choice.