Are you concerned about the deficit and the national debt? I am. Very concerned. One of my biggest fears is that despite my hard work and diligent savings, my accumulated savings will be decimated by inflation and currency devaluation because of high deficit and national debt.
With interest, I read Comeback America by David Walker. Walker is a former head of Government Accountability Office, a non-partisan investigative arm of Congress. At the time he wrote this book, he was CEO of The Peter G. Peterson Foundation. Peterson is the author of Running on Empty about the unsustainable entitlement programs. I read Running on Empty a few years ago and I liked it.
Both books are about fiscal responsibility. They sound the alarm about the problems of current budget deficit, and more importantly, the projected increase in deficit and national debt due to unfunded liabilities in the entitlement programs: Social Security, Medicare, and Medicaid.
Although the title Comeback America sounds like a tea party’s manifesto, it’s not. Walker is a true advocate for reducing the gigantic budget deficit and unfunded liabilities. The approach is best described as whatever it takes. Both spending cuts and tax increases are on the table.
Some of the ideas in the book may appear as not politically acceptable: means-testing Medicare; adding a VAT. However, the specifics are not as important as recognizing the problems and doing something about them. The only things that are not an option are the status quo or going the opposite direction: more spending, more promises, and more tax cuts.
Unfortunately, the opposite direction is exactly what’s happening right now. Both political parties are in favor of maximizing the current enjoyment and deferring the problems to the future. Democrats like spending and promises. Republicans like tax cuts. They only pay lip service to fiscal responsibility. Democrats want to expand health care; Republicans say we can’t afford it. Republicans want to make Bush tax cuts permanent; Democrats say we can’t afford it. They only invoke fiscal responsibility at their convenience against the other party, never against their own agenda.
You can’t blame the politicians. Their constituents want it that way. Tackling the problems means making sacrifices now for a sustainable future, and nobody is in the mood of making sacrifices. Making sacrifices means higher taxes for those who work and lower benefits for seniors. Any political candidate who campaigns on either higher taxes or lower benefits to seniors is doomed.
As a result, taxes can’t go up no matter what, not for 98% of the population anyway. It doesn’t matter that Democrats were vehemently against the Bush tax cuts when they were enacted. Medicare Part D benefits can’t be rolled back either. It doesn’t matter that Democrats were against it because it wasn’t paid for. The first thing the new health care law does is filling a donut hole in Medicare Part D, and thus digging deeper the fiscal hole.
I’m glad Walker and Peterson are fighting for fiscal responsibility. Along the same lines, they also produced two excellent documentaries: I.O.U.S.A. and I.O.U.S.A. Solutions. If you don’t have time to read the book, just watch the videos. Note: I.O.U.S.A. Solutions has five parts. Find the next part in the list of related videos after you are done with one part.
However, I can’t help being cynical. Despite their best intentions, I don’t see Walker and Peterson’s advocacy going anywhere. People live in a world of now. Pandering to the desire of now always wins – be it lower taxes = higher paychecks or no scaling back on Medicare no matter what.
The country is operating on a giant credit card and charging more and more. Dave Ramsey can save some consumers from debt overload only when those consumers are motivated to get out of debt and never get into debt again. David Walker can’t do it for our country because the current generations are not motivated to alleviate the problems for the next generations. As long as the credit card still works, they vote for policies that keep on charging on that card.
Am I too pessimistic? Tell me how it ain’t so.
Say No To Management Fees
If an advisor is charging you a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice: Find Advice-Only.