Chris Kipfer: Federal IOUs
Reducing a complex problem to its simplest elements is often the only way to achieve understanding. Politicians rarely want a complete understanding of their proposals. Their public explanations are designed to sell themselves. They seem to be motivated by ideology, power, money, and, new to American politics, religion. However, “follow the money” is still a useful if overly simplistic investigative tool.
Regardless of motivation, they have to sell a proposal by obfuscation. The current debate about the future of Social Security seems complex. The economics problem is, in its elements, extremely simple. The politics are complex. The government’s budget is not unlike a household budget. Revenues must balance expenditures in some sort of timely fashion. Each of the family’s earners contributes some income to the family. Each family member spends some. Politics are involved in the distribution of those expenditures: “We really need my Harley. It will save a lot of gas in my commute.” Or my granddad saying, “I need that team of percherons in case the tractor gets stuck.”
Our government, that’s us, is in a fiscal crisis. We have engaged in a war that we cannot afford. We have created a new entitlement with Medicare that is a disguised give-away to the drug companies. We have had a massive tax cut for the wealthiest. Our country is increasingly in hoc to foreign investors. Now our idea of tightening our belts to get through this rough patch is a reduction of future guaranteed benefits from Social Security coupled with a boon to Wall Street money managers. “We really need private accounts. They will earn a greater return.”
The political argument is really about the distribution of wealth. No politician is likely to use the phrase, “distribution of wealth.” We sold Social Security as a forced savings plan. You would get your money back. In reality, the money that I receive in my Social Security check comes from a current government, supported with current taxes. Wealth is taken from younger workers to give to older retirees, like me, just as it was taken from me when I was younger. The Trust Fund funded with IOUs is there to hide the reality.
For better or worse, recent government policies have resulted in a redistribution of wealth to the wealthiest. “We know what to do with it,” or, “It increases the pool of investment capital.” The average worker has little left to save as voluntary or forced savings.
Truth-tellers such as former Secretary of the Treasury Paul H. O’Neill don’t last long in an administration for which politics always trumps truth. Perhaps it’s time for citizens to look at the facts squarely and discuss government policy without the constant obfuscation. Our irresponsible leaders have thrown one heck of a party. Now, who is going to pay for it?
We need a national debate about how the economic pain should be distributed. The politicians will try to use this pain as a twitch on the nose of the body politic while they mess with us in other ways. Perhaps we have matured enough as a group of people to see through the smoke-and-mirrors.
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