Who's Gonna Grab the Third Rail?

Tuesday, August 10, AD 2010

That’s a line from a brief but astounding post by Kevin Williamson of NRO, which I’m reproducing in full here:

A little perspective from the debt commission:

“The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. ‘The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans — the whole rest of the discretionary budget is being financed by China and other countries,’ [Alan] Simpson said.”

Three programs — Social Security, Medicare, and Medicaid — consume 100 percent of federal revenue, and everything else is paid for with borrowed money.  This is why we cannot balance the budget by cutting military spending, foreign aid, food stamps, etc. There is not going to be a serious project to address our deficit/debt problem without deep, painful entitlement reform, and the longer we wait to admit that fact and get going on it, the worse it is going to be.

So, who’s gonna grab that third rail? George W. Bush tried and got hammered — an example that few if any in Washington are eager to follow.

Indeed. I think if this is going to happen, it’s going to have to come from the people (tea parties, perhaps?), because it seems suicidal for any politician to take it on without considerable popular support.

Continue reading...

3 Responses to Who's Gonna Grab the Third Rail?

  • Really? So FICA and Medicare withholding represent the entire federal revenue stream? Whatever happened to the federal income tax and other revenue sources?

    The reality is that we are being set up. The federal government is looking for ways to default on what it owes and it will be far easier to default on what it owes its own people through social security than what it owes foreign banks. Defaulting on foreign loans will affect its credit rating and ability to further borrow while leaving retirees high and dry will just hurt retirees.

  • Finaly someone has outlined the major problem of our deficit spending..Without borrowed money in the term of t notes, we would be bankrupted in regards to income. IT IS TIME for means testing and benefits of those who really do not need SS survie. A cap on those with a certain substainable income need to be removed from SS and Medicare needs to have a schedule of benefits and of premium cost similar to the income tax tables based on 1040 results of income each year to determine premiums and benefits. There will be the normal hue and cry, but our representatives need the backbone to make it happen.

  • They will never solve anything.

    Nearly that entire first paragraph is incorrect. SS and Medicare are (even today) fully funded out of specific FICA and Medicare taxes, not out of general (personal and corporate income taxes, excise taxes, etc.) tax revenues. In fact, the SS surpluses are spent in vote-buying gov programs, and the SS trust fund gets in return nonpublic US debt instruments that can only be repaid from new taxes. The fit hits the shan when the SS taxes paid in are insufficient to pay SS (30,000,000 baby boomer) benefits and the guv needs to tax we the people to repay worthless debt to pay SS beneficiaries.

    I’m too depressed to continue.

Caritas in Veritate 25, By the Numbers

Monday, July 26, AD 2010

My co-blogger Tim recently highlighted the following statement from Pope Benedict’s latest social encyclical, Caritas in Veritate:

The global market has stimulated first and foremost, on the part of rich countries, a search for areas in which to outsource production at low cost with a view to reducing the prices of many goods, increasing purchasing power and thus accelerating the rate of development in terms of greater availability of consumer goods for the domestic market. Consequently, the market has prompted new forms of competition between States as they seek to attract foreign businesses to set up production centres, by means of a variety of instruments, including favourable fiscal regimes and deregulation of the labour market. These processes have led to a downsizing of social security systems as the price to be paid for seeking greater competitive advantage in the global market, with consequent grave danger for the rights of workers, for fundamental human rights and for the solidarity associated with the traditional forms of the social State. Systems of social security can lose the capacity to carry out their task, both in emerging countries and in those that were among the earliest to develop, as well as in poor countries. Here budgetary policies, with cuts in social spending often made under pressure from international financial institutions, can leave citizens powerless in the face of old and new risks; such powerlessness is increased by the lack of effective protection on the part of workers’ associations.

Now in this passage, the Pope makes a number of factual and causal claims. First, he claims that the global market has led countries to “attempt to attract foreign businesses” by adopting “favourable fiscal regimes and deregulation of the labour market.” Second, the Pope claims that these reforms (i.e. adopting “favourable fiscal regimes and deregulation of the labour market”) have led to “a downsizing of social security systems” and “cuts in social spending.”

Continue reading...

0 Responses to Caritas in Veritate 25, By the Numbers

  • I believe in one social encyclical by JP II (can’t recall which one) it was noted that social teaching was subject to correction as historical, sociological etc.understanding advanced. Perhaps this is a case where evolving economic understanding would correct prudential assessments.

  • That’s a great post. It needs to be stressed really forcefully that the Pope’s comments in an encyclical like Caritas vary in nature quite dramatically, and many of his statements are simply the opinion of a wise but limited individual.

    Two other aspects of the document struck me as showing unusually clearly that the document drew from distinct, and to some extent opposed, sources. (1) On the one hand, the Pope suggests that globalization and its progeny have the danger of suppressing the distinct characters of separate peoples. On the other, he seems to laud the ability of people, labor, goods, and ideas to move freely around and mix, to the potential betterment of all. Well, you can’t have the latter without the former, so which is it?

    (2) In a like vein, the Pope makes it entirely clear that stronger world governance is needed, “with teeth”, and that the UN should take steps in dealing with the dramatic poverty caused by the 2008 crisis in short order – months to a year timeframe – steps that would in fact require such “teeth” as the UN does not possess. On the other hand, the Pope makes it clear that any world organization for governing must be organized with subsidiarity as a founding principle. But the UN, and especially the UN aspects that are the strongest in terms of “teeth”, exhibit nothing whatsoever in the nature of subsidiarity, and indeed the ruling class of bureaucrats in NY and Geneva, (and in Brussels and the Hague) are quite adamantly opposed to subsidiarity whenever they come up against it. So, again, which is it?

  • Pingback: Caritas in Veritate 25, By the Numbers II « The American Catholic