“Since the masses are always eager to believe something, for their benefit nothing is so easy to arrange as facts.”
This scornful observation of our human nature is attributed to Charles Maurice de Talleyrand, an astute politician and long persevering survivor of the French revolution and Napoleonic eras. Senior politicians and government mandarins in Washington are schooled in understanding and using the insight divulged by this derogatory statement. They must be. The most extensive, pervasive and obscene rearrangement of facts has become one of the biggest lies ever floated in history.
Even those who depend on Dave Letterman or perhaps a Kardashian for remaining informed, are aware that there exists a large National debt hanging over the United States. Many of us are even aware that the often repeated amount of $17.2 trillion is an enormous amount of debt, however, it has too many zeros to be taken seriously and in any case, we heard, or read somewhere that it’s too big a debt to ever be repaid. Fortunately for the Baby Boomer generation, the younger generations are too preoccupied with earning a living, or searching how they might earn one, to be angered.
These younger generations have every right to believe what they have been told. It is not unreasonable for them to embrace the notion that since their efforts will partially finance 78 million Boomers into retirement, their own social security and health care needs will be taken care of when the time comes to retire. It is also reasonable for them to accept the veracity of the government’s representation of $17.2 trillion in debt.
Twenty five years ago, governments and corporations promised Boomers generous pensions and benefits. Promises were cheap and easily made when the future was so far into the very distant and murky horizon.
Remembering Talleyrand’s acumen, we dig a little further and discover that there are some numbers (facts) missing in the $17.2 trillion. One website offers a running amount which already exceeds $74 trillion in debt using different methodologies in the calculations. Why such significant variance? Accrual accounting – meaning the debt is accounted for when the obligation is entered into. How does the government “arrange facts?” It uses cash accounting, which accounts for Medicare and Social Security as debt when they come due. We hear nothing from Washington about balancing the budget on a fully accounted and accrued manner. We don’t even hear any suggestions on real spending cuts.
Most Boomers heading into retirement, or dreaming of doing so cannot trust the trust funds which career politicians and bureaucrats pretend guarantee their future well being. Social Security? There’s no guarantee of such for either Boomers, or their children, or their grandchildren. The only prevailing guarantee appears to be that the money will run out, then, nothing. When? Well that’s easy. That’s when . . . umm, oh no, another review of the “facts?” Now what? The Fiscal Gap. That 74 with a dozen zeros following may look ominous, but it does not fully represent the Nation’s indebtedness. The gap between costs and funds collected through time, is the Fiscal Gap.
A Boston University economics professor Larry Kotlikoff calculated the fiscal gap including unfunded liabilities, debt service costs and the mortgage guarantees under FDIC, and Fannie, and Freddie Mac and he came up with a present value of $222 trillion. That is over 13 times the total U.S. GDP. Obviously there is room for error in this number, as the world will force events which will impact future costs and revenues. The amount remains menacing regardless.As we watch the Keynesian Federal Reserve Chairman Ben Bernanke destroy savings and generate $80 billion a month in quantitative easing, encouraged by progressive politicos spending lavishly to buy and retain votes, we know there is no possible method whereby the fiscal gap will be tightened. Future generations will wonder how we were ever able to feel no compunction to elect anyone with skills, with leadership, with will, or with a plan. They will wonder why we were incapable of discerning facts from fiction. They will wonder if we understood Talleyrand.