“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.
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