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Authors: Mike Huckabee
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National Debt
Of course, these annual national deficits add to our combined national debt, which is about $13 trillion now and growing at the rate of about $4 billion every single day! That’s even more than hedge fund managers make!
Our friends at the Congressional Budget Office have another grim estimate: The cost of interest on the debt will more than triple in just the next decade. In fact, President Obama is on track to add more to our national debt in his first two years than President George W. Bush did in his entire eight.
An accepted yardstick for a nation’s economic health is the ratio of national debt to GDP. Economists studying national debt levels over the past two hundred years have concluded that economic growth is sharply restricted when debt is 90 percent of GDP. President Obama’s projected budget will raise our debt level to 103 percent of GDP by 2015, which will be extremely threatening to our national prosperity. By comparison, both Reagan and Bush 43 left office with that ratio at 40 percent.
There are many related consequences, none of them good. For example, Moody’s rating agency warns that our Treasury bonds risk losing their triple-A rating. Other countries, watching us make irresponsible economic decisions, talk about abandoning the U.S. dollar as the world’s reserve currency.
As for interest rates, they are artificially low right now because of the downturn. They are predicted to go up soon, meaning that carrying our national debt is going to cost us more. And as the debt increases, the cost of interest will rise right along with it. The result: a lower GDP because of less investment.
Meanwhile, we are rightfully terrified that we now owe so much to the Chinese, but we’re just as terrified that they may stop lending to us. This is a security issue as much as an economic one: How hard can President Obama push them for sanctions on renegade Iran or fairness in international trade when our huge debt to them gives them so much leverage over us? I’m thinking about ordering the Rosetta Stone course in Mandarin Chinese so I’ll be prepared to talk with the bankers who will own all our currency!
Social Security
Here’s a dirty little secret: Social Security was never intended to finance retirements lasting decades. When the legislation was passed in 1935, and the retirement age was set at sixty-five, life expectancy was in the late fifties for men, early sixties for women. See that? It was assumed that most people would be dead before they could qualify! No one imagined those legions of healthy, lithe retirees you see in TV ads playing golf, boating, running marathons. Today, life expectancy for average Americans has reached the late seventies, and many of us will live at least a decade or two longer. This is a blessing, especially if you’re healthy, but you can no longer expect the government to support you for twenty or thirty years. The original financial calculations didn’t allow for that eventuality. It’s that simple.
What can be done? Well, for those already retired or close to retirement age, it’s too late to change benefits. That door is closed. But it is fair to ask people in their twenties, thirties, and forties—in light of radically changed life expectancy—to plan for a different kind of future, including the responsibility to provide more for their eventual retirement. For one thing, the retirement age has to be raised. For another, the benefits will have to be adjusted downward.
There’s another dirty little secret in all this (actually, most people know it but pretend otherwise). Your Social Security benefits are not funded by what you actually contributed to the system over your working years. That dissipates very quickly. No, your monthly checks come from the payroll taxes paid by younger folks still in the workforce. Back in 1950, when there were sixteen workers for every
National Debt
Of course, these annual national deficits add to our combined national debt, which is about $13 trillion now and growing at the rate of about $4 billion every single day! That’s even more than hedge fund managers make!
Our friends at the Congressional Budget Office have another grim estimate: The cost of interest on the debt will more than triple in just the next decade. In fact, President Obama is on track to add more to our national debt in his first two years than President George W. Bush did in his entire eight.
An accepted yardstick for a nation’s economic health is the ratio of national debt to GDP. Economists studying national debt levels over the past two hundred years have concluded that economic growth is sharply restricted when debt is 90 percent of GDP. President Obama’s projected budget will raise our debt level to 103 percent of GDP by 2015, which will be extremely threatening to our national prosperity. By comparison, both Reagan and Bush 43 left office with that ratio at 40 percent.
There are many related consequences, none of them good. For example, Moody’s rating agency warns that our Treasury bonds risk losing their triple-A rating. Other countries, watching us make irresponsible economic decisions, talk about abandoning the U.S. dollar as the world’s reserve currency.
As for interest rates, they are artificially low right now because of the downturn. They are predicted to go up soon, meaning that carrying our national debt is going to cost us more. And as the debt increases, the cost of interest will rise right along with it. The result: a lower GDP because of less investment.
Meanwhile, we are rightfully terrified that we now owe so much to the Chinese, but we’re just as terrified that they may stop lending to us. This is a security issue as much as an economic one: How hard can President Obama push them for sanctions on renegade Iran or fairness in international trade when our huge debt to them gives them so much leverage over us? I’m thinking about ordering the Rosetta Stone course in Mandarin Chinese so I’ll be prepared to talk with the bankers who will own all our currency!
Social Security
Here’s a dirty little secret: Social Security was never intended to finance retirements lasting decades. When the legislation was passed in 1935, and the retirement age was set at sixty-five, life expectancy was in the late fifties for men, early sixties for women. See that? It was assumed that most people would be dead before they could qualify! No one imagined those legions of healthy, lithe retirees you see in TV ads playing golf, boating, running marathons. Today, life expectancy for average Americans has reached the late seventies, and many of us will live at least a decade or two longer. This is a blessing, especially if you’re healthy, but you can no longer expect the government to support you for twenty or thirty years. The original financial calculations didn’t allow for that eventuality. It’s that simple.
What can be done? Well, for those already retired or close to retirement age, it’s too late to change benefits. That door is closed. But it is fair to ask people in their twenties, thirties, and forties—in light of radically changed life expectancy—to plan for a different kind of future, including the responsibility to provide more for their eventual retirement. For one thing, the retirement age has to be raised. For another, the benefits will have to be adjusted downward.
There’s another dirty little secret in all this (actually, most people know it but pretend otherwise). Your Social Security benefits are not funded by what you actually contributed to the system over your working years. That dissipates very quickly. No, your monthly checks come from the payroll taxes paid by younger folks still in the workforce. Back in 1950, when there were sixteen workers for every
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