Ash-heap or Renaissance?
"This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves. You and I are told we must choose between a left or right, but I suggest there is no such thing as a left or right. There is only an up or down. Up to man's age-old dream-the maximum of individual freedom consistent with order or down to the ant heap of totalitarianism. Regardless of their sincerity, their humanitarian motives, those who would sacrifice freedom for security have embarked on this downward path. Plutarch warned, "The real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits."
The Founding Fathers knew a government can't control the economy without controlling people. And they knew when a government sets out to do that, it must use force and coercion to achieve its purpose. So we have come to a time for choosing." Ronald Reagan, given as a stump speech on a memorable night in 1964.
Despite the remarkable achievements of his own administration, the conditions President Reagan complained about have not improved. Sadly, the era of BIG GOVERNMENT is not over and plainly evident, the detrimental growth of government is all socialism.
During the period covered by these charts, America passed from being the world's largest creditor to become the world's largest debtor and Ronald Reagan defeated the world's largest totalitarian state sending the Soviet Union and its socialistic threat to the ash-heap of history. Unfortunately for Americans, President Reagan was not even able to slow the rate of growth, let alone purge socialism from the United States. Paradoxically, in our country founded on freedom and equality, socialism precludes the possibility of either. No longer the land of the free, these graphs show an America that is well on the road to serfdom. As grim a picture as these charts portray, unless We the People abolish socialism in the United States, the future looks even worse. Using the combined resources of the Federal Reserve and the Treasury Department, former Treasury Secretary, Paul O'neill commissioned a study to estimate the future unfunded liabilities of Social Security and Medicare. In the summer of 2003, Gokhale and Smetters reported their estimates of the accruing, but unfunded future liabilities. To the already incurred $44 Trillion of total US debt above, and with total US expenditures annually now exceeding total US income by more than a Trillion dollars, beginning in 2008, SS and Medicare will begin adding another additional $55 Trillion of unfunded liabilities over the next 30 years.
(This page was first constructed in late 2001. At that time, the total debt was $33 Trillion and the projected unfunded liabilities were $44 Trillion. GDP has grown, but the debt gap has grown even wider and net savings have continued to decline. It is going to take a major change in the law if the United States is going to be saved. The best way to change the law is to change the lawmakers.)
Capitalism depends on savings. Savings can then be invested to increase productivity. Higher productivity increases income, which in turn supports additional savings as well as a growth in consumption. The debt and income lines in our first graph (repeated below) always diverge showing that the United States has been steadily consuming its capital base for almost fifty years. The drop in savings provides the confirmation.
Charts courtesy of Grandfather's Economic Report: http://mwhodges.home.att.net/ and courtesy of Market Observations: http://www.contraryinvestor.com/mo.htm
In a country where total expenses already exceed total income by 10%, how will it be possible to increase the excess expenditures by 150%? Conversely in today's world, how will it be possible to quickly grow income by 25% in an economy whose job growth is limited and an economy whose overall growth potential is limited by growing global competition? Shackled by the chains of socialism, how will Americans compete with the unfettered economies of the Asian Tigers or a China learning capitalism while breaking its own bondage from socialism? How long will Americans endure progressive impoverishment and declining standards of living for themselves and a demoralizing future where their children will likely be even worse off than they are?
At 64, in election after election, I have seen countless politicians apply band-aid repair after repair or promise change after "meaningful" change. The results are immediately evident in the first graph. Socialism and capitalism are incompatible. Socialism is a failed economic model and can only exist in a country as long as previously saved capital is available to be cannibalized or as long as there are enough remaining capitalists to parasitize. Socialism universally fails because the incentives are wrong. Socialism rewards sloth and subsidizes failure. The few numbers of people that are actually benefited are more than offset by the many who succumb to the temptation of taking the easy or "free" money. Every welfare program ends up harming the very people it is designed to help. In contrast, unleashing American workers and entrepreneurs by freeing them from the government imposed burdens of socialism would allow Americans to save and invest in themselves to increase the wealth and standards of living for all Americans. Free people correctly choose capitalism as their economic model and capitalism is the engine of choice for wealth creation.
It is the freedom to make our own choices that made America great. In contrast, the federal government chose, and then mandated that Social Security and Medicare be the retirement and health care programs for all working Americans. How can the federal government make participation compulsory in an allegedly "free" country where freedom should mean that individuals have the right to make their own choices? If Democrats actually believe in freedom, why do they want to deny you the right to opt out of Social Security and Medicare? If these programs are the sterling successes and truly enjoy the popularity that Democrats would have you believe, why are they determined to prevent every American from having a choice to opt in or opt out? Misguided thinking that transferred the power of choice to government, is what put us on an impossible path that is almost certain to end in tragedy. Now we must either change course before the Gokhale Smetters clock runs out or we should expect to suffer the consequences.
Only one President in my lifetime has made a serious effort to reduce the size of government, Ronald Reagan. Only one other President, Dwight Eisenhower, limited government growth. Neither was a politician by career choice. The Contract with America has been the only significant Congressional effort to limit government. Professional politicians, concerned about their own "tenured" careers, defeated the two crucial parts of the Contract, the Balanced Budget initiative and Term Limits. Now in the majority, Republicans seeking re-election have become progressively more socialistic providing proof that regardless of party affiliation, career-oriented politicians seeking "defacto tenure" by repetitive re-election will almost always choose to bid for votes using the public treasury. Socialism is a cancer and it is killing the United States. Professional politicians are the cause and the sole means of spread.
The trends portrayed in these graphs are unsustainable; unsustainable trends end. The two most important unanswered questions are "when" and "how". Let's address the "when" first. Historically, our economy has never grown at a rate that would be required to amortize the existing debt plus the now accruing but unfunded liabilities. Predictably, politicians will avoid dealing with this problem until partial default and/or hyperinflation become inevitable. By 2016, the pain and the growing magnitude of the problem will be apparent to every American. When it is evident to almost everyone that the ship is going to sink, there will be no socialists on board. I believe that we have only five elections, 2008, 2010, 2012, 2014 and 2016 in which we will all be in the same boat and there will still be enough life jackets to go around.
How? By recruiting Rush Limbaugh to lead the Reagan Renaissance effort. By far, this is the quickest and the simplest means of making the Reagan Renaissance possible. On any given day, the bully-pulpit will reach a broader audience and as a single shot is more effective than any other platform for public speaking. But on a day-in and day-out, year-in and year-out basis, the guy behind the golden microphone at EIB is reaching the audience that can make the Reagan Renaissance a reality within the time frame that is required. And it is not an accident that Rush can quickly tap the two resources that I believe are readily available for raising revenue to fund the Reagan Wing of the Republican Party, the reactor core that will power the Renaissance itself. Rush's audience constitutes a potentially large independent resource for funding the campaigns of our conservative Reagan Wing candidates. Excellence in Golf, my creation, could be the other. Under Rush's tutelage, these two resources could spend $600 million to elect conservatives to seats held by Democrats or liberal Republicans. Targeting liberal Republicans would move the majority party to the right "at a measured pace." Defeating Democrats would quickly restore reality to government.