A story is told about Winston Churchill that may or may not be apocryphal, however the significance for us is timeless. After the war was over and Sir Winston unceremoniously voted out when his indomitable gift of leadership and candor became politically inconvenient, he was invited to speak at a gathering at Cambridge University. He sat through the formal dinner with his bulldog visage unreadable, silently contemplating the tribute that dominated one wall, memorializing the long list of Cambridge alumni and students who laid down their lives to protect their country from being brutally incorporated into the Third Reich. The dean finally concluded his endless extravagant introduction lauding Churchill, and how his soaring rhetoric saved the British Isles. An expectant hush settled on the listeners, awaiting inspirational brilliance. Sir Winston stood wearily and looked out over hundreds of fresh young faces, survivors whose brethren would never return. Glancing once again over to the wall, he spoke, “Never give up, never give up, never give up.” Churchill settled back into his chair.
The usually laconic, if not truly morose, Senate Minority Leader, Mitch McConnell, burst out laughing when Treasury Secretary Timothy Geithner proffered the Obama administration’s “compromise” solution to avoid jumping over the “fiscal cliff” on January first. Without a scrap of compromise or one inkling to slow down spending, its raison d’etre was taxes, taxes and then, again, more taxes, and even those barely cover a couple of weeks of Federal expenditure. Not a serious proposal, only more political posturing and dialectic of class struggle. To add to the comic relief, the proposal suggested that Congress should abdicate its responsibility to approve debt ceiling increases. “Leave it to us and avoid the unseemly bickering,” suggested the Executive Branch. Perhaps that is the rub that incited McConnell’s rarely seen mirth.
The administration kicked off the reign of the 44th president with an unprecedented level of unstimulating stimulus spending at the staggering level of $800 billion larded on in 2009. The unprecedented soon became business as usual with spending levels sticking at the newly established benchmark, resulting in undreamed of deficits, over $1,000,000,000,000 (one trillion) a year. This deficit and the negotiations to raise the debt ceiling resulted in the beggar’s choice deal that dug the chasm looming ahead and deemed by a gleeful media as a “fiscal cliff”. $16 trillion in debt (and counting), and the compromise solution only addressed asking more from the taxpayers with the rhetoric about fairness and redistribution. Not a syllable about specific proposals to curtail diarrhea profligacy.
One provision, raising the estate taxes on the “wealthy” from 35% to 55%, would result in the breakup of long held family ranches and farms. Ranches and farms are by definition illiquid, with their “wealth” consisting of hundreds or even thousands of acres of agricultural land – land owned for generations. Every nickel of the income derived from these businesses and the income of their owners has already been taxed, every acre taxed each year with property taxes. Yet when the principle owner lacks the good sense to stay alive, the heirs are subject to the “death tax”. Their only option is either taking on insupportable debt or selling off some land to pay the taxman. Estate taxes are deeply rooted in progressive egalitarianism and antipathy to any attempt to pass along the hard earned net worth of the successful to their heirs. Not just the oft cited Paris Hilton or Kim Kardashian excesses, but privately held farms, ranches and businesses are to be crushed with burdensome taxes at the passing of the owner.
Perhaps the least understood and therefore mostly avoided debt discussion is not the fiscal deficit that shows on the Federal balance sheet. The debt that is held “off the books” is far worse. Like Enron, which sealed its own ruin by concocting sophisticated accounting to hide liabilities, the Federal debt that isn’t declared on the balance sheet is shocking to comprehend. Think icebergs.
The promises made to those who have paid into the system their whole working lives are not stipulated in Federal deficit reports. The mostly unfunded liabilities of Social Security, Medicare and federal employees’ future retirement benefits already are over $86.8 trillion, 550% of Gross DP. Much has been made of our stated deficit of $16 trillion crossing the line of 100% of GDP. Quick addition of both the stated and unstated deficits is $102 trillion or about $310,000 for every man, woman, child and transgendered person in the country. You only thought you had worked all your life to pay off your mortgage and credit cards. Think again.
Secretary Geithner stated unequivocally that Social Security is not on the table in any debt discussion under any circumstances. Why? My cousin, David, is an unrepentant Connecticut/Manhattan progressive, yet somehow remains very intelligent and a good guy. I have full confidence that he and I could sit down with a halfway competent accountant and come to an agreement to fix Social Security funding for the foreseeable future over a couple of beers. Eliminate the cap (satisfies taxing the rich), stop the ridiculous pandering of cutting the Social Security contributions of all of us employees, gradually continue to raise the retirement age to reflect the increased longevity of our citizens, and we’re just about done. How about another beer? Why can’t our elected officials do the same?
Nearly 49% of the voting population chose Door “B” to common sense and responsibility. We lost, but cannot surrender. Never give up, never give up, and never give up. For the sustainability of this noble Great Experiment of ours. To remain true to our ideals and consciences. For our children and grandchildren. Sing, but keep going.
“Let us sing alleluia here on earth, while we still live in anxiety….So, then, brothers (and sisters), let us sing now, not in order to enjoy a life of leisure, but in order to lighten our labors. You should sing as wayfarers do – sing but continue your journey… Sing, but keep going.” St. Augustine
Quo Vadis Blog 