How To Fund The Welfare State

On 5/30/11, I posted a blog on how America needs to fund defense spending in favor of spending more money on entitlements. Today, I want to mention more about the severity of our national financial problem.

America now has a debt burden of $14 trillion. $4 trillion more than just 2 years ago. In 2008, the ratio of public debt to gross domestic product was 40%. Today it is 68%! Unless we make hard decisions now, in less than a decade every dollar of federal revenue will go to covering the costs of Medicare, Social Security, and interest payments on our debt. We will sink even deeper in debt to pay for everything else, from national security to disaster relief. Our country will fall behind the productivity of other countries. Our currency will be debased, and our influence in the world will wane. Our security will be more precarious.

In order to resurrect this failing state, we need new leadership, leadership that will not be afraid to institute programs to reduce, reform, and in some cases end government programs—include some popular but unaffordable subsidies for agriculture and energy. We need leadership that will cut this wild spending on Medicare and accept the fact that we can no longer fund Social Security our of a “trust fund” that has no money in it (And it never has—all the Social Security “trust fund” has ever had in it has been a bunch of IOU’s from the Federal Government.)

We need to pursue free trade agreements with other countries, just as other countries now do. 95% of the world’s customers live outside the U.S. We will not remain the most productive economy in the world if we embrace the mistaken belief that we can prosper by selling and buying only among ourselves, while the other countries seize the opportunity for economic growth that the global economy offers.

Let’s do something about this deplorable financial situation now—before it is too late!

This blog post was largely excerpted from the Wall Street Journal 6/1/11, page A19.