I got word last week that I'll have a bi-weekly column published in our local newspaper, the Emporia Gazette. My by-line is "Right Turn." My first colum, titled "Get off the Tracks" was published on February 25th. I'm hoping my vanity doesn't get the best of me. So far I've taken a somewhat subdued attitude toward things, insisting that Nancy not only refer to me as "Slick," but also as "Mr. Columnist."
I've got the Gazette's permission to cross polianate the columns to this blog. So, here goes. "Get off the Tracks" now follows. Subsequent colums will follow on a bi-weekly basis.
There is a bit of bi-partisan agreement building in America these days. Government debt is bad and our current profligate ways may soon do us in.
The problem to this point is that the government overspending and borrowing continues, unabated, faster than the Times Square tote board can calculate it.
In an op-ed penned earlier this week, liberal columnist Al Hunt looked over the grim numbers and noted: “The numbers are stunning. Over the next 10 years, under President Barack Obama’s budget, the total deficit would be $8.5 trillion; by 2020, the interest payments on the debt would be almost as much as projected spending on all discretionary domestic programs and as much as Medicare outlays that year. The national debt would be approaching $20 trillion in 2020; nice symmetry, horrifying economics.”
About the same time, conservative publications like Business Week and Bloomberg began looking beyond the massive economic losses since the bursting of the “great asset bubble” and cheap money of the Bush years to the very real potential of “a debt hangover and reckoning” brought on by the trillions of dollars of borrowed money and deficit spending currently in vogue. It seems that one bubble bursts and another mysteriously pops out of the government pipe.
You’d think we’d learn from the pain. Unfortunately, we don’t. Last year, economists Carmen Reinhart and Kenneth Rogoff published “This Time Is Different: Eight Centuries of Financial Folly.” The title says it all. One century it might be tulip bulbs. In another it might be buying stock “on the cuff.” In this century it just might be a government takeover of everything but our home gardens.
One of the hair raising things Reinhart and Rogoff noted was that there seems to be a tipping point for disaster, expressed as a percent of government debt to G.D.P. Historically, that number has been ninety percent. At the point of handoff from George Bush to Barack Obama, our national percentage of debt to G.D.P was 84%! Is it credible, then, to assume we can avoid careening toward the magic 90% by borrowing and spending more?
While I try to think of myself and family as being safe from the ravages of government fiscal policy here in conservative Kansas, the reality of things slaps me like a Muhammad Ali left hook. The current budget deficit here is $400 million. Our local school district faces huge financial problems in the classroom. Yet, our leaders were recently able to find enough money for Astroturf and “absolutely necessary” road construction on 18th Street.
A recently published report, co-authored by Dr. Barry Paulson and Dr. Arthur P. Hall, revealed that at the end of 2008 KPERS, our state employee pension plan, had a funding deficit of $8 billion. The reasons cited (poor asset mix, unrealistic assumptions on rate of return, low employee contribution rates, early retirements) aren’t nearly as important as the deficit number. It’s in the billions, with a B! Solutions are being offered – decreased benefits, increased employee contributions, or increased employer (Kansas taxpayers) contributions. Does one really need to guess who’s going to bear the brunt of the solution?
As for answers, I don’t have a clue. Some experts tell me I should spend and consume more (Cash for Clunkers or “shop Emporia first”). Some say I should join the Tea Party movement. Really smart marketing guys tell me I should buy gold. The political parties tell me they have legislative saviors in the wings, just waiting for my vote. Others say I should just accept the fact that higher taxes and bigger government are my only salvation.
I think I hear the faint whistle of the oncoming freight train, boxcars loaded with fiscal disaster. Given that, about the only solution that seems to make sense to me is to get off the tracks.