Emmer: Politicians hope to outrun financial responsibility and retire before the debts catch up (column)
Remember Sheila Bair, one of the heroes of the financial crisis? She was perched atop a powerful regulator, the Federal Deposit Insurance Corp. (FDIC), during the financial crisis. She’s a smart cookie. As one of the few public officials who saw the financial crisis coming, she ruffled feathers to say so.
She’s a tough cookie, too. To apply discipline, she opposed bailing out the big banks. Now she sees the seeds of the next crisis growing, fueled by deficit spending.
“I don’t think Congress has a clue that the reason they have been able to get away with this profligacy is because we are the best-looking horse in the glue factory. But we are in the glue factory. Our fiscal situation is not a good one,” Bair said recently.
Political leaders at all levels of government have buried the average American household under public debt of various kinds. Economist Larry Kotlikoff testified before the Senate that balancing the federal budget long-term requires a nearly 60 percent federal tax increase starting now and lasting forever.
That would increase the average household’s visible and hidden federal tax burden from $28,000 annually to $44,000.
Knowledgeable public officials are so embarrassed or ashamed that they cannot bring themselves to add state and local obligations to the federal numbers. It is easy to see why.
The public sector thinks of itself as a kind of protective god with the power to cure all ills, fix all wrongs, protect from all dangers. It also thinks of itself as among the best of governments — perhaps THE best.
Yet here it is, unable and unwilling to control itself, recklessly abusing its citizens and especially the young by heaping mountains of bills for services of unknown value upon them. American politicians of both parties habitually spend without thinking and borrow like they’re drinking.
Adopting Saint Augustine’s famous plea, “Lord, give me chastity, but not just yet,” they hope to outrun financial responsibility and retire before the debts catch up.
If the United States stays on present course to ram this iceberg, then people still living will suffer declining lifestyles. Money will be tighter. It will be more difficult for the young and the have-lesses, including minorities, to climb the ladder.
Job opportunities will shrivel. Fewer businesses will start; fewer will be profitable. Fewer families will qualify for mortgages. Fewer will own homes and take vacations and get worthwhile educations. Only those who die before will escape.
Tick tock, tick tock. An unthinkable event is stalking us.
The fall of the Berlin Wall was unthinkable, right up until it happened. Just a short time ago, it was unthinkable that religious vigilantes would be imposing the death penalty in Europe and the United States.
An unthinkable economic crisis struck in late 2008. Our most senior financial officials say we teetered on a knife-edge of another Great Depression. The last presidential election was unthinkable, too.
We should be thinking more about unthinkable events. A repeat financial crisis could make the 2008-09 version look like Austin Power’s Mini-Me. A depression could turn the tide of humanity away from democracy as incompetent. It would give more leaders an excuse to embrace China’s authoritarian model.
Do we want to cripple effective social spending, cripple our defenses, cripple democracy? No. Ordinary people like us are running on hamster wheels to earn a living. We must use our time wisely. Yet political activism is a big time-suck with small odds of success.
Our political system stoutly defends itself against the “will of the people” with special interests, representatives who represent themselves, partisan tribalism and manipulative messaging.
It’s not game-over yet. We have a tool that can ring politicians’ bell. It is a Constitutional amendment.
To claim a more meaningful share of political power for citizens, there is a movement calling for a Convention of States to amend the Constitution for the 28th time.
The hurdles to enactment are high, yet the odds of success are high, too. This type of campaign panics the politicians to do the right thing through legislation.
Jump on to conventionofstates.com. Read its petition; sign it if you agree. I’d like to hear from you either way, but especially if you don’t. Send them some money. Every little bit helps.
As Sheila Bair says, we are a horse in a glue factory. Let’s restore that horse to health before our system dissolves into something as obsolete as antique furniture adhesive.
Vince Emmer is a financial analyst who runs Citizens Due Diligence in his off hours. Reach him at email@example.com.