|Back to Back Issues Page|
Commentary from the Free Enterprise Foundation, Ethical Standard More Thought Provoking Commentary!
April 20, 2010
You are invited to read this commentary from the Free Enterprise Foundation. It will make you think!
By Robert E. Freer, Jr., President of The Free Enterprise Foundation
”…So after I signed the bill, I looked around to see if there were any -- (laughter) -- asteroids falling or -- (applause) -- some cracks opening up in the Earth. (Laughter) It turned out it was a nice day. (Laughter) ...” Barack Obama
“It is incumbent on every generation to pay its own debts as it goes…I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” Thos. Jefferson
The President, almost giddy, and the Democratic Party are celebrating what they term the end of a hundred year battle to create a health care entitlement for all Americans. What has become known as an “entitlement” is any benefit made available by the Federal government which is provided without a sunset provision or other limitation that foresees any end to the obligation it puts on taxpayers to continue to fund it.
That is not what I consider an “Entitlement.” In the sacred documents that created this great land, there are but three Entitlements listed: “We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness-” These concepts taken from the writings of John Locke are not gifts of the state but of a benevolent Creator who has endowed us all with these gifts. From them we have made a limited recallable grant to the federal government of portions of those rights that encompass our Freedom to facilitate our own and our fellow citizens’ security, our safety and commerce among the states. None of what the media call “Entitlements” meet any definition of natural law as I understand it. They create instead continuing funding obligations so long as the people desire them and the Treasury contains the funds to pay for them.
Somewhere down through the years, our fuzzy headed legislators have forgotten their primary obligation to keep our country secure by not entering into obligations, wanted or not, that we cannot afford and that threaten the very freedoms that are their primary obligation to hold sacred.
When you ask an economist what is the national debt, you get figures all over the map. I know. I have asked. The estimates I have heard range from 7 Trillion and change to over 100 trillion and change. The consensus which contains actual debt and unfunded obligations from these so called “Entitlements” comes in at somewhere around 56.4 Trillion Dollars as of October 2008. Trying to compute additions after that date just creates a food fight among economists, but that amount is bad enough at almost 4 times a single year of gross domestic product.
If we converted everything we produce and didn’t consume even a morsel for ourselves, it would take almost 4 years to pay that back. That is, of course, ridiculous, but another way to look at it is how close the current debt is to a single year of GDP. That is also hard to figure because of the proliferation of data. My estimate, counting debt and debt guarantees of GSEs like Freddie and Fannie Mae is that we owe currently in excess of 15 trillion dollars and thereby exceed our GDP by more than one trillion dollars.
Contemplating 15 Trillion in debt is enough to ruin your whole day, and it should. Exceeding 100 percent of GDP has happened before, but that was just after the World War, the economy was recovering nicely and preparing to rebound mightily from the war years as all the delayed gratification of the 40s gave way to the heady economy of the 50s, the economy zoomed, and the debt stabilized at below 50 percent until 1980 and since has grown to its current unhealthy heights.
David Walker, former Comptroller General of The U.S. and now President of the Peter G. Peterson Foundation, in his new book Comeback America, argues that we have two to three years to get our house in order before precipitous increases in interest rates for our debt demanded by foreign creditors will cause the annual carrying costs to skyrocket and subject us to carrying charges that will cripple the nation.
The percentage of wealth produced by the private sector demanded by government to carry this indebtedness must necessarily grow so large that our businesses will not be able to produce enough real income to pay government’s voracious appetite. Commerce will contract as opportunity dwindles, and we will be well on our own path to becoming just another failed nation looking to international credit agencies to help us. I doubt if there would be much sympathy in those quarters, and our enemies would rejoice.
I am becoming accustomed to seeing eyes glaze as I, in Chicken Little fashion, forecast our precipitous decline, but solid analysis supports the fact we are no different from other nations who have lost their way. President Obama may not perceive earthquakes or cataclysmic happenings. He simply doesn’t know what it sounds like.
It is heard in the series of announcements by our largest companies of federally required new reserves in the billions that have been required to be announced to shareholders to prepare for new costs of health care caused by the new law. Those are lost jobs and higher costs. It is heard in the announcements of foreign firms, not our businesses, will be drilling off our shores. It is heard in what even government suggests will be prolonged anemic employment numbers. That is what it sounds like. Lagging jobs, higher taxes and anemic recovery all brought to us by our irresponsible actions spending what we don’t have and obligating ourselves to continue to pay for what our own actions make it unlikely we will produce.
Einstein defined insanity as repeatedly doing what you know is wrong and expecting a different result. All that we know about the world, all that we have learned from history supports the conclusion that we are traveling the oft trod path of failed republics. We must return to our founding principles; we must cut deeply into federal government operations and bloated costs. We must free our private enterprises to produce and earn a fair return unburdened with operating restriction not found abroad and which handicap us in producing real growth not a false shadow of deficit produced government spending. There is time left to right the ship, but time is short. The amount of deficit produced largesse from Uncle Sugar is sapping our strength. Soon we will be too enmeshed in its coils to turn back and Uncle Vinegar will have us in its death grip. _._
Copyright © 2010 by Robert E. Freer, Jr. All rights reserved
About the author: Robert E. Freer, Jr., is president of the Free Enterprise Foundation. He is also the first BB&T Visiting Professor in Ethics and Free Enterprise Leadership at The Citadel. A regular contributor to the Mercury, Prof. Freer may be reached at email@example.com. If you would like him to appear before your group or organization to speak on any of the subjects about which he writes, please contact him at The Citadel. Copies of his earlier columns may be found at The Free Enterprise Foundation
This article may be republished unedited in its entirety provided that copyright statement and author by-lines are kept intact and unchanged and hyperlinks and/or URLs provided by the author remain active.
Please sent any comments to Robert Freer, President of The Free Enterprise Foundation
|Back to Back Issues Page|