Posted on 12/24/2019 6:32:20 AM PST by Kaslin
As that rail and subway strike continued to paralyze travel in Paris and across France into the third week, President Emmanuel Macron made a Christmas appeal to his dissatisfied countrymen:
"Strike action is justifiable and protected by the constitution, but I think there are moments in a nation's life when it is good to observe a truce out of respect for families and family life."
Macron's appeal has gone largely unheeded.
"The public be damned!" seems to be the attitude of many of the workers who are tying up transit to protest Macron's plan to reform a pension system that consumes 14% of GDP.
Macron wants to raise to 64 the age of eligibility for full retirement benefits. Not terribly high. And to set an example, he is surrendering his lifetime pension that is to begin when he becomes an ex-president.
Yet, it is worth looking more closely at France because she appears to be at a place where the rest of Europe and America are headed.
In France, the government collects 46% of the GDP in taxes and spends 56% of GDP, the highest figures in the Western world.
And Paris appears to be bumping up against the limits of what democratic voters will tolerate in higher taxes, or reductions in benefits, from the postwar welfare states the West has created.
A year ago, when Macron sought to raise fuel taxes to cut carbon emissions, the "yellow vests" came out in protests that degenerated into rioting, looting, arson, desecration of monuments and attacks on police.
Paris capitulated and canceled the tax.
How do we compare?
The U.S. national debt is now larger than the GDP. Only in 1946, the year after World War II, was U.S. debt a larger share of GDP than today.
In 2019, the U.S. ran a deficit just shy of $1 trillion, and the U.S. government projects trillion-dollar deficits through the decade, which begins next week. And we will be running these deficits not to stimulate an economy in recession, as President Obama did, but to pile them on top of an economy at full employment.
In short, we are beginning to run historic deficits in a time of prosperity. Whatever the economic theory behind this, it bears no resemblance to the limited government-balanced budget philosophy of the party of Ronald Reagan.
The questions the U.S. will inevitably face are the ones France faces: At what point does government consumption of the national wealth become too great a burden for the private sector to bear? At what point must cuts be made in government spending that will be seen by the people, as they are seen in France today, as intolerable?
While a Republican Congress ran surpluses in the 1990s, when defense spending fell following our Cold War victory, Dwight Eisenhower was the last Republican president to run surpluses.
Opposition to new or higher taxes appears to be the one piece of ground today on which Republicans will not yield. But if so, where are the cuts going to come from that will be virtually mandated if U.S. debt is not to grow beyond any sustainable level?
America's long-term problem:
Deficits are projected to run regularly in the coming decade at nearly 5% of GDP while economic growth has fallen back to 2%.
With taxes off the table, where, when and how do we cut spending?
Or does each new administration kick the can down the road?
The five principal items in the federal budget are these:
Social Security, which consumes 25% of that budget. Yet, Social Security outlays will reach the point this year where payroll taxes no longer cover them. The "trust fund" will have to be raided. Translation: The feds will have to borrow money to cover the Social Security deficit.
Medicare, Medicaid, Obamacare, and other health programs account for another fourth of the budget. All will need more money to stay solvent.
Defense, which used to take 9% of GDP in JFK's time and 6% in Ronald Reagan's buildup, is now down to 3.2% of GDP.
Yet, while defense's share of GDP is among the smallest since before World War II, U.S. commitments are as great as they were during the Cold War. We are now defending 28 NATO nations, containing Russia, and maintaining strategic parity. We have commitments in Iraq, Syria, Afghanistan and the global war on terror. We defend South Korea and Japan from a nuclear-armed North Korea and China.
Yet another major item in the budget is interest on the debt.
And as that U.S. debt surges with all the new deficits this decade, and interest rates inevitably begin to rise, interest on the debt will rise both in real terms and as a share of the budget.
Again, is France the future of the West?
I like Ronald Reagan’s approach with the air traffic controllers.
France’s problem would be much worse if they weren’t so cavalier about euthanizing people over there. I’m sure this is exactly what our future holds here.
Social Security will be means tested (even more than it is, via the bend points) and will become nothing more than an old age welfare system. Health care for seniors will be severely rationed; it will probably become something like Medicaid -- unless, of course, you are a retired government employee, in which case you will continue to get good benefits on a government plan. Beyond that, we will have a long bout of very high inflation, which is the modern form of debt repudiation.
Alternatively, we could face up to entitlement reform now, as we could and should have done at any point in the last 50 years. I'm not holding my breath, though I would still vote for a candidate who at least pretended to take the problem seriously.
Will the bubble burst or will we have to nuke all our enemies?
Inflation is low, interest rates are low, unemployment is low, the economy is growing, technology keeps getting better, and Trump has us heading in the right direction.
People have been predicting debt based End of Times for decades. It’s nothing but doom and gloom for some people.
Those who attack Trump are destroyed
Just wait until our 60 million foreign born and first generation Americans discover that 60 million new Third World suckers are NOT going to move here and pay their Social Security and Medicare pensions.
In short, we are beginning to run historic deficits in a time of prosperity. Whatever the economic theory behind this, it bears no resemblance to the limited government-balanced budget philosophy of the party of Ronald Reagan.
...
Reagan was unable to control spending, and Trump isn’t having any luck either.
The best we can do is to keep the economy growing, which makes people less dependent on the government. Preventing the Federal Reserve from causing recessions is important, along with cutting regulations.
Avoid destroying the supply side of the economy, which was done in Zimbabwe and Venezuela. Look at their results.
Thanks for the depressing but sobering prediction. I’m beginning to understand my elders when they would say that they wouldn’t have to deal with these world problems too much longer. Amen.
They need to import more Mohammad’s and Fatima’s. I’m sure they won’t mind working their Mecca-pointing tails off for Jacques’ and Marie’s retirement checks...
“...limited government-balanced budget philosophy...”
Does not, can not exist in our self-enriching, graft heavy, nepotistic, RICO-style federal government.
Those cesspoolers will survive just fine with their stashed money, along with the lifer fed grunts with their very nice retirements and healthcare plans.
It’s just like the older UAW workers when GM deeply cut the hire-in rate years ago. “Hey, we got ours. Tough chit for them.”
The writing is on the wall. We just cannot avoid paying the debt piper someday, and probably sooner than any of us think.
I am a veteran of the Cold War service. Why the hell are we defending 28 other nations while they live safely under the umbrella of our men and women’s lives? Why the hell are THEY not paying for us doing this?? We have to pay for police services in our towns and cities. We have to pay for our military’s protection. Why in the hell are these 28 nations not sent a damned bill saying either pay some of the costs, say 100%, of what it COSTS US TO PROTECT YOU!!!! It is damned high time that all these nations no longer get a free ride. They got it during the Cold War and now continue to safely do it. They have the protection of the blood of our people and they get to use defense spending to spend on other things. Send them a bill or quit defending their free loading @$$e$!!! Just one old soldier’s opinion.
Congress makes the budget. The POTUS either signs it or shuts down the gubmint. Not much of a choice.
Trump is trying to get them to pay or do it themselves. No effort from previous administrations on getting other nations to wean them off of us. At least he is trying.
The whole purpose of NATO is to prevent European nations from fighting among themselves, not protect them from some outside aggressor.
the US government and its 1000 social-engineering projects and massive, permanent bureaucracy are on total auto-pilot, all fed by printed, fiat money and massive debt, courtesy of the Federal Reserve.
Bingo. Its worth repeating. NATO is not only "defending" Europe, its steadily pushing up to the borders of Russia. Clearly, confronting, containing, and dividing Russia are part of someone in the deep-state's plans.
Because there is no real desire to cut any spending.
No one is willing to give up the SS, charitable deductions, or any other "benefit" in our current system.
As long as the lights are on, groceries are in the store and sports are on all will be right with the world.
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