Debt crisis must not be 'wasted'

In a recent column, I wrote, "Social Security and Medicare and Medicaid are wonderful benefits, especially since we don't actually have to pay for them…" and was taken to task by a few readers for "not knowing" about the payroll tax.

Trust me, I do know about the payroll tax, having been paying it for these past 30-some years… but that's not what I was referring to when I said, "we don't have to pay for" Social Security, Medicare and Medicaid.

Instead I was talking about the fact that Congress has authorized these benefits without being able to point to a sufficient revenue source to actually fund them. Oh yes, the politicians talk and blather and obfuscate and promise that they will never default on their commitment to the American voters who have paid into the system for many years. But convicted-felon financier Bernie Madoff told his clients that their money was safe, too.

Yeah, sure - safe in Bernie's bank account in the Bahamas (or wherever).

Well, the fact of the matter is that, if you are my age - 54 - your Social Security and Medicare benefits are safe, too - in your children's and grandchildren's overdrawn piggy bank.

The numbers are abysmally astounding:

As of Jan. 1, 2008, the obligation for future payouts of Social Security was $6.6 trillion. I know, I know - that doesn't sound like much. After all, the federal government this year authorized nearly $1 trillion in spending on 'stimulus spending." But let's not forget that the $1 trillion that Congress generously appropriated to help fund government building projects was $1 trillion of "funny money" - money borrowed from China to be paid off later with money leveraged from new investors in the Ponzi scheme formerly known as the American government.

But Social Security is just the 900-pound gorilla on the ship of state. There is also the 190-ton blue whale of Medicare flopping dangerously on deck. Get ready for this: Medicare has an unfunded liability of $34 trillion. That's how much more the feds have promised to pay through the program than they actually have available.

I'm not making this stuff up. The Obama administration released a report by the trustees for Medicare and Social Security in May that told the dread story. According to the May 12 New York Times, "The administration said the Medicare fund that pays hospital bills for older Americans is expected to run out of money in 2017… The Social Security trust fund will be exhausted in 2037."

Of course, the Times dutifully reported that, "Lawmakers say they would never allow Medicare's trust fund to run out of money," but they also noted that "beneficiaries could be required to pay higher premiums, co-payments and deductibles to help cover the costs."

Yeah, and taxpayers will be required to cough up blood, but for how long? Or more to the point, for how long will taxpayers put up with the sham?

The fact of the matter is that seniors have been paying into the system for a long time under the impression that they would be taken care of now that they need the money. And just like Bernie Madoff's early investors, most Medicare beneficiaries are still making out like bandits. On average, they collect at least two times more money from Medicare than they paid in. Wow! A 100 percent rate of return. No wonder seniors say they are 'very satisfied" with their health care.

But can we be serious for a minute? If all the beneficiaries are getting twice as much as they paid in, then who is paying for all that extra expense? Any guesses? (Remember, Uncle Sam is a fictional character, so he won't be picking up the tab!) OK, you figured it out… it's me and you, and there won't be anybody at the back of the line to pay for our Medicare or our Social Security when we want to collect for ourselves. That's the nature of a pyramid scheme. The people at the beginning get paid off handsomely, and the people at the end get the shaft.

I'm not sure whether the growing taxpayer rebellion can actually force the government to stop playing games with our money or not, but I am sure that it represents the best hope we have to stop the collapse of the American economy.

Is that fear-mongering? Not according to the Peter G. Peterson Foundation, a think tank which calculated the 'real national debt" at $56.4 trillion in 2008. That includes the Medicare and Social Security debts, plus all the other publicly held debt, and debt for money the government has borrowed from itself.

In my mind, it's not fear-mongering; it's paying attention.

Or maybe it's an opportunity?

Shortly after the 2008 election, President Obama's chief of staff Rahm Emanuel was quoted by the New York Times as saying: "Rule one: Never allow a crisis to go to waste. They are opportunities to do big things."

One of the "big things' that Emanuel has been hoping to do is pass "health-care reform," a big-ticket liberal wish-list item that has been a political orphan since Hillary Clinton got her clock cleaned in the early 1990s.

But health-care reform is small potatoes. If fiscal conservatives ever hope to regain the high ground in Washington, D.C., they had better start talking about the real crisis … the pending bankruptcy of the entire nation.

n Frank Miele is managing editor of the Daily Inter Lake and writes a weekly column. E-mail responses may be sent to edit@dailyinterlake.com