Pardon me if this topic is already covered elsewhere, but I'm reading the speech of David M. Walker, the USA's Comptroller General, to the London School of Economics, two days ago. I don't have a website for his speech (probably stolen from New York Times), but he referred to their report, called “21 st Century Challenges: Reexamining the Base of the Federal Government,” and you can find it free on their website at www.gao.gov.

If you use proper accounting procedures, the USA has $46 trillion dollars of unfunded liabilities and existing debts which simply cannot be paid.

Now, the supply siders will chant their mantras that if you just lower taxes, the tax base will quintuple or sextuple or sexify itself until we're in an ecstatic Nirvana. No. Walker points to the outmoded business models of the 1950's, that have put the entire economy on a freight train loaded with dynamite headed for a canyon wall (not his words). Walker points to the fourth deficit being the worst: a deficit in national leadership, both by politicians and by captains of industry.

I know nothing. I suspect this guy knows a little. But you guys with a BBA in marketing know much more.

This isn't a total surprise if future social security benefits are included in this number (which I'm pretty sure they are).

Sigh,................why is it that the left always has to castigate the Supply-Side model? It's nothing more than Classical Production-Side Economics. Granted, it is a bit different from the Austrian School, in that the former is more oriented to improvement of the economy, and the later is more in favour of fiscal responsibility. If I were a Leftist, I would be JUMPING on the Supply-Side bandwagon: unless I was a 'class warfare' sort of kook.




And there is where he is totally correct. All one has to do is look to the illegal immigration issue, check out the US Senate, and see the most outrageous moral cowardess on exhibit. One side is shamelessly politicizing the issue, and the other is shamelessly displaying the utmost splinless character possible.

And you expect politicians(in general) to do the Right thing now, rather than wait for the other shoe to fall.......................on someone else's tenure?

I doubt that I'm as far left-wing ECONOMICALLY as you might think I am. But when I read some of your remarks, JohnL, I can't help wondering if you honestly believe that supply side economics will miraculously raise the American economy out of the inevitable quagmire of these staggering deficits.

Some of the deficits which Walker mentions include the annual federal deficit and the national debt; perhaps the current account deficit, also. But he mentions the same unfunded liabilities I've been worry about lately: the unfunded portions of the military and civil service pensions, plus Social Security. Yes, he takes great aim at the Medicare drug program, saying that legislation alone has created a multi-trillion liability overnight. He also mentions the impending bankruptcy of the Pension Guaranty Benefit Corporation, and I think he mentioned the tendency for bankrupt and reorganizing corporations to abandon their fixed pension obligations, including their medical plans. If General Motors files for bankruptcy, that will be the major issue, sending a ripple effect through the economy.

Walker also mentions that the savings rate (however flawed that measure may be) in the USA is now negative, while European, Chinese and Japanese workers save over 10% of their gross income. Walker warns that if these countries that are buying trillions of American debts, and it will cause a catastrophe if they stop buying new bonds, and if they redeem some of the bonds to find better returns and safer investments.

Hey, even Argentina's bonds are looking good now! The world can turn upside down or inside out.

I don't expect the politicians at any level to suddenly wake up and start showing leadership or courage. The word SACRIFICE has disappeared from their vocabulary.

What am I going to do with you Fit? First off, I did NOT label you a "far left-wing" person. Left wing, sure, but "Far",..............come on, please give me some credit, ok?

And it is not supply-side economics that 'miraculously' does nice things for the US economy. It is the American citizenry who do this, not S-S economics, the president, or Congress. However, it is S-S economics that unleashes their potential to do miraculous things. Let's place credit where credit is due, ok? And as for staggering deficits, I will agree that fiscal restraint is necessary. That is why I fit neatly between the Austrians AND the Supply-Siders, squarely within the Production-Side Classical model. I believe in both.



In those cases, blame it where blame is the most guilty: coward politicians, and corporate leaders, who have bowed to special interests at the expense of competitive market forces. Both Federal AND corporate leaders are guilty, and it is the Leftist, welfare leading, forces that are leading the common citizen into the tank eventually. And if GM files for bankruptcy, it will be because it is the only way for it to stay afloat. Not because they wish to 'screw' their former, and current employees. The union leaders are the ones who got their members in the long term trouble that they are in. And they will be the first large "welfare state" to go belly up in the US. Welfare states to not last, and clearly even you should see this, no matter what your left leanings. Collectivist tendencies DO NOT work.



Of course, he is correct here. And Bush spent the first six months of his second term promoting the privatization of the Social Security system, which is in dire need of reform. And look what it got him? He has been villified by YOUR Jackass Party, and instead of promoting the War, it has cost him dearly. The only SS system that will work and put billions(actually trillions) of dollars into the economy, thus stimulationg the economy further, is SS privatization. It would reap untold benefits and money for ALL the contributors, rich and poor. And are the Jackasses interested in helping the "average" citizen? If you say yes, YOU LOSE!! So, why aren't you actually promoting a system that will take the money away from the government and place it in the hands of the actual tax payers? If you are truely interested in helping your fellow citizens, then why are you not actually standing with Bush on at least this one important item?



You've got to be kidding me. Argentina? Don't expect me to be interested in anything that that Collectivist Welfare state has to offer, other than beef.



Of course. What do you expect? They will not even act when the overwhelming majority of the nation want something. The immigration issue is a classic example of going against the grain for their own Self-aggrandizement. You have to vote them OUT of office and expect them to represent the citizens, not themselves. And this requires an ever vigilant citizenry.

And again, all this Welfare crap is part of the problem. If citizens vote Congressmen, who promote this, into office, you will only see more of the same.

If the SS system had been economically sound in the first place (actuarially, that is), and its funds had not all been invested in worthless IOU's, and the agency had not been mismanged, the system might be salvageable. Now it's too far gone.

I agree that some sort of private agency could do the job, or they could possibly privatize the whole thing with well registered national insurance companies. I wouldn't care to waste my time petitioning Congress to redress that grievance, because I know they're too cowardly to act responsibly. Maybe Ron Paul would speak up, but I'm not registered in his district, and the other congressmen ignore most of what Dr. Paul says.

My Congresswoman now might be Shirley Jackson Lee (a clone of Barbara Jordan) or Martha Wong. I'll check. Phil Gramm, who at least had a Ph.D. in economics, might have listened. Senators Hutchison and Cronyn, however, probably don't care what I think.

I've already told my younger kids that Big Daddy won't be there to help them in 40 more years, not government or I.

Somehow, I keep seeing a healthy distrust of government creeping into your vocabulary "Fit". Good for you! The State will NEVER do what many expect from it, and the sooner people realize this, the better. And it does not matter which party, although one is worse than the other, I like neither.

Privatization is the preferable thing. Privatizing SS is the only way to empower the citizens, because it is their money, and will remain there. Politicians don't generally like this, as it takes power away from them AND Washington. The State needs to be "Spayed" if we are going to reap the benefits that we as citizens deserve.

That is why I am the consumate Individualist, for I do not Trust the State. And rightly so.

Gosh, John L, I don't know if you are beginning to see a distrust of govt. creeping into my vocabulary as we speak, or whether it was there several months ago when I started posting on this forum. However, since retiring from the IRS less than 8 years ago, and recalling what John Howard Yoder wrote in The Politics of Jesus, I have been gradually realizing that govt. is the problem, so we should never expect it to solve its own self.

Now, I haven't studied the privatization of SS enough. Let's say that starting tomorrow or on 1/1/2009, every additional penny that would have gone into the OASDI Fund (12.4% of wages, paid equally by employee and employer) would be funded into private, actuarially sound insurance programs. That's for old age (pension), disability, and survivors. I worked for insurance companies in actuarial trainee positions before the advent of electronic calculators, and for the govt. for another 24 years. I'll grant you that the competition in the free market would make the insurance companies slightly more productive in their use of capital and labor, than the govt. agency of SSA, but it's not enough to make a huge difference. Besides, then you have to allow for a profit margin. And the insurance companies have not been free of scandals, although they've done better than big oil, telecoms, dotcoms, and Arthur Anderson.

However, I don't know what to do with the morass that would leave behind, on the trillions of unfunded OASDI liabilities. Hey, I'm on SS now; don't take away my check!! The existing OASDI fund is bankrupt, nothing but IOU's they can't collect, funded by treasury bonds that are looking increasingly shaky, backed up by little more than the remaining "full faith of the government."

Well Fit', good for you! I have Always been a believer that the Government is the Problem, not the Solution, and the least we have it intruding into our lives, the better we are for it.

As for Social Security, you need not worry. The proposal is for those getting SS would continue, and those at a certain time of input into the system would also receive it. However, the young and those opting out, would go into the new system. In that way, those in between folks, would be able to benefit from both when they reach retirement age.

And what is best about the privatization plan would be that ALL of the accumulated benefits would belong to YOU, not the State. That means that it can also be passed on to beneficiaries of your will.

Here is one plan by the CATO Institute's Michael Tanner, The 6.2 Percent Solution: A Plan for Reforming Social Security. There are many plans out there, and almost ALL of them are better than the current system, which will soon go Bust anyway.

Unfortunately, the argument is being demogoged by those who are not in favour of Individuals having the Liberty to make a choice. So much for Pro Choice people. This is like School Choice: those with the money to loby their favorite party, have the most clout, even though they KNOW they will eventually lose in the long run. These issues are going to happen, sooner or later, and the later, the more costly. However, nothing works better than Special Interests.