To the Publisher: Hi Norm, I thoroughly enjoyed your recent article (Jan. 4 issue, Norm Poltenson editorial, entitled “Uncle Sam’s Ponzi finance”) on the federal government’s Ponzi scheme. It got me thinking about what has happened to us as a nation. As we listened to the pleas from the New York and New Jersey politicians […]
To the Publisher:
Hi Norm, I thoroughly enjoyed your recent article (Jan. 4 issue, Norm Poltenson editorial, entitled “Uncle Sam’s Ponzi finance”) on the federal government’s Ponzi scheme. It got me thinking about what has happened to us as a nation. As we listened to the pleas from the New York and New Jersey politicians to rebuild the damaged homes and properties destroyed by Hurricane Sandy, they referenced the government generosity to the Katrina victims in the Gulf. Then we saw some recent polls showing how a large plurality or majority of Americans felt that Medicare and Social Security should be left alone.
This made me think of the story of how a frog dropped into a pot of boiling water will jump out, but a frog put into a lukewarm pot of water will be so comfortable that as the water temperature is increased, he doesn’t notice the difference until it’s too late. I think we may have reached that point as American citizens. With our permission, our elected (and usually re-elected) politicians have gradually warmed our circumstances with a steady diet of supplements like insurance for health, insurance for homes and property, insurance for retirement, as well as subsidies for farming, ethanol, wind power, etc.
One small problem with all of this help from the government is that so much of it has been purchased with borrowed money. With the cooperation of the [Federal Reserve System], we have been living in a wonderland of extremely low interest rates which masks the true cost of the accruing debt by keeping the annual cost of servicing it artificially low. At the same time, all of the people who saved for their retirement are finding that the interest on their savings now pays only a fraction of what it once did, and they are forced to expend their principal to meet the costs of daily living.
As soon as the interest rates rise to more normal levels (as they must and will), the governments that are borrowing short-term to fund their excessive spending will find themselves in a financial bind, since the interest will eat up a much larger portion of their annual budgets, squeezing the very programs to which they (and we) have become so acclimated.
The debates in Albany and Washington are usually couched in economic terms. We are warned of the consequences of unsustainable spending, but there seems to be insufficient political will to stem it. I would like to submit that it is a moral problem that underlies the economic one. We have allowed ourselves to be seduced by the present comforts of overspending and reckless borrowing, while claiming that we have to do something about it. That “something” always seems to depend on someone else paying more or getting less. I suggest we all need to start by taking less, in the form of handouts, co-pays, deductibles, etc. Those of us on Medicare who can afford to pay more for our care should be paying more. The same goes for Social Security. At the same time, would it be too much to ask the federal government purse-watchers to restructure Medicare so it does continue to be a perverse incentive to treat? Would it be so unbearable to ask retirees to wait another year or two to start collecting their Social Security? Is there some hidden reason why we can’t tax earnings above the current salary cap of $113,700?
We need to start thinking of the future of our country as well as our own individual futures. If we don’t look after the former, it seems unlikely there will be much left for the latter.
Sincerely,
Arnold Poltenson, Manlius