‘We have met the enemy, and he is us’ - by Judge Jim Gray

OK, fun is fun, and fair is fair. But our economy is in serious trouble, which, in turn, means our country’s future is at stake. And, as Ayn Rand was quoted as saying, “You can’t fake reality forever.” So this will be a realistic and even blunt assessment of where our economy is, the problems we are facing, and what we should and must do about them. I am sorry to ruin your Sunday breakfast, but realities must be faced.

Just like the government of Greece, our country’s government is virtually bankrupt, which is to say that the federal government spends more than it takes in, and has been doing that for years. As a “short-term remedy,” the government has been using its irresponsible fallback ability literally to “print more money,” but this has simply aggravated the problem by building up huge budget deficits.

In addition, the signs are increasing that China, which holds more of our debt than any other country, is beginning to seek repayment, because their vast holdings are daily decreasing in value. If and when that happens, it will present us with another major economic crisis! So in so many ways our fiscal irresponsibility is inescapably catching up to us fast, and must be faced — now!

Specifically what are we facing? Using figures that come from economist Robert J. Samuelson, the federal government is projected in the next 10 years to spend about $45.8 trillion. But during that same period the government will take in revenues of only about $37.3 trillion, and even that is based upon the fabulously optimistic assumption that we will soon experience a full economic recovery. Thus the deficit is projected for the upcoming decade — in the best-case scenario — to be about $8.5 trillion, which will be about one-fifth of our total spending.

Starkly put, we cannot borrow our way out of debt. So we must now put into practice what we have been preaching for decades to Third World countries, and that is to “tighten our belts,” and act with fiscal prudence.

What are both our president and Congress doing to respond to this genuine crisis? Almost to a person, they are expressly ducking the hard questions, and are instead continuing to pander to us. How can they live with themselves by doing this while facing such economic peril? Because that is what we tell them we want them to do!

In today’s world, voters nationwide are expressing flagrant contradictions — all at the same time. On the one hand, more than a majority of voters are saying that they favor the so-called stimulus plan and want government to fix our economic problems, while on the other hand they are also saying that the government is too big and costly and spending much too much money, and that taxes are too high.

So what Pogo, the Walt Kelly comic strip character, was quoted years ago as observing is once again true: “We have met the enemy, and he is us.” We are the ones who are vehemently saying that we want our entitlements, while at the same time saying that we do not want to pay for them. So our elected representatives have been listening to us, catering to those perceived wishes, and faking reality for years — and they still continue to do so. So it is we who must change!

The truth is that fiscal balance can only be achieved, and our economic future secured, either by increasing government revenues by further increasing taxes, or by reducing government spending, or by a combination of both. In that regard, simple mathematics tells us that we could probably balance our budget by increasing all federal taxes by about 50%.

But that would probably not actually happen because that approach would, of course, be actively resisted by the people who would be called upon to pay those taxes. With time, those people would simply move their companies and assets out of the government’s reach, which would inflict further enormous harm upon our economy. In fact, we have experienced that phenomenon already, and would be well advised to lower the taxes we have today to entice those companies and assets back.

That leaves us to look at an appreciable reduction in governmental spending as the only remaining path to fiscal responsibility. So what should we look at? Well, as has been written several times in this column, we can start by passing sunset laws for our federal agencies that will inevitably reduce the size and cost of government. We can also repeal things like subsidies for farmers to grow and not grow various crops. Those things would be a start, but in themselves they would not be nearly enough at this point to bring us to fiscal stability.

No, what we are facing is much more serious. About $20 trillion of the projected $45.8 trillion in government spending will go for three programs: Medicare, which is health insurance for those who are 65 or older; Medicaid, which is health insurance for the poor; and Social Security. At present the average federal subsidy for each person who is 65 or older is $11,000 for Medicare, and $14,000 for Social Security, for a total of $25,000 per year. Obviously that is a lot of money, and, even speaking as a person who just qualified for Medicare last week, we can no longer afford it.

So we are going to be forced to change the Social Security system to take into account the wealth of the recipient, and reduce the benefits paid to those people. That is really a hard thing to say, because this was supposed to be our money that was being held for us in trust for our retirement. But in truth, the Social Security system was never set up that way. Instead Social Security was always a “pay as you go” program that paid money to today’s retirees that was taken from today’s workers. That means that there were no savings of money in trust for anybody. In other words, Social Security was a legalized Ponzi Scheme, and now reality is exposing that fraud.

Fiscal responsibility also virtually demands that our Social Security age must be pushed back from 65 to 70. Most mortality tables say that people who are now 65 can, on the average, look forward to another 18 years of life. That is much longer than when the Medicare and Social Security programs were originally put into effect, and the program never took that eventuality into account. This will certainly not be popular with people at that age, but the solvency of our country and our way of life simply require that result!

The counties in our state are in much the same position, but their problems to a large degree are caused by the vested benefits they owe to their public employees. These consist mostly of health and retirement entitlements. Think about it, the various county supervisors are almost always elected and re-elected with the financial help of government employees’ unions. Why are the unions so involved in these elections? Because the unions’ members are highly affected by how those supervisors vote.

So after the elections are over, there exists a definite conflict of interest when the supervisors are called upon to decide upon the various financial benefits for the public employees. If they do not vote for benefits that are lucrative enough, they will arouse the anger of their biggest contributors, and this will probably result in their losing their next election. So often the supervisors go to great lengths with county funds to please the unions. But with this scenario, no one looks out for the solvency of the counties. As a result, probably every city and county in California is financially insolvent, because they have more projected obligations than revenues.

Those are the realities. Discussions like this are certainly not fun, but eventually reality must be faced. In fact, our children demand it. Mostly, you and I will be fine, but our financial security and comfort are being paid for by mortgaging the future of our children and grandchildren. And I hope you agree with me that this is too high a cost to pay!

In a democracy our “leaders” are governed by only one universal principle: They will follow where the votes are. That means in this case that they will tell us the truth at their peril. Furthermore, as long as financial ruin does not happen while they are still in office, reality can be postponed until someone else’s term. So in effect, all of them have simply been doing our bidding since they were voted into office, and they will continue to do so. Therefore, it is not the “rascals” we elect to office that are to blame. The rascals are us.



JAMES P. GRAY is a retired judge of the Orange County Superior Court, the author of “Wearing the Robe – the Art and Responsibilities of Judging in Today’s Courts” (Square One Press, 2008), and can be contacted at jimpgray@sbcglobal.net or via his website at www.judgejimgray.com .

WE MUST REGAIN FISCAL RESPONSIBILITY! by Judge Jim Gray

WE MUST REGAIN FISCAL RESPONSIBILITY! by Judge Jim Gray 03/04/08

 In my view, the most dangerous threat to our safety and security is not the possibility of being invaded by another country, or even the terrorist actions of any of the world’s radical elements. Instead, the greatest threat facing the safety of our country is a weak national economy.  

 

  Ancient Greece, Ancient Rome and the Ottoman Empire were really not conquered by external forces. Instead, they overspent themselves to death and spread themselves too thin. That is a major lesson in history, and the Government of the United States of America has not learned that lesson.

 

  For example, the total revenues or tax collections for the federal government in 2007 was about $2,500 billion, but the total expenditures by the federal government were about $3,200 billion. So our government had a budget deficit in this past year alone of $

700 billion!

 

  To that we add the existing national debt of about $10,000 billion, which requires an annual debt service or interest payment of more than $350 billion. That is almost a billion dollars every day we make just in interest payments! At this point, we are making those interest payments both by borrowing the money from other countries, and by printing extra money – which contributes directly to inflation. So now can you see why the value of our dollar is declining?

 

  If this balance sheet were to be applied to any private business, that business would be in bankruptcy. No non-governmental enterprise could possibly survive such red ink. But our government continues to deepen the hole we are in. Among other things, this recent tax cut results in our government borrowing even more money just so that it can give that money back to the lower-earning population. Politically that may be smart; but additional borrowing adds even more to inflation, which will hurt virtually everyone.

 

  So all unproductive expenditures of the federal government must be eliminated, as a matter of our nation’s security! How can this be done? Well, we as taxpayers and voters must demand – now – that our government return to fiscal responsibility. In every respect, big and small.  

 

For example, recently I received a really expensive brochure “Report to the District” from Congressman John Campbell, naturally prepared at taxpayer expense. You probably received one too. Okay, fine – all congressional representatives do it. But that is no excuse. It had to have cost a lot of taxpayer money. So I sent him a letter and suggested that, if such a report was necessary at all, it be provided in the form of a simple and inexpensive letter. To his credit he wrote back personally and said that I would never again see such a mailing from him. (I took this as a positive sign, but maybe that means I am simply off his mailing list.)

 

But otherwise it is up to us all to monitor all of our government’s spending. If military bases are still open that are not needed for security purposes, let’s close them. We still are supporting about 1,000 military bases in about 30 countries all around the world, even apart from those in Afghanistan and Iraq. Are all of them necessary? Let’s be sensible, for once, and stop paying for things we do not need!

 

We have already discussed in an earlier column how we can reduce unnecessary government agencies and their spending by passing “Sunset laws” that would require each federal agency to justify its own existence every seven years or be disbanded. What have you as concerned readers and taxpayers done to discuss this proposal with your elected representatives? Come on, our future and that of our children and country is at stake. This is serious stuff!

 

Every line item in our federal budget must be scrutinized as publicly as possible, and the size of the federal bureaucracy must be reduced. This will materially reduce government spending. Government does not in itself produce wealth. Instead it detracts from it.

 

Look at the island country of Singapore. It has a population of only 5 million people, no natural resources, and is only 700 square kilometers in size. But Singapore has put a competitive economic plan into operation, to the degree that this small country is now the 17th wealthiest economy in the world! For all of its lack of resources, it has a growth rate of 7 percent per year and an unemployment rate of only about 1.7 percent. The United States, on the contrary, has a growth rate of only 1.5 percent, and even that is declining, and an unemployment rate of 4.9 percent.

 

We can and must do better! We can regain our economic strength without withdrawing from our military and other obligations. But we must have a change in thinking and a change in approach. And it begins with us. You and I must cause that change to take place!

 

To be honest, I am now 63 years old, and our economic troubles will probably not affect me personally all that much. But it is my generation that has been borrowing all of that money. And it will be our children’s generation and that of our grandchildren that will be forced to face the effects of our irresponsibility and pay it back.  

 

At the very least this is embarrassing, and at worst it is criminal. Please join with me in taking notice of these problems right away, helping to change our country’s course and leaving our descendents a better life than they are now facing. I think it is a matter of honor.

James P. Gray is a Judge of the Superior Court in California, the author of Why Our Drug Laws Have Failed and What We Can Do About It - A Judicial Indictment of the War on Drugs (Temple University Press, 2001) and Wearing The Robe - The Art And Responsibilities of Judging In Today's Courts, has a blog at http://judgejamesgray.blogspot.com/. http://www.judgejimgray.com, and can be contacted at www.judgejimgray.com.