Many thanks to Stephen L. Hall for today’s post!
***
In a recent discussion with therealguyfaux, the topic turned to the hidden part of many states’ and the federal government’s debt, that is the false promises inherent in every welfare state. As it is a recurring topic, and one I wished to address for some time, I thought it appropriate not only to vent about it this day, but to point out the obvious solution staring everyone in the face but they conveniently ignore for political expediency.
It is the nature of any welfare state to make future promises for current votes to benefit the current politicians until it spends itself into oblivion. This process generally takes between 60 to a hundred years; the Soviet Union began in 1917, and effectively collapsed in the early 1990s.; our welfare state started about 1934, just over 80 years ago.
While a great deal of attention is paid to the fact that our nation has ran up a debt of over $20 trillion, it is difficult to understand the true demographic impact of these anti-social government spending policies without accounting for the anticipated liabilities of an aging population which is living longer and accelerating growth in the poorest segments of society.
To understand the true wealth of a country one must compare its assets to its total liabilities, not merely the current debt as calculated by the debts incurred but also by the promised which have been made.
The aggregate wealth of the United States is estimated to be between $100 to $200 trillion, of which only about 1/4 to 1/2 are in tangible assets. Meanwhile the country in $20 trillion in debt currently. http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/
http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-wealthydeclines-for-the-lower-93/
Offsetting this must be the total, or aggregate debt of a nation, which includes state and federal employee pensions, anticipated Welfare and Medicare benefits, Social Security payouts, in addition to the necessary costs of replacing an antiquated infrastructure. The aggregate debt of a nation must include not merely the national debt of $20 trillion, but also the unfunded liabilities of $80 to $200 trillion.
http://dailycaller.com/2012/07/16/report-federal-unfunded-liabilities-total-84-trillion/
http://dailyreckoning.com/205-trillion-in-unfunded-liabilities/
To bring this down to a more understandable level, sometimes it is helpful to look at the typical households in America. Median household net worth of about $87,250, to disguise the wealth disparity in America rather than stating the mean net worth of about $282,000. There really is an increasing wealth disparity which many on the left keep trying to highlight, while at the same time keep trying to ignore the real cause. But that is another matter.
The total assets of the federal government in land has been valued between $23 and $150 trillion. So it is theoretically possible for the government to merely liquidate its assets and fully pay off the national debt. But it would be highly unlikely that such a divestiture could pay off the unfunded liabilities that the government has promised in free government handouts.
http://www.msn.com/en-us/money/generalmoney/what-us-land-is-really-worth-state-by-state/ar-BBkTfZS
http://instituteforenergyresearch.org/analysis/federal-assets-above-and-below-ground/
As you can plainly see, estimates are just that, a guess, and can vary wildly. However, it is clear that the government could sell off assets to pay off the current national debt. This would not nearly address the problem of the unfunded liabilities which have been promised which would consume the entire wealth of the Unites States. And this is before the promises of free health care, free education, and a free unicorn in every garage which current politicians are busy promising a gullible public.
Fortunately, there is a forgotten principle of law which could resolve this problem without the dreaded “default” that everyone fears will ruin the economic health of our nation. Unfortunately, it would require that legislatures be filled with people of moral courage, intellectual fortitude, and determination.
Unlike cities, which are municipal corporations and thus legally treated like an individual or any other corporation; states, and the federal government, are sovereigns, not corporations. There is an innate quality about sovereigns, peculiar to democratic governments, distinct from corporations or dictators, which are of the character of individuals.
The principle is that: No legislature can be bound by the actions of a prior legislature. Each legislature is considered, for its duration, an entirely new government. Take a minute to reflect upon that. Every two years, the United States has a brand new government, a form of perpetually and periodic revolution by the people.
The promise of a state employee’s retirement which has not been fully funded in a defined contribution plan, is merely the promise by one legislature that a future legislature will be bound to give someone some money.
The pretense that Social Security is a social contract is the effect that the grandparent promised the parent that the grandchildren would pay the parents’ retirement if the parents would pay for the grandparents’ retirement. First rule of contract law is that no person can make a promise for another person, only for themselves. Social Security fails as a contract.
Instead, it is a promise that in the future the government will make good on promised made today. It is a complete fraud. No Congress can bind a future Congress. This is the very reason that the Constitution provides: “To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years.” Paragraph 12, Section 8, Article I of the United States Constitution.
The Founding Fathers recognized the importance of this principle, particularly the potential for abuse by the executive of the failure to recognize the principle that each new Congress exercised sovereign power over the purse. They may not have seen the sheer hubris which would infect Congress that they thought that they could forever bind every future Congress.
Leftist proclaim that Obamacare must be accepted because IT IS THE LAW. But, such a declaration is a direct insult and challenge to Congress and confrontation with the Constitution itself. Laws change and NO CONGRESS is bound by the decisions of a previous Congress. Any Congress may repeal or refuse to fund Obamacare. The power of the purse is absolute.
To address all of these unfunded liabilities at once: unfunded liabilities are not binding upon Congress. The promises of Congress can last only a maximum of two years, often less. Every two years a new government must accept or reject the laws previously established, though their acceptance may be passive, we ought to be wary of too passive a Congress.
The common complaint to this traditionalist perspective is that people have relied upon these promises, that they are dependent upon Welfare, or Medicare, or Social Security, et cetera. To which one can but respond, the more fool they for depending not only upon a fraudulent promise, but a promise so obviously false to any who but understands the basic principles of government, basic civics.
