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The real story: the public is the problem

By Norman Poltenson


Late in the evening of Wednesday, Oct. 16, President Barack Obama signed legislation to re-open the federal government, which had been partially shut for 16 days. The political drama captured the attention of the media, which was consumed by the tactical struggle and the question of who won and who lost.

The real story occurred on Friday, Oct. 18, at 3 p.m. when the Treasury announced that the federal debt exceeded $17 trillion. Every U.S. citizen now has a debt obligation approaching $54,000 as the federal government continues unabatedly to borrow $200 million an hour.

Surpassing the $17 trillion debt mark was just the introduction to the story that should have dominated the media. The history of how we got here would then follow. It took the U.S. government 193 years to rack up the first trillion dollars; eight years later, in 1990, the number jumped to $3 trillion. When George W. Bush took office in 2001, the debt was $5.7 trillion. President Bush only needed two terms in office to balloon the debt to $10 trillion. Not to be outdone, President Obama has increased the debt 70 percent in less than six years and is on target to reach the 100 percent mark ($20 trillion) when he leaves office.

The real story would end by addressing what drives spending and the resulting deficits and debt — “entitlements.”

Robert J. Samuelson, in an Oct. 20 op-ed piece in The Washington Post, suggests we banish the term entitlements and identify specific programs in order to evaluate them. Here is the Top 10 list, brought to you by the Office of Management and Budget, and ranked by the millions of recipients in the program: Medicaid – 63.2, Social Security – 55.8, Medicare – 49.9, Food stamps – 46.6, Child nutrition – 35, College loans – 11.3, Unemployment insurance – 8.9, Supplemental Security Income – 7.9, Veterans compensation – 3.8, Civil-service retirement – 2.5.

If we eliminate the overlap in some of the programs where recipients receive multiple benefits, that still leaves about half of all U.S. households receiving a federal benefit. That’s a huge constituency. In 2012, all of the entitlement programs accounted for 63 percent of total federal expenditures.

Samuelson also suggests that we get rid of the word entitlement because it deludes the public into thinking the programs are untouchable. If truth be told, these programs have no legal standing. The U.S. Supreme Court dealt with this issue as early as 1937 (Helvering v. Davis) when the court ruled that Social Security was not a contributory insurance program but a payroll tax for a welfare system. Our 535 elected politicians in Congress can alter the terms of Social Security or any other federal program on a whim. In 1960, the Supreme Court confirmed the status of Social Security, and thus all other federal programs, in Fleming v. Nestor, when the court proclaimed that Social Security benefits were not “accrued property rights.”

The polls keep telling us that the public has a limited willingness to be taxed and instinctively understands that we can’t keep spending and borrowing at the current rate. At some point, interest rates will rise and the $223 billion in interest we currently spend annually to sustain our borrowing addiction will rise and squeeze out other spending options and reduce investment available to private capital markets. At some point, our creditors will become disenchanted, since their “investments” are being repaid in depreciated dollars that the feds print ‘round the clock. Worst-case scenario, our monetary system collapses.

But the same polls tell us that 90 percent of our fellow citizens don’t want Uncle Sam to mess with “their benefits.”

America, you can’t have it both ways. In the 1970s, the U.S. was the world’s biggest creditor. Today, we’re the biggest debtor on the globe. The answer is to modify benefits and eligibility levels over time so as not to distort the economy and also to make the changes politically acceptable. Blaming the Beltway for gridlock is an easy distraction from the real problem.

The story will end well when Americans finally look in the mirror to identify the real problem and admit that all they are doing is passing a heavy financial burden on to our children and grandchildren so that we can continue our current bi-polar lifestyle. Washington will respond when the public finally makes up its mind to embrace fiscal sanity.


Norman Poltenson is publisher of The Central New York Business Journal. Contact him at




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