It's hard to imagine that President Obama would have the gall to say the words "unsustainable" and "debt" in the same sentence, let alone on the same day. After all, he did more to increase the debt burden than any president in history. Okay, let's get this straight: Raise the price of something, you get more of it (minumum wage)? He implored lawmakers to put aside partisan politics (hilarious); and "create" more jobs (seize wealth from the private economy) and redistribute it to public workers ( a.k.a. infrastructure improvements). As if the president of the United States could create wealth and more without raising taxes by a "dime!" The refrain was: "I propose . . . [fill in impossible wealth-creating promises here, of your special interest's group's choice, natch]."
I thought the speech was a boldly fantastic walk through a parady of big government liberalism. And I thought David Boaz, of the Cato Institute, put it right when Jesus, er, Obama said, "This country only works when we accept certain obligations to one another and to future generations," Potus said. @David_Boaz tweeted, "Don't bankrupt them." Boaz is right. The net present value of the government's future obligations (entitlements programs) is around $60 trillion, says the Peter G. Peterson Foundation. We have written on this: Promises will be broken. See I.O.U.S.A. if you want to be truly freightened by our debt.
Thankfully, we didn't really have to ponder The Abyss. One of my past co-workers at SmartMoney who now is at Reuters (@LaurenYoung) had the good sense to keep her followers on Twitter updated on the goings on at the Westminster Kennel Club deal-ee-o. And we are forever grateful for that.
I'll just never understand the so-called multiplier effect: Seizing money from the private econmy and redistributing it, inefficiently, BTW, I'll never get why that theoretically creates jobs.
Here is an excerpt from our retirement troubles package published in 2008, in which we asked: How do financial planners build plans around DB plans that may not exist in a decade?
The United States has a severe savings problem, one so hardwired into our culture that it is institutionalized. You've heard that before, perhaps you've even warned your clients about it. The bottom line is that if you are using promised future cash flows from a client's defined-benefit plan in your retirement calculations — employer- or government-sponsored — you had better be careful. Retirement promises will likely be broken — and sooner than you think. In the private sector, more and more DB plans are shutting down or reducing their payouts as future obligations are overwhelming companies' ability to pay. The government itself is also facing some tough times ahead: It is running historic deficits and, recently, the national debt has been growing at a pace never before seen in this nation's history. (And that's saying something.) The promises on the books for future payments from entitlement programs — from Social Security to Medicare — already represent $53 trillion. That works out to about $175,000 per person.
The trouble is, we haven't got $53 trillion. “Social Security trust funds are a misnomer, and, in fact, they're an oxymoron,” says Peter G. Peterson, a former secretary of commerce and chairman of the Blackstone Group. “They shouldn't be trusted and they're not funded.”