Friday, May 27, 2011

Soak the Rich and everyone else

Guest post by Duke

According to the National Debt Clock, we have $14.3 trillion in debt. On this day in 2015, using Congressional Budget Office projections, the National Debt will be $18.5 trillion. The President, the Democratic Party and selected “Republicans” don’t seem to think that this is a serious issue that requires action today. They are outraged at spending cuts and changes to entitlement programs (Social Security and Medicare.) These two programs are the biggest budget items, and they will grow faster that the economy and the rest of the budget for decades.

Servicing this debt costs a little more than $208 billion dollars this year. This will grow along with increase in our national debt. This item would be larger if interest rates were not near historic lows courtesy of the Fed’s “Quantitative Easing.”

So, what are we to do? We know that tax increase and confiscation of CEO compensation won’t make a dent in our National Debt or our annual deficits. Dramatic actions are required. The 500 companies in the S&P 500 Index have a market value of about $12.5 trillion dollars. One solution would be the “Joe the Plumber” plan also known as the “Mother of all wealth re-distribution?”

Let’s seize the ten largest companies and give them to China in exchange for the debt we owe them. This would result in selling off Exxon Mobile (evil), Apple, Chevron (evil), Microsoft, IBM, General Electric (good guys), Berkshire Hathaway (Warren always advocated redistribution), Wal-Mart, Procter & Gamble, and AT&T. That should do it, right? Nope! These companies are worth, in total $2.3 trillion. O.K. it’s time to get serious. Let’s expand our reach to the next 240 companies; seizing half should do the job, right? Nope. These 240 companies are “only” worth $8.5 trillion. So, after seizing half of the largest publicly traded companies in America, and we’re still $3.5 trillion in debt. Enough is enough; let’s seize the remaining 250 companies. That will leave us debt free, right? Nope. We will still owe $1.8 trillion. That should end our worries about the Debt Ceiling for generations!

Not so fast. In this process, you have wiped out most, if not all of Americans retirement savings, the pension plans of workers still lucky enough to have an employer sponsored retirement plan. Add on to that the endowment funds of educational institutions, not-profits, to name a few. So, maybe this is a bad idea.

Maybe those spending cuts and reforms to Medicare and Social Security are not as radical as they say. Maybe the Governor of Indiana (sadly not a candidate for President) was correct when he says:
“What people will eventually understand is that the real enemies of Medicare, the real enemies of Social Security are these people who are saying leave them as they are. They will explode or implode.“

Of course, we are engaged in scare tactics. Having unfunded liabilities for the very benefits we have promised to seniors via Social Security and Medicare, that are multiples of the National Debt is not a problem.

Sadly for America, this will be evident after “Our” Government has tried every other option, including raising taxes dramatically on all Americans.

Of course, our “Progressive” Senator Sherrod Brown opposes entitlement reform, in particular Medicare. Brown calls the Paul Ryan Plan “reckless and irresponsible.” He urges Obama to “Protect American Seniors.” Apparently defending an unsustainable program is providing protection to seniors. This begs the question...

What is Sherrod Brown's solution to the deficit, the debt and the unfunded liabilities of Medicare and Social Security?

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