Hope Springs Eternal . . .

We noted with interest an article in this morning’s New York Times, on public sector pensions (States Take Aim at Pension Costs).  To successfully address the debt crisis, sacrifices will need to be shared across both the private and public sectors, and they will need to include entitlements, benefits, services, and programs.

To get an idea of what it will take to solve our fiscal overhang, we need look no further than our parents’ and grandparents’ generation, during WWII.  The war effort was a shared sacrifice, and everyone was in it together: sugar and gas rationing; paper drives and metal drives; Victory Gardens and the War Production Board.

This time, the enemy is not tyranny, or totalitarian governments.

We are the enemy — “we are they” — and we need to address, both personally and collectively — as consumers and as government — our profligate ways, and our expectations of what government can and should provide; and we need to learn to live within our means, lest we go the way of Greece, Japan, Great Britain, and others . . .

The irony as consumers — as discussed here previously — is that we actually will have more to spend overall if we use saved dollars rather than borrowed dollars, for two fairly obvious reasons: interest not paid on borrowed money, and earnings received on savings.

The second irony is that the delay to get to that “more to spend overall” condition is not a long slog; it is actually fairly brief, relative to one’s working years.

So, too, the irony with government spending: government will actually have more to spend if it is not servicing debt to the tune of several hundred billion dollars per year.  Want a quick and substantial increase to the federal budget?  Hunker down and pay down that debt.

It will mean a shared sacrifice.  And we must do it, for our children and grandchildren.

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