By James Schaefer.
In today’s Wall Street Journal, the lead editorial discusses the problems of government overspending (The Road to a Downgrade, July 28, 2011).
Medicare, Social Security, and Medicaid prove Milton Friedman’s thesis: we cannot get something for nothing. There is no free lunch; and indeed, it is quite an expensive lunch.
Entitlements are nothing more than benefits promised by government to its citizens, using the citizens’ own money, and with enormous additional costs added on — driven by over-promising, underfunding, and the costs of administering the programs.
We the taxpayers — households and businesses — will pay for all these, in their entirety. The only issue is whether we pay will for them immediately (as taxes), or later (taxes, interest, and perhaps inflation). The largest item in the federal budget is Medicare and Medicaid, lumped together, and the second largest is Social Security. These programs will grow rapidly as the Baby Boomer generation retires, and they will also lose the significant financial support that the ‘Boomers were donating through their FICA payments.
The numbers are huge, as explained in this Bloomberg Businessweek report.
Ultimately, this is a discussion about who we as a nation want to be. Will we be a can-do, make-do society, so ably demonstrated by our parents’ and grandparents’ generation that saved much of the world from tyranny and left it a better place? Or will we be a society marked by how much we try to extract from government, on somebody else’s dime?