Thursday, April 22, 2010

Fred Hickey on Government Speak

Reminding us of the fragility of the current u.s. political economy


"What Irritated me the most about the health care debate was the sham argument that it would somehow reduce the nation's deficit. The history of these giant entitlement programs is clear. After adjusting for inflation, Medicaid now costs 37 times more than it did at its launch, way, way beyond the original projections. Medicare cost nearly eight times what Congress had initially forecast. Social Security -- all you need to know is that there's absolutely no money put aside for the pensions promised to the baby boomers just beginning to retire. All the money that I've put into the Social Security system (and I pay both the employee and employer contributions) for more than thirty years supposedly to finance my retirement is gone, used to fund the pensions of others who have come before me. Indeed, this year there will not even be enough 'pay-as-you-go' receipts to cover the year's Social Security outlays, forcing the government to borrow an estimated $28 billion to fund the payouts

" Yet the House Speaker Nancy Pelosi had the nerve to declare last month that, "Over the life of this (health care) bill, it will create 4 million new jobs and cut the deficit by 1.3 trillion dollars." House majority leader Steny Hoyer: "In truth it is the biggest deficit reduction bill any of us will have an opportunity to vote on in this congress and indeed other congresses as well." What kind of turnip truck do they think we fell off of?

"All these savings will supposedly be created by adding 32 million currently uninsured Americans essentially to the poorly functioning Medicaid program. I guess eventually the program may grow enough to add 4 million more bureaucrats to the government's payroll, but the new jobs won't come from the private industry. Caterpillar (and a long list of other private companies) recently came out with estimates of their additonal first-year costs. Giant manufacturer (and exporter) Caterpillar forecast their costs would increase by $100 million; and noted that it could 'ill-afford cost increases that place us at a disadvantage versus our global competitors'

"The saddest part about the 'Decade from Hell' is that we didn't learn anything from it. We're losing manufacturing jobs because our companies are non-competitive. Our solution: make them less competitive. The country is burdened by enormous debts. Our solution: spend (mostly waste) record amounts of money and pile on even more government debt. The social safety nets are woefully underfunded. Our solution: massively increase entitlement benefits. We don't save any money. Our solutions: Drive interest rates to zero, drastically increase tax rates on investments and encourage more consumer spending (cash for clunkers, ect.). The Fed continually creates debilitating asset bubbles: The solution - create some more

"We have been deluding ourselves for years. Our spendthrift policies would have led to an earlier crisis if not for the willingness of foreigners to fund our follies, thanks to the U.S. dollar's position as the world's reserve currency. When many of the biggest lenders (Chinese, Russians, and others) began to hesitate recently, reducing their U.S. Treasury holdings, a new source of funding was required to avoid a funding crisis. That's when the Fed stepped in this past year by monetizing the debt, directly (through $300 billion of U.S. Treasury Securities purchases) and indirectly (with over $1.4 trillion of mortgage purchases). I find it utterly preposterous that just a few weeks ago Fed Chairman Bernanke told Congress: "We're not going to monetize the debt" as the Fed has been doing exactly that through its 'quantitative easing' money printing operations for more than a year. There can be no sugar-coating this. Our government leaders are not telling us the truth."