1932-2008 RIP

It is getting difficult for me to talk with conservatives lately. Many, probably most, of my friends are fiscal conservatives. When I give them my current assessment of the situation in the US I have tobe careful in the way that I explain my views.

The great debate started either in 1913, with the introduction of the federal income tax, or in 1932 when FDR was elected as president. The debate has been, to use an old analogy, between the "people who are pulling the wagon and the people who are riding in the wagon." Reagan used to always warn that there was an urgency to getting the government under control. There were the arguments in the 1950s against "creeping socialism." There were warnings since the 1960s that entitlement programs were growing too fast. Now its too late. The wagon has already plunged off a cliff and it matters only to historians who was pulling the wagon and who was riding in the wagon.

Fiscal conservatism is dead. Even if we added zero new spending to the federal budget, our obligations are too much to be paid by the federal income tax. The reason is not the national debt, the reason is the interest on the national debt. Taxes cannot be used for a national health care program, for example, because all of our income tax revenues will be needed to pay for the inevitable expansion of social security, the growth of costs in medicare/medicaid and interest on the national debt. The people riding in the wagon have already destroyed us. It is too late to "halt the growth of government." By the end of 2009 I predict that the federal debt will be about $13 trillion. The projected growth in SS/MC/MC will mushroom that debt to $40 trillion by 2022. We are going to be paying about $500 billion in interest on the debt by 2010. By 2025 we could be paying $2 trillionin interest on the debt every year. This is assuming that there will be no new programs like national health care. The middle class will be slaves to the interest on the debt. There will be no wagon pullers. All the wagon pullers will be paying interest on the debt.

Can Congress pass a law enabling national health care? Oh, sure. They might even pay for it for a year or two by issuing government bonds (taking on more debt). Here is the problem, though; someone has to buy the bonds. People who buy bonds know how to do math too. At some point, very soon, potential bond buyers are going to realize that the US will not be able to pay interest on the bonds and will never pay off the debt or even get the debt under control. People and governments who buy bonds are not idiots. Not only are the buyers going to dry up, the current bond holders, including the government of China, are going to start getting nervous and selling bonds. Then what we we do?

I think the die was cast on this when GHW Bush was president. The die was cast about 1991. Clinton actually staved off doom by having budget surpluses, largely due to Newt Gingrich taking over Congress -not because Clinton was smart. But then GW Bush has more than made up for any gains in the 1990s by adding $5 trillion to the national debt since 2001, first with all the GOP earmarks and now with the bailouts.

You can have whatever opinion you want about how cool national healthcare would be, but there is no way to do the math.

There is only one way out of doom. Since it is too late to stop government growth, the only hope is that the government somehow findthe money or the platinum. The government can prevent doom if it can find about 250 million tons of platinum. Shrinking the government is pointless, we need to let government be big enough that it has thewherewithall to find, mine and bring back 250 million tons of platinum.

Its simple. They either find the money/platinum or we attack them with torches, pitch forks and molotov cocktails. They could also find themoney by becoming the world's energy supplier using space based solar power. Or they could do both. Who cares? The point is that they either get the money or prepare themselves mentally for the gallows. They will wish they had listened to fiscal conservatives over the last few decades, but that time is past.