Mr Obama's Piggy Bank: The Stark Reality of the US Budget

When my daughters were young children, both had “Piggy Banks”. These were for coins which they had been given and which would not be spent on sweets. One day, my eldest told me she wanted to save money for a Care Bear, the rage of the times. I suggested she use her Piggy Bank, but she replied that it was for other things. What she needed was a Care Bear bank.

I was reminded of this story as I looked at the principal features of the 10-year US budget proposed by the Obama Administration. The figures are mind-blowing. About $3.55 trillion has been requested for the Fiscal Year commencing October 2010. In excess of $2 trillion of that amount is required for Medicare, Medicaid, and Social Security.

Let us be clear about this. This spending is mandatory. The decisions of previous Congresses dictate that such sums must be spent.

Two issues arise from this simple requirement that taxpayers funds have to be spent on healthcare and the equivalent of old age pensions. One issue is the Piggy Bank.

During President Clinton’s second term, the federal budget went into surplus. Rather than refund the surplus to the taxpayer, Clinton decided it would be placed in a “Lockbox” to fund Social Security. One of George W. Bush’s first acts was to undo the lockbox and give a tax refund, which benefited his wealthy friends.

In Franklin Roosevelt’s day, 45 workers funded one retiree. Last year in America, two workers funded one retiree and the position may be even tighter now, as US unemployment rises. Much has been said of the third rail of American politics – touch Social Security and you die – but one thing is abundantly clear. The funding of Social Security from the outset was, effectively, a government-approved Ponzi scheme as new contributors paid for those who were retiring. This form of funding has now failed.

The other issue is that it is illogical for Republicans to hold fast to an ideology that seeks to outlaw universal healthcare. It is patent from the figures that healthcare funded by federal government has not only arrived; through Medicare and Medicaid it has been in place for the past 43 years. Since the White House has been in Republican hands for 28 of those years, I must ask why Republicans, who have effectively accepted a form of universal healthcare for decades, are building up a head of steam to object to Obama’s healthcare proposals. They should concentrate instead on making sure the proposals are in the best interests of the taxpayer and will work to benefit as many as possible.

When it comes to  “entitlements”, whether Americans believe in Republican free market orthodoxy or Democratic tax and spend is irrelevant. If Americans --- "left" or "right" --- want entitlements for which they may have contributed for years, they cannot expect a series of Piggy banks to be available to help them out. They have a stark choice. Either entitlements remain, in which event the national debt will continue to rise, or the entitlements are reduced, which will hurt the poor and the blue-collar community, i.e. the people least capable of defending themselves.

Since there's no Care Bear bank in sight, who would be Obama right now?