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The federal budget cannot be balanced

I’m always amazed at the number of people I meet who believe that Washington DC will still get its spending under control, that it’s just a matter of getting the right person, or the right party, into office and disaster will be averted. Or, that when we finally hit a real crisis, politicians will do the right thing – which is, incidentally, the complete opposite of what they’ve been doing for the last 100 years. Those are long odds if you ask me.

In the following video, Hal Mason takes a look at the budget put out by the White House and makes a simple observation: Even if you shut down the entire federal government, including the military, you still wouldn’t balance the budget. The real problem lies in the section called Mandatory Programs, which includes Social Security, Medicare and government pensions. This is the epicenter of political promises.

It has often been said that the inevitable end of any democracy is bankruptcy, as organized constituents learn they can vote themselves gifts from the treasury – and from future generations. So, how likely is it these programs will be cut or reformed in some meaningful way? Look to the section heading itself to understand their sacred cow status. Cutting a now dependent population off from its means of survival is political suicide. But in the end, this isn’t even about Washington, DC. Voters will simply never allow these programs to be cut; they have bought into the idea of government taking care of them and now demand that it make good on that promise. 

The real problem with government safety nets is that they create the illusion of freedom from personal responsibility. The reality is there is no such thing. The force of nature can be controlled temporarily, but only arrogance or ignorance believes it to be suppressed forever. Eventually the market will reject an endless stream of Treasuries offered for sale. If the Federal Reserve chooses to buy them with an endless stream of new dollars, the market will reject the dollar itself. Personal responsibility means difficult decisions. There are many who will choose to ignore the warning signs, but that too is a decision for which they will ultimately be responsible.   

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