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Government Debt, and who is to Blame Vol 27

October 23, 2013

If you carry jumper cables in your car, you must be a Boomer.


Like many of you, I have been watching world governments put off decisions on debt, future services, and growth all year long. Amazing. We all can name the things that appear wrong with our society, but only see inaction. Since a fundamental belief of mine is that we get the government we deserve, it’s us who have to change the storyboard of our future. Otherwise, someone somewhere else will do it for us.

All Boomers are the same. Better said, while Boomers occupy many different social strata’s, financial circumstances, political parties, and  economic blind spots, these differences are small compared to the things we have in common.

For example, Boomers are all apprehensive about the future. Whether you are still working, are semi-retired, or have actually started collecting a pension, planning for the future looks like an impossible task. Yes, while we all enjoy the speeding economy and its almost magical wealth ride, few of us actually understand how it works. We are a passenger on this business train. Now, the economy is still speeding up, and we feel like we are in the station, watching the speeding train go by with no clue as to how to get on.

I have used the analogy of the train before to simplify the economic argument currently occurring everywhere. Briefly, think of our economy as a train on a track going fast into the future. Most of us are passengers on the train, enjoying the rewards associated with success. People not on the train, or those pushed off, are people who do not have the skills to succeed, are sick, or do not fit into our society today. Liberals / Democrats want to slow down the train, to allow these people on ( Obamacare ? ) – after all, the train should has room for all. Republicans / Conservatives understand that the train cannot slow down too much, because getting it back up to speed, with all the new weight, is impossible without an event, like a recession, which hurts everyone. Of course, we could agree to have a slower moving train,  but why behave like Europe ?  Practically, there should be a point where we can all agree on the optimal speed that keeps the economic train going forward, creating new jobs and the needed wealth to pay for our consumption, without burdening the train with too much debt, slowing it down or even stopping it. Europe, it can be argued, overburdened their economies with too much debt, and are now paying the consequences of social unrest.

Today, we have not agreed on this optimal point. Boomers, since we elected our governments, obviously want continued consumption, but do not want to pay for it – let someone else pay. Many European populations are have this conversation today, between classes, cultures, and generations. This conversation is in full swing in the US, and I believe the world is all watching to see the outcome.

So what ? Well, since the winner is still to be decided, the Tea Party is ramping up its push to minimize US spending, which it believes is out of control. We are overloading our economic train, goes their familiar refrain. With huge debts, our kids will be asked to pay our debts while remaining unemployed. or underemployed. Not a recipe for progress.

Liberals, on the other-hand, make the economic argument that the US is wealthy enough for the next major public right to be made law – allowing all citizens the right to health care. Practically, with Boomers aging, and needing this benefit shortly, how can we not institute these basic changes, which are readily acceptable and available in the rest of the civilized world.

Seen logically, both sides make their arguments persuasively. Healthcare, if not now, when we are the richest country on the planet, when will it be affordable ? Especially considering all the Boomers who will need this service, and will electorally demand it in the near future anyway. On the other hand, we are not paying our bills, our taxes are already high, and our incomes are stagnating. Let’s get our economic house in order, so our kids will not have to pay our bills.

It’s fun to note that Liberal economists like Paul Krugman wave away the Republican concerns about the debt. He forgets that the real problem with debt started with George W Bush, and 8 years of Republican’s running up the debt on wars and a prescription system that was never paid for. Tea Party’ers actually got their start just trying to bring GOP’ers back in line. Krugman argues that  debt is OK as long as you save money at the appropriate stage in the economic cycle. Boomers have stopped this periodic re-balancing, because we want things, and have been bribed by all recent governments to give us what we want. So, Krugman’s theories are misplaced in the age of the Boomer.

My real question is – where are the Liberal Tea Party’ers ? Can’t they see what our debt will do to their kids ? Where is their outrage ?

Image the scenario where us Boomers continue to run up the debt, maintaining our lifestyles and the health care system needed to keep us alive forever, until we are brain dead. Our kids are not going to have the assets or wealth available to do this, and they will have to start turning out the lights, sell our houses, and approve other methods for Boomers to pay. Frankly, we should have these conversations now, while we control governments worldwide. Our kids will have their own kids, environmental issues, and economic challenges from Asia, to contend with. Putting us in a home may be their only viable option. A terrible conversation to have with your Boomer parents, but unavoidable.

Unavoidable the way Boomers are currently controlling the conversation. Its time to understand that our window of  opportunity is slowly closing. What are you going to do about it ?

Next time on Boomers – wtf !, some solutions.

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