They both are wrong when they claim that if only their government was in
power it would bring about a millennium. In fact government cannot
protect prosperity. When government runs economic activities the living
standard must fall and fiscal situation must deteriorate. Today
government's mountain of debt is so huge that government is a drag on
the economy. No options are good. Government can, however, restore
America's vitality by addressing the problem of debt creation.
The health care reform is one step towards this direction. Far from
improving the quality of care it aims mainly at the reduction of the
unsustainable growth of government spending on healthcare. The private
spending will increase; every working American will have to buy some
premium. The least expensive premiums will cover the least care. This
may provide affordable access to health care for most. As stated above,
no options are good and government can only try to select the least
harmful.
President Obama also asked the Congress to "invest in our people without
leaving them a mountain of debt." Yet, the U.S. budget deficit is
growing. Without significant policy changes, the U.S. government would
soon face an "unsustainable growth in debt." About 94 cents of every
dollar of federal revenue will be spent on entitlements and interest
cost by 2020. Over 94 percent of all tax revenues will go to pay Social
Security, Medicare, Medicaid and the interest on national debt. There
will be no money for defense, homeland security, welfare, unemployment
benefits, education or anything else.
This prospect portends the enormous and long-term deterioration of
America's economic health, and Paul Volcker, Alan Greenspan and Ben
Bernanke have recently urged drastic spending reductions and tax
increases. Introduction of European-type VAT might be necessary. Experts
know that every tax increase reduces the GDP growth, yet reasonable
choices are no longer available.
The prevailing attitude is for still bigger participation of government
in economy. This attitude firmly bends the path of America towards
socialism. For the past 50 years making the socialistic doctrine look
complete and harmonious went ahead without a fundamental challenge. Now
many believe that the doctrine is true, beneficial and historically
necessary. Somebody remarked that prejudiced in favor of socialistic
Europe, and even Cuba, by reason of their ignorance, people are
confident that they are bringing to America an element of refinement it
had too long done without it. The greatest carrot is to join the side
willing to shower the crowd with entitlements and destined to win.
Matthew Jarosinski lives in Waitsfield.
