Saturday, November 17, 2012

Lower Standard Of Living For All

It would be easy for me to dismiss Obama supporters as mentally defective but for one inconvenient fact: my mother, sharp as a tack at 92, voted for him. Also my sister, a San Francisco attorney who is no slouch in the brains department. I’m not sure where my brother, a municipal employee, stands, but neither am I eager to find out. There is no bridging the political gap between us, and so we simply avoid discussing politics. The same goes for old friends, although newer ones are another matter. One of them walked out on our dinner together in a huff when an innocuous remark I’d made about Abe Lincoln evidently bruised his self-righteously liberal, morally perfect heart . Good riddance. It is far better friends than he that I am worried about. Will they draw the line when I let slip my support for the right to bear arms, even concealed? A few of my wife’s closest friends are unmitigated liberals, and it’s unclear how much longer we’ll be able to tiptoe around the political rough edges when we get together socially.

The truce with my siblings and mother has held, but not without strain. When the latter referred to the eminently decent Mitt Romney as “a jerk,” I returned fire with an over-the-top fusillade of anti-Obama invective. That was a month ago, and we haven’t talked about the election since even though the nation has been wallowing for nearly five years in an officially undeclared, if not to say brazenly-lied-about, state of recession. Romney voters will have to stifle the hubris, though, since there is no way he would have been able to reverse the country’s inexorable slide into economic darkness. To be fair, I should state that Obama is no more culpable for the abysmal state of the economy than Bill Clinton was praiseworthy for its resurgence during his presidency. He got lucky, is all, while Obama inherited a disaster two generations in the making. Economic cycles are far bigger than the presidency, and this one is going to take its ruinous course no matter who is in the White House.

Dating Game’s Top ‘No-No’

In the meantime, the political gap between liberals and conservatives can only continue to widen. And to grow uglier. This unfortunate trend was underscored by a recent Wall Street Journal story that focused on dating services. It seems the matchmaking business has declined in recent years because clients seeking mates are increasingly putting political compatibility at the top of their lists. “In this neck-and-neck, ideologically fraught election season, politically active singles won’t cross party lines,” the Journal noted. “The result is a dating desert populated by reds and blues who refuse to make purple.” So much for romance these days. Time was when smoking, drinking, religion, education level and physical attractiveness were the main concerns of men and women looking for love; now, apparently, a date-seeker’s political views trumps them all.

Until a crisis equal to the Great Depression arrives, liberals and conservatives are unlikely to bury the hatchet. For voters on either side of the divide, the stakes in this election will not seem to have been exaggerated; for they involve nothing less than a fight for the nation’s economic well-being – nay, for its very soul. Over the next four years, and probably long thereafter, moral and financial jeopardy will confront each of us in ways that seem likely to widen political divisions. Putting aside the wild card of Iran, one of the most difficult issues we face will entail putting public employees’ pension and health care benefits on a sound financial basis. The unions will claim, correctly, that there is no legal precedent for denying workers benefits that were promised them when they were hired. Their employers will claim, also correctly, that the money simply isn’t there. But anyone who thinks the Federal Government will be able to “solve” this problem simply by printing money is in for a rude awakening.

The financial liability is in fact so large that attempting to monetize it would be tantamount to hyperinflating. If, say, the Government were to offer lump-sum settlements averaging $150,000, the money could conceivably be worthless on delivery, since the actual disbursement of digital cash would be taken as a sign by the rest of us that Uncle Sam was on the hook for everyone’s financial needs. If the Government were instead to assume responsibility for years of scheduled payments in “real” dollars, taxpayers would eventually riot in the streets. No matter how you work the numbers, there is no easy way out, at least not using monetary shenanigans. The very clear implication is that the “solution” will come in the form of a dramatically lowered standard of living for most Americans.

Pensions Too Big to Bail Out

What is the dollar amount of the unfunded liability? Many hundreds of trillions of dollars, according to some published estimates. Consider that a bankrupt Flint, Michigan, under the direction of a conservator, has cut its budget to the bone to effect annual savings of around $10 million. But the long-term structural shortfall imposed by Flint’s retirement promises is on the order of $600 million dollars over the next 25 years. Of course, Detroit’s long-term problems are orders of magnitude larger, and New York City’s vastly larger still — too big, in the aggregate, for even the U.S. Government to fix. Or rather, pretend to fix, since that’s all that the would-be fixers have been doing all along. Yes, the bailout has been a fraud – a con-game made easier by the fact that most of the bailout “money” has gone to sustain the illusion that the assets of our biggest banks net out to a positive number. But there can be no such shell game when it comes time to send out pension and healthcare checks after the coffers of states and cities have gone empty. Paying for the lives of retired workers will require coughing up real dollars each and every month, not virtual ones such as are posted as “reserves” by the banks. And that’s why it will be impossible for the Federal Government to pretend, as it has with the banks, that the bailout is other than a charade.

Under the circumstances, hostility can only grow between liberals and conservatives, haves and have-nots, public and private workers, taxpayers and recipients. We wish Mr. Obama luck, but he’ll have his hands full merely trying to keep blood from running in the streets, never mind returning America to prosperity.

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