Wednesday, October 13, 2004

?Free lunch? spending run amok


Pat Murphy

?This (Bush) administration and the Republican Congress,? the author writes acidly, ?has presided over the biggest, most reckless deterioration of America?s finances in history.?

Democratic hash straight from a liberal think tank?


The author is Peter G. Peterson, Commerce secretary in President Nixon?s cabinet, a card-carrying Republican conservative and president of the nonpartisan government watchdog group, Concord Coalition, which fires fusillades of warnings about crazed government spending.

Terrified of economic disaster, Peterson minces no words in his new book, ?Running on Empty: How Democratic and Republican Parties are Bankrupting Our Future and What Americans Can Do About It.?

Conditioned to the psychology of entitlement, Americans predictably will perilously ignore Peterson?s warnings.

His dread is amply confirmed: Congress (Republicans and Democrats alike) shoved through $137 billion in atrocious corporate tax breaks this week, deepening debt through lost revenues. (The film industry?s $350 million in tax breaks was shaved to $100 million: vindictive Republicans got revenge on the film industry for naming a Democrat their lobbyist rather than one of their own.)

Senate Republican maverick John McCain lashed out at colleagues for "the worst example of the influence of special-interest groups I have ever seen."

Republican conservative and Nobel economist Milton Friedman?s classic admonition, ?There?s no such thing as a free lunch,? is long forgotten.

Among Peterson?s points:

· The combined liability of Social Security and Medicare is an astonishing $24.1 trillion--twice the size of the U.S. economy.

· From zero in 1980, net U.S. debt held by foreigners has risen to a staggering $2.6 trillion, a third of total public debt. Americans now are more obligated to foreign IOUs than themselves.

· When baby boomers collect retirement benefits, only twoand one-fourth workers will provide taxes to support each retiree. It once was 10-to-1. (In an earlier book, ?Will America Grow up Before it Grows Old: How the Coming Social Security Crisis Threatens You, Your Family and Your Country,? Peterson predicted workers eventually would pay 35 to 55 percent of their paychecks in Social Security and Medicare taxes plus retire later.)

· To finance the trade deficit of excess imports over exports, Washington borrows $540 billion, about 5.1 percent of gross domestic product.

· Very little separates political parties in budget practices--Republicans borrow-and-spend, Democrats tax-and-spend, Peterson writes. Bribery for votes by both parties, in Peterson?s judgment.

In reviewing the book, Financial Times columnist and Weekly Standard editor Christopher Caldwell quoted Thomas Jefferson?s warning.

?To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.?

Servitude wins every time.

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