Future generations to foot the bill

By Harrison Searles

Last week, President Obama signed the Patient Protection and Affordable Care Act, giving it the force of law in our nation. As debates reached a new peak this weekend, many commentators and politicians have been in an uproar wondering whether or not the bill will finance abortions with tax-payer money – and the executive order by Obama to prevent that  has not done much to calm the fury over this issue. 

While the funding of abortion is certainly an issue of grave moral importance, the coverage that it has been given has been relatively out of proportion, since all the other moral issues relating to the bill have been given little attention because of the issue of abortion. Without a doubt, one of the most important moral issues at stake is the fact that the federal government has now passed a program that will require $848 billion (that’s $848,000,000,000, as it sometimes takes writing out the number to realize the scale of even a single billion) over a decade while debt is at $12.6 trillion ($12,600,000,000,000), and the federal government is running a deficit of $3.5 billion.

Of course, the first response is inevitably going to be that the “non-partisan” Congressional Budget Office (CBO) has estimated that this piece of legislation will reduce the federal deficit by $130 billion by adding new taxes and reducing the growth of Medicare.

However, the fact that anybody in the United States even takes government estimates of the costs of government programs seriously is unnerving, since the government has never been able to successfully project the costs of its own programs within an acceptable standard of error. For instance, in 1990 the House Ways and Means Committee estimated Medicare would cost $12 billion, but in reality, it ended up being $107 billion. How any organization could ever be credible with respect to its cost-projections after such a mishap is bewildering.

As pointed out by the Harvard professor and economist Greg Mankiw in his blog, when the CBO estimates the financial costs of a bill like the Patient Protection and Affordable Care Act, they assume that gross domestic product (GDP) maintains its current path; however, not only does the bill introduce taxes on capital incomes to finance insurance subsidies, which may very well have an impact on GDP, but it hasn’t been that long since the majority of government economists were set into a panic by the meltdown of the financial system in 2008.

Even if the federal government was not running a massive deficit, the financial concerns of our economy ought to have placed a shadow of doubt upon the bill. To make matters worse, not only is the government in over $10 trillion in debt, but by 2018, four years after the bill comes into full force, the government will have to face incredible demographic changes.

Around this time, the federal government will be receiving less in Social Security payroll-taxes than it pays in Social Security benefits. As always, matters get worse: not only will the government be paying out more than it takes in, but the money that it has been able to accumulate so far in the form of a Social Security Trust Fund has been entrusted to Congress and therefore spent. As a result, when the demographic shift occurs, and the baby-boomer generation retires, the federal government will need to begin spending its own money in order to ensure that Social Security payments are met. 

Of course, any Social Security reform that is attempted is going to be deadlocked by the rent-seeking baby-boomers who have done all that they have done to create a fiscal Armageddon, and then pass the debt to their children. Nor is the demographic situation going to get any better with time for there is no time in the foreseeable future where there will be more individuals paying into the system than are receiving from it, and the birth rates continue to drop.

In the end, the federal government in the upcoming decade will be tested by difficult financial stress as welfare systems like Social Security lurch under the stress of demographic change, and if this were not bad enough of a forecast, the federal government is already in a debt of trillions of dollars.

None of this seems to daunt Congress, which continues to spend money ad infinitum to the merry tune of: “In the long-run, we’re all dead,” with little attention given to the fact that their fiscal irresponsibility has moral consequences. Like it or not, someone will always have to pay the bill and borrowing only delays that fact enabling the borrower to reach into the future to consume resources that would have been available then in the present. The debt of the federal government is $12.6 trillion while the GDP of the American economy, as of 2009, is estimated to be $14.27 trillion.

This essentially means that it will take a year’s worth of production in order to pay off the bills that the politicians have accumulated. There is a word for this that can cut through all of the economic mumbo-jumbo that the court-economists of Washington DC have spoken: theft.

The federal government has essentially stolen a year’s worth of production from their citizens. This is easy to laugh at and ignore if one is a gray-headed politician and might not live to see the demographic shifts that threaten to destroy the government social insurance programs that everyone knows are unsustainable.  Even though the virtue of temperance may not be in vogue these years, those in Washington are in desperate need of it. For a while an orgy of spending may yield short-term euphoria, in the long-run, someone will have to pick up the pieces. While it certainly may be true that in the long-run we are all dead, it is also true that human society continues past the death of a generation and that someone will always pay the bill.

It is a tragedy for the American citizen that the moral implications for further government spending, approved by the Patient Protection and Affordable Care Act, have not been discussed further. It is bewildering that the federal government has passed this piece of legislation despite the fact that it is not only in trillions of dollars in debt, but is also currently running a deficit of over a billion dollars. Even though the CBO has stated that the bill will reduce the federal government, previous experiences with the government attempts at cost-projection inform us that they are to be taken with at least a grain of salt. Despite all of this, the primary moral debate has been with the possibility of funds from this program going to fund abortions, not the fact that this bill is yet another display of the fact that Washington D.C. is content to merrily spend when the future will have to pay the bill.

Harrison Searles is a Collegian Columnist. He can be reached at [email protected]