Its premise is that blaming the multitrillion dollar financial meltdown on banks, the Fed, capitalism, Wall Street, or political parties ignores the obvious.
Governments don't make policy decisions like the Community Reinvestment Act. Quasi-government aAgencies like Fannie and Freddie don't inflate the mortgage and housing markets with whimsical financing. Wall Street does not dip its snout ever deeper into ethereal derivatives and high risk strategies.
Generation Zero argues that the radical cultural shift to immediate gratification, self entitlement, and disdain for moral and fiscal traditions started with the Baby Boomer generation. The trend is global and accelerating with generations X and Y. From developed nations to historic corporate boondoggles like Enron,Worldcom, and AIG, Baby Boomers all over the world have mostly been in charge for the last couple of decades.
Even now infamous pirates like Bernie Madoff could only swindle billions of dollars from the innocent and unwitting with the help of greed and avarice of those far from innocent or unwitting. One can still argue that the timing does not prove that the global financial mess is any particular generation's fault. But it is no matter--there is as much blame to go around as there is red ink.
Greece, the cradle of western civilization is on the verge of bankruptcy with a national debt nearing 125% of their total Gross Domestic Product (GDP). At its current rate, debt that Greece already can no longer afford will double in less than six years. Nevertheless, private and government employees are striking and rioters are taking to the streets in protest of government cuts to bring their annual budget deficit of 12.7% GDP down to 'only' 8.7%. (Most say Greece will be lucky to achieve a 2% reduction.)
U.S. Deficit Spending Jumps 500% since 2009
For comparison, from 2001-2008 U.S. national debt rose a dismaying 13 points from 56.5% of GDP to 69.2%. But just since 2009 America's total debt has rocketed to 94.3% of GDP with annual deficit spending jumping a whopping 500% to 10% of GDP from the previous eight year average.
Even including six years of concurrent war in Iraq and Afghanistan, U.S. deficit spending remained at about 2% GDP. Critics rightfully screamed that Bush was a big spender. It was true. But then how in the world does one describe the current administration; a government that has already quadrupled deficit spending and added $2 trillion in federal debt in the first year?
The only other time in history that America's debt got to 100% or more of GDP was in WWII when annual deficit spending peaked at 28% of GDP. Even when the government tried to spend us out of the Great Depression of the thirties, annual deficits stayed below 5% of GDP. I guess we all had different ideas about debt back then.
Redefining Fiscal Responsibility
Today, sliding ever deeper into debt but at a slower rate is heralded as fiscal responsibility. No one seems to grasp--or care--that debt reduction and deficit reduction are horses of a very different color. Perhaps that is why the interest on our current national debt has reached over $1.2 billion per day and now consumes 11% of our nation's annual budget.
Over ten years, that would cover the cost of "ObamaCare" and stabilize both the Medicare Trust Fund and Social Security. Instead, we must use it to pay interest on previous overspending.
By 2015 America's national debt is projected to grow another 30% approaching $20 trillion. The CBO projects interest will explode to 11% of GDP by 2035. But each year Congress circumvents Pay-as-you-Go legislation by raising the debt ceiling.
It gets worse. About 42% of the federal budget goes to Social Security and subsidized health care. The Trustees of Social Security and Medicare have issued a warning to the public for the third consecutive year.
The Medicare Health Insurance trust fund will be broke in seven years. Medicare revenues from payroll taxes (FICA) will then fall short by 19% and grow to a 50% deficit within another 18 years.
Social Security is currently solvent only if you count Treasury IOUs as money. Forget about 10 or 20 years from now. There is no cash in the Social Security Trust Fund account today. Not one dime. Zip. Nada. Zilch. The big goose egg. Just $1.2 trillion of 'special' Treasury bonds. Our government has so much debt it owes itself money.
Those Other People?
Before you get too vexed about "those people" in government, the Employee Benefit Research Institute's annual Retirement Confidence Survey found that 54% of the workers with some form of savings said that they have less than $25,000 stowed away and 43% have less than $10,000 in savings. Compare that to average debt of about $18,654 per household not including mortgages and that about 43% of American families spend more than they earn each year. Sound familiar? In fact, about 1/4 of Americans now plan to put off retirement--and work where?
Through stones at 'Capitol Hill' or 'Wall Street' if you must but no lifeless federal building or mechanical ticker tape ever made a decision. Aliens from the planet Ork did not secretly seize control and conspire on Black Tuesday in 1987, the Dot-Com implosion of 2000, or the global financial conflagration of 2009.
Nope: no institution, no economic model, no political party, no industry sector, no financial system, and no government has ever made a decision or taken an action. Only people do. Our government is made of people. Corporate America is made of people. We are those people.
We have met the enemy and it is us.
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