Growing Government Insolvency

06 Apr

Government Pigs Squeezed by Reality [courtesy Google Images]

Government Pigs Squeezed by Reality
[courtesy Google Images]

The Washington Times reports (“Dennis Ross pushes zero-based budgeting for federal government”) that Congress may impose much stricter financial controls on government agencies and bureaucracies.

According to said Congressman Dennis A. Ross, Florida Republican and a member of the House Committee on Financial Services,


“The streamlining tactic, known as zero-based budgeting, requires each agency or business unit to justify their budget requests from scratch for all existing and newly requested programs. It’s something the federal government hasn’t attempted since Democratic President Jimmy Carter advocated for it in the 1970s; it relies instead on past budgets as a baseline of money that’s guaranteed, and then requests additional sums year-over-year.

 “‘We should be painfully honest with the American people, because it’s their money.  When we do the budget process, we want to have some justification for every appropriation that is sought—a legal basis for it, an amount that is less than last year’s and a summary to express the outcome of it.”


Oh, pulleese—as if government could ever be “painfully honest” with the American people about anything.  (If government started being “painfully honest,” half of Congress would wind up “painfully” in prison.)

If economic circumstances are so bad that the government is contemplating being honest with us, let’s start with baby steps before we try to run.  Personally, I’d be amazed and delighted if government were merely a little bit (“unpainfully”) honest.

As for the money government spends being “our money,” there’s not a dime in North America that the government doesn’t regard as its own.  Right now, the government is trying to figure out how to “legally” seize every dime Americans have.

Think not?  When I was a boy, the government took about 15% of my father’s income in the form or local, state and federal taxes.  Today, government consumes about 60% of everyone’s income in the form of local, state, federal and “hidden” taxes.  When Bill Clinton was President, he once predicted that the next generation of Americans would pay 80% of their income to government in taxes.

Government may not get every dime, but it won’t be for lack of trying.  If government has its way, y’all will be impoverished and ultimately enslaved by government.

Finally, Congressman Ross’s suggestion that gov-co needs a “legal basis” to “justify” its spending is silly.  Our government has become unconstitutional and lawless.  Under the pretext of “national emergency,” anything goes, regardless of law, whenever government deems it “necessary”.  Suggesting that government should have a “legal basis” to “justify” its spending would be almost like making government accountable—or making the Obama administration the “most transparent” in history.

And, we know that’s never gonna happen.


•  Still, the primary motivation behind the “Zero-based Budgeting” proposal that deserves consideration.  It’s not about government efficiency or even accountability.  It’s about government insolvency.

Government knows that it’s going broke.

It can’t raise tax revenues from our weakened economy without pushing us deeper into recession or depression.

Gov-co’s ability to borrow more currency is shrinking since creditors know government can’t ever even repay the existing debts in full.  If government can’t pay its existing debts, how can they pay additional debts?  Lending currency to the US government is a little like lending to a crack addict.  Chances of being repaid in full aren’t high.

Result?  Government must begin to tighten its spending policies simply because there is, or soon will be, less money to spend.  “Zero-based Budgeting” is a manifestation of growing government insolvency.


•  Here’s another article from The Washington Times (“Obama supports reduction in military retirement pay”) that also illustrates government’s growing insolvency:


“President Obama said Monday he supports the recommendations of a military commission that would reduce the size of traditional military retirement pay by about 20 percent and offer a new defined-contribution benefit for troops who leave before 20 years of service.

“In a letter to congressional leaders, Mr. Obama said the proposals are “an important step forward in protecting the long-term viability of the all-volunteer force, improving quality-of-life for service members and their families, and ensuring the fiscal sustainability of the military compensation and retirement systems.”


More political smoke, mirrors and happy-talk nonsense.

President Obama is trying to persuade veterans to believe that cutting their retirement checks by 20% is a “good thing” done for the veterans’ benefit rather than an act of desperation by a government that’s going, . . . going, . . . gone . . . broke.

How could Obama dare to even suggest that veterans’ retirement pay be cut by 20%—unless the gov-co were nearly insolvent and desperate for dollars?

We can reasonably infer that if gov-co is willing to cut military pensions today, the time is fast approaching when the feds will also cut government employee pensions, So-So Security, welfare and subsidies.

Implication:  the gov-co is broke.


•  At the state level, we see similar evidence.  The Fiscal Times publishedOutrageous Public Pensions Could Bankrupt These States”:


“Some of the worst public-sector pension problems in America are playing out in states and cities where legislation or local court rulings have granted extraordinary protections to [government] workers’ retirement benefits—far beyond those enjoyed by private-sector employees.”


Ironically, the “extraordinary protections” provided by laws and court rulings to government pensions are absolute evidence of how excessive and irrational those pension plans have become.  The idiots who work for government actually believe that all they need to do is pass a law to make irrational pensions magically reasonable and therefore sure to be paid. If politicians pass laws that retired government employees are entitled to a free Cadillac every year (maybe every month) then, by golly, the taxpayer will just have to find a way to make good on the politicians’ promises.

Unless, of course, gov-co policies push us into a persistent recession or even depression, unemployment exceeds 20%, and creditors refuse to lend more currency to gov-co.  Then, reality will intrude and government pensions will be reduced or even terminated.

It’s precisely because government pensions are irrationally generous that they needed special “legal protections” to guarantee that they could somehow be enforced.  However, in the real world, the more protected those pensions are, the more likely they are to be abandoned.

Government pensions are going to be cut.  A lot.


“Illinois officials, for instance, are awaiting a ruling from the state’s Supreme Court on a suit by workers seeking to overturn the legislature’s 2013 pension reforms. If the court, which has previously refused to allow any changes to retirement plans for retirees or current workers, throws out the reforms, Illinois will face $145 billion in higher taxes over the next three decades just to pay off the debt . . . .

“Last year, Arizona’s Supreme Court overturned 2011 pension reforms that, among other things, sought to curb expensive annual cost-of-living increases for judges, legislators, and municipal public-safety workers. . . .[and] ordered the state to reinstate the 4 percent annual increases . . . . In restoring the payments, the court ignored the distress of the pension system, which is only 67 percent funded.”


Only “67% funded”?

What if you paid only 67% on your mortgage each month?  Should you be surprised if your house is foreclosed?

Likewise, should Arizona government workers be surprised when their pension system is “foreclosed” because it’s been underfunded by 33%?


“The predicament faced by Illinois and Arizona should be a warning, especially to other states where government pensions enjoy extraordinary legal protections. Raising benefits or shortchanging annual pension-system payments is especially dangerous in states lacking the ability to tame costs once debt grows too large.

“Yet, New York State, where government workers enjoy some of the strongest protections against changes to their retirement benefits, is doing exactly that—continuing a program that allows the state and its hard-pressed municipalities to shortchange the pension system by billions of dollars.”


Do you need to be a PhD. to predict what’s going to happen?

Grandiose pledges were made by federal, state and local government politicians to government employees that they’d enjoy extravagant retirement programs.  Whether the politicians ever really believed their original promises could be kept is debatable.

However, insofar as governments are now so pressed for revenue that they can’t even fully fund government employee retirement programs, it’s certain that most government programs will soon fail to provide promised goods, services, welfare and subsidies.


•  Over the past 30 years, public employee unions have grown so strong that they’ve compelled politicians to agree to rob future generations by leaving them with the burden of providing funds to pay for exorbitant pensions for current government employees. If government employee unions want to collect funds to pay for their retirement, those funds should be contributed by the union members during their working career and/or by government at the time the promises are made.  Those debts should not be left as deficits to be funded by future generations of children.

Nevertheless, if we’re going to live in a society where one group or generation is entitled to rob another, is it more moral for government employees to rob future generations of children?  Or is it more moral for the future generations to rob its former government employees’ pension funds?

The answer’s obvious.

No generation of children should be forced to enter adulthood already burdened with the debts run up by previous generations of “adults” and “honorable politicians” who refused to be responsible for providing for their own pensions.  These alleged “adults” and politicians wanted to “live large” in their prime by spending every dollar they could earn, steal or borrow, and then “live large” later when they retired by leaving the cost of their pensions to future generations rather than by paying their own way.

Result?  Future generations will be impoverished as they struggle to provide the pension funds for previous generations of government workers.

Result?  Future generations will have little or no opportunity to work and save enough during their lifetimes to provide for their own pensions.

Result?  Future generations will refuse to pay the previous generations’ retirement schemes.

Result?  Previous generations will scream when they enter their “golden years” and learn that their pensions have been cut or even terminated—and they’re too old to hold a real job.

Insofar as modern pension funds rely on deficit financing and debt being left to future generations, the modern pension funds are Ponzi Schemes that will inevitably fail and deprive all participants of at least much the pensions they’d been promised.

At some point, the loss of government pensions funds will be disastrous for many former government employees.  They might lose their cars, they might lose their homes.  They will scream, they will cry.  Their pathos will be tangible.

Nevertheless, I will have no sympathy for government employees who lose much of their promised pensions.  Insofar as government pensioners have relied on deficit financing (robbing future generations), those same government pensioners can have no moral standing to object to being robbed of their own pension funds.

The coming justice will be palpable.


•  In sum, the three previous newspaper articles point to the growing probability that government—at the national, state and even local levels—is going broke.

Insofar as government has enacted so many regulations, there are fewer new (and especially, innovative) businesses in this country.

Insofar as government cut tariffs and encouraged US businesses to relocate into foreign countries, we will not see an upsurge in productive jobs in this country.

Without more businesses and jobs, we won’t see significant growth in the US tax base.

In other words, the government’s own policies are preventing government from raising enough tax or creditor revenues to make good on government’s previous promises to act as the world’s policeman and to provide welfare to the poor, “free” medical care to all Americans, and overly-generous pensions to former government employees.

Thanks to government’s own policies, the government’s supply of free lunches has just about run out.

Americans who depend on government for their support are heading for a moment when that support will be dramatically reduced and perhaps terminated.


Two reasons.

First, because government not only promised Americans more than they deserved, it promised them more than this economy could deliver.  Deficit financing is stupid, deceptive, immoral, and arguably wicked.  If government can’t pay for something now, what makes anyone think that government will be able to pay for it twenty years from now when the national debt is $18 trillion, $100 trillion or even $200 trillion?

And, secondly, because Americans (including government employees) were sufficiently dumb and greedy to believe government’s promises.

I’m reminded of the ancient aphorism that “You can’t con an honest man.”

Y’know why?

Because the essence of every con-game is persuading the victim that he can make a fast, but totally unearned, buck.  The greedy, dishonest, incompetent and irresponsible who want “something for nothing” are the natural prey of con-artists—and rightly so.

On the other hand, honest men and women are almost invulnerable to con-games because they don’t want anything they haven’t personally and honestly earned.  They don’t want “something for nothing”—which is the con-artists’ sole stock in trade.

Similarly, you can’t con an honest nation—or a generation of honest government employees.


Again, because an honest nation/generation of government employees doesn’t want anything—not even subsidies, welfare, benefits and entitlements—that it hasn’t “personally” earned.  Honest men and women are prepared to earn their own way and live within their means.

Not wanting “something for nothing,” the honest nation refuses to elect politicians who have nothing to offer the people besides promises that can’t be kept.  Not wanting “something for nothing,” the honest nation is not subject to being conned by their own government.

Likewise, honest generations of government employees don’t want their union bosses to fight for pension benefits that are unearned, excessive and therefore irrational. They don’t cheer when their union bosses boast about extorting overly-generous pension promises from government politicians.  They know that “what can’t be paid, won’t be paid” and if pensions aren’t fully funded now, they won’t be funded in the future.

Unfortunately, few Americans understand the need for honesty and fairness.  Their mentality compels them to get all they can from whoever they can, under any pretext that works.  Some of the people of this mindset are politicians and government employees.  Thus, some of the nation’s greediest, most self-serving, immoral and non-productive people (government employees) are the natural prey for our best con-artists (American politicians).

Wanting something for nothing, government employees took jobs which paid far more than they could earn in the (honest) private sector.  They took jobs that promised retirement after 20 years (while the rest of the chump taxpayers could expect to work for 45 or 50 years before they retired).  Government employees were fool enough to actually believe promises that their pensions would soon generate several thousand dollars per month (while the chump taxpayers received only one thousand dollars from So-So Security).

But reality is beginning to intrude.  The day is fast approaching when:


1) The government con-artists (politicians) will be forced to admit that government is broke and can’t make good on most of its former promises;

2) Welfare and subsidy dependents will find themselves left to starve for lack of free lunches; and,

3) Government employees promised early retirement and fat pensions are going to scream when those promises turn out to be false and nothing more than bait used to trick the dishonest (government employees) into being victims of government “con-games”.

That “fast-approaching day” won’t be fun for anyone–including me.  The weight of a coming depression will bear down on all of us.

But those who have no savings of their own and/or no dependable employment in the private sector are heading for desperate times.  So are those who’ve only “worked” for government and therefore don’t know how to work a productive job.

Coming soon.

I can hardly wait.


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7 responses to “Growing Government Insolvency

  1. Henry

    April 6, 2015 at 3:17 AM

    Get mentally ready for when the economic freedom fighters try to impose the same Goldman Sachs austerity that a curiously high number of current and former Goldman Sachs employees in key positions around Europe have been imposing.

    After that comes the sweeping privatization of your nation’s natural resources and other legacies – for pennies on the dollar – into the hands of the same Money Power that set up your evil gubmit for a fall in the first place. See the post-Soviet space for several real world examples of this “free market” plan in action, orchestrated from New York City and Harvard University.

    In fact, don’t just get mentally ready for your Goldman Sachs austerity with sweeping privatization, cheer for it when it arrives because gubmint… well, just because gubmint.

    Yours truly,

    The Money Power

    • Roger

      April 6, 2015 at 11:07 AM

      Funnily enough, Goldman Sachs was also instrumental in the post-Soviet austerity. That is, Goldman Sachs isn’t only central to the current European austerity (which involvement you mentioned), but the austerity policies (for a nation’s people, not the rich) of Goldman Sachs were even part of the post-Soviet breakup in the 1990s.

      Staring roles in the post-Soviet “Goldman Sachs austerity with sweeping privatization” (as you phrase it) were played by Robert Rubin and Lawrence Summers, both of whom have worked for Harvard University. Robert Rubin was co-chairman of Goldman Sachs at the time.

  2. Henry

    April 6, 2015 at 1:55 PM


    Lawrence Summers (as the Secretary of Treasury) was personally included on the list of people and international organizations that GATA famously sued 15 years ago for suppressing the price of gold. Also on the list: Goldman Sachs.

    But don’t expect anything like a thorough exposé of these clearly relevant relationships from the jerk-your-chain disinformation media which only pretends to care about what you care about in order to keep you perpetually chasing your tail.

    • Roger

      April 7, 2015 at 3:22 PM

      How about “disinfotainment media”?

      Yeah, the biggest bunch of phonies you’ll ever come across – amateur actors portraying cartoonish characters on some “righteous” quest (which is used to explain the monotony and persistence of their propaganda message in the apparent absence of monetary compensation).

      They’re only “here to help”, and “charity” is their hobby, understand?

      Lol, what a comedy. But these charlatans also dish out large helpings of tragedy to those naive enough to take them seriously.

  3. Ken Johnson

    April 8, 2015 at 7:20 PM

    Come on now, have we not figured out that Congress or the President does NOT violate the Constitution?
    Why would anyone say unconstitutional? That seems to be non-sense , just like we are in an emergency and that’s why the Government is acting unconstitutional.
    Congress CAN’T pass any laws that violate the Declaration of Independence on the People. I have not seen any, nor have I seen any here in California. Get real people.
    Congress has complete jurisdiction in DC, just read art 1 sec 8 clause 17. The Clause 18, they can do whatever is necessary and proper. Still , all in DC or needful buildings, etc.
    To say the taxpayers have foot the bill or about to is non-sense. Read the 14th Amend. The public debt shall not be questioned. that was 1868.
    Then to say the creditors refuse to loan the their creators is silly. The creditors are using FRN and refuse to give them back. HAHA, that’s just stupid.
    We should just turn our backs on the non-sense. Congress told us not to worry about it in 1868.
    I can’t even go on, i am sick of the non-sense.

    • Ted D.Roofer

      April 13, 2015 at 6:46 PM

      Ken Johnson,
      @ The Clause 18, they can do whatever is necessary and proper. Still , all in DC or needful buildings, etc.
      ok, then why the additional add on power clause that says, This article shall be enforced via ‘appropriate” legislation? Was this add on power clause added because the “necessary & proper” power clause was not appropriate? Do I expect you to answer? Nope.


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