The Idiocy Of The American Public


It’s considered poor form to call your readers idiots.

Unfortunately, I have to, because on the clear facts, they are.

Witness this story:

WASHINGTON Less than a quarter of Americans support making significant cuts to Social Security or Medicare to tackle the country’s mounting deficit, according to a new Wall Street Journal/NBC News poll, illustrating the challenge facing lawmakers who want voter buy-in to alter entitlement programs.

In the poll, Americans across all age groups and ideologies said by large margins that it was “unacceptable” to make significant cuts in entitlement programs in order to reduce the federal deficit. Even tea party supporters, by a nearly 2-to-1 margin, declared significant cuts to Social Security “unacceptable.”

Doesn’t matter.

Here’s the numbers.  Show me what we’re going to do about it.

Social Security, Medicare, Medicaid, Unemployment and Welfare comprise 56.7% of the federal budget ($2.1 trillion.)

Defense comprises another 18.7% (about $700 billion.)

And interest, today, is a paltry 4.6% (primarily due to ZIRP).

Interest expense will double even if we don’t add one more dollar of debt to the Federal side.

Not might double, will double.

Tell me how we’re going to address the deficit, when those five programs above (note, not including the interest) comprise all of the $2 trillion we collect in taxes.

That’s the beginning and end of the discussion folks.  We have to set the ground rules against what is possible, not what people like.  We get to “likes” after we get beyond “mathematical facts.”

America refuses to deal with mathematical facts, in no small part because our leaders repeatedly and maliciously lie about those mathematical facts.

The mathematical facts are:

  • Social Security has to have its retirement age increased.  I apologize in advance to the 50 million Seniors and soon-to-be-seniors that this will piss off.  I don’t care.  It’s a mathematical fact.


  • Medicaid and Medicare as currently constituted must go away entirely.  We must actually fix health care.  This means getting rid of the ability of health providers to cost-shift entirely, it means forcing health providers to publish prices and stick to them for everyone (under penalty of law), it means enforcing “first sale” doctrines no matter where drugs and devices are first sold (thereby immediately getting rid of the $20 pill here that’s $2 – from the same manufacturer – in Canada) and it means solving the uninsured care problem in our hospitals.  The latter is not difficult to solve – if you show up without insurance or money you’ll be treated, but your bill becomes a tax lien.  If you’re a foreign national your nation must pay if you cannot.  And if they refuse to pay, after the unpaid tab gets to a certain point, we will send you home without treatment.  That’s right – if Mexico will not pay for Juanita’s birth expenses that’s fine, Juanita is going home in a bus, and if she dies on the way, so be it.  This is her government’s problem, not ours, and is under their control.  No other nation on the planet allows the abuses we do in this regard and we must stop it right now.  Not tomorrow, today.

    The entire scam currently defined as “health insurance” must cease and be prosecuted as the felony it should be.  Get rid of the cost-shifting and the price of procedures, drugs and devices will come down by 50, 60, 70% or more.  Most of this is monopolies and anti-competitive practices.  At the same time the entire medical malpractice system must be thrown overboard and replaced.  There are a host of articles here on The Ticker on this subject; read them.

  • Unemployment, Welfare and other mandatory spending (SCHIP, etc) have to be slashed.  Unemployment as an insurance policy is fine, but that’s the first 26 weeks.  Taxes and insurance premiums must reflect actual costs and then they’re revenue neutral.  But beyond that?  Nope.  Sorry.  Can we have 46 million Americans on food stamps?  That’s not 1 in 7, it’s closer to one in three because we’re talking households here.  One in three American households cannot afford to buy food?  Gee, you think we have a problem with how “CPI” is computed and with The Fed’s policy?  Uh, yeah.  Solve the actual problem instead of band-aiding it with more borrowed money.
  • I understand these decisions are difficult and people don’t want to talk about – or implement – them.  I get that.  But it doesn’t matter what I want.  What matters is what we can actually do.  And what we can actually do is limited by the revenue we can raise.

    There are many people who say “Tax the Rich!” as if it’s some sort of mantra.  But the top 1% of households (which earn $300k and up) is roughly 1.5 million households.  If we taxed all of their income (that is, a 100% tax rate) we couldn’t close the budget deficit.  But we wouldn’t collect any of the money either if we did that, because nobody works for free – you’d have a lot of people earning $299,000 and then going home.  What’s worse is that the extra income they wouldn’t earn also wouldn’t get spent.  When tax rates change so does behavior.

    If we’re going to get legal tax avoidance we want it in capital formation, not in people choosing to sit under the beach umbrella with boozed-up pineapples.  Attempts to “soak the rich” will simply cause the latter, not the former.  The wealthy and those who are high-earners, for the most part, can choose to walk off into the sunset and earn nothing from this day forward until they die, erasing any attempt to close the budget gap by taxing them.  The truly stinking-rich can expatriate and give the middle finger to the IRS as well.

    We cannot fix the problems we have in this country with our federal budget without addressing entitlements.  It doesn’t matter if people want to ignore entitlements or not – they must be addressed in order to balance the budget, and we must move away from people sucking on Federal transfer payments.

    This isn’t optional folks.  We have made promises we cannot keep.  They’re mathematically-impossible to keep, irrespective of what we want to do.  We are left with accepting this and making the necessary adjustments or having them imposed upon us by the market in a disorderly fashion.

    The Market-Ticker