This week Bloomberg reported that “Former Federal Reserve Chairman Alan Greenspan criticized politicians for their 'awesome' silence on the U.S. government’s own projection that Medicare will run out of money for some programs by 2019.”
At a Washington panel discussion hosted by the American Hospital Association, Greenspan said, “The silence in the political system is awesome. We may be in a position where we are promising more than can physically be delivered. That is not ethical in government.”
Our current Fed chairman, Ben Bernanke, has also pleaded for our government to take some action on this issue to avoid disaster.
Silence Speaks Volumes
In our view, the political silence is indeed awesome, but it is not surprising.
Successive governments, particularly under Democratic presidents, have purchased votes by offering financial “goodies” to our electorate. These “enticements” were financed not out of earnings or savings, but largely by a combination of inflation, massive government debt, and unfunded promises of future delivery.
Of course, the reality for funding or “ratting” on such a bogus package will eventually rest with some future government. So, our politicians reason, why face the issue now and risk being voted out?
Meanwhile, as the “true” financing gap widens, today’s politicians listen in terror, but do nothing.
They know that once you give a dog a bone, you can’t take it away. Social unrest would most probably result if Medicare and other social benefits were to be reduced.
The Cost of Votes
Our politicians also know that financing the real costs would lose votes. Yet they vote hundreds of billions of our tax dollars and debt to finance the restructuring and rebuilding of a foreign county — Iraq.
The failure of our politicians to face financial reality at home, will lead inevitably to increased financial and social tension within our country.
Clearly, now is the time for strong leadership. It is of great concern, therefore, that with few exceptions, the list of presidential hopefuls is so lackluster.
It is important to emphasize that Alan Greenspan was appointed to his job as Fed chairman by both Republican and Democratic presidents. His warning is therefore not a party-political electioneering point. It is a national cry for our government to face this reality before it is too late and so avoid future social and financial disaster within our great country.