The angst and wailing over the brief shutdown of a fraction of the federal government is instructive. The left-leaning news and commentary is full of dire scenarios about hard-working . . . whatevers . . . “running out of peanut butter and jelly,” as one SiriuxXM Progress host put it. Federal employees on average earn 50 percent more than their private-sector counterparts, but apparently they are living paycheck to paycheck.
But the conservative side of the radio and television dials is not without its own tales of woe. Think about the contractors who may never get paid. Think about all of the restaurants and doggie daycares and dry-cleaners who are suffering because their federally employed customers have no spending money. We are indeed all Keynesians now, apparently. Stimulate that demand!
This is what happens when a relatively small group of federal workers don’t get their paychecks.
Imagine what it is going to look like when the Social Security checks stop coming.
Around 2038, less than 20 years out, total spending on the major entitlements — Social Security, Medicare, Medicaid — plus interest on the debt will exceed all federal tax revenue. Put another way, come 2038, if we put every dollar Uncle Stupid collects in taxes toward Social Security, Medicare, Medicaid, and interest on the debt, all of that money combined will not cover those expenses.
Fiscal Armageddon is coming.
Which is to say: If the federal government does not do something to reform its long-term finances, then a fiscal crisis of some sort is inevitable. No one knows exactly what it will look like, and no one knows what the consequences will be when a country responsible for about a quarter of the human race’s total economic output becomes insolvent. Hard to say, really, how that will shake out. Safe to say it will be ugly.