The American Political Class - Writing Checks That We Cannot Cash

What do the following situations have in common:

• Greek government debt is downgraded to junk status while Greek citizens riot in the streets over austerity moves by the Greek federal government.
• California state government issued IOUs last year as substitutes for cash payment of its outstanding debts and bills.
• Illinois state government does not even bother to issue IOUs. In a May 13, 2010 Associated Press article by Christopher Wills, it was detailed how badly the financials are for the state government of Illinois. Illinois is further in debt than at any time in its history and has fallen months behind in paying its bills. Rather than pay its bills, Illinois just ignores them, they do not even go to the trouble of IOUs. This has led to some pretty sad stories:

1. A supplier refused to sell bullets to the Department of Corrections unless it got paid in advance.
2. State legislators have gotten eviction notices for some of their regional offices because the rent had not been paid.
3. One legislator used campaign funds to pay for his office phone needs after the telephone company cut off service for non-payment.
4. School funding has been slashed and social programs for the old, the needy, and the addicted have also been cut or eliminated.
5. Illinois will probably end the year with $6 billion in unpaid bills and is facing a $13 billion deficit for next year.

• According to an article in the June issue of Kiplinger's Personal Finance magazine, the pension plans of state and local government are underfunded by about $1 TRILLION and that the funding ratio, the ratio of assets to liabilities of pension plans, is about only 65%, down from 85% in 2008. According to the article, ten states have already curbed benefits to new workers or raised the retirement age and another ten states have raised the employee contribution levels of employees. The article concludes that states will either have to further trim benefits and payouts or face continually rising costs that will require tax increases or further reductions in state government services.

All of these situations are symptomatic of all levels of the political class mishandling the tax dollars they were entrusted with. In order to perpetuate their reign in office, politicians were willing to make outrageous promises and institute unnecessary programs to gather votes at the expense of fiscal integrity. Now, the bills are coming due. Riots and killing in the streets of Greece, state governments not paying its bills, essentially defaulting on its debt at the expense of many of its citizens, public pension and other employee benefit programs getting sliced and more restrictive.

These are just a preview of what the entire country could be looking at if the Federal branch of the political class does not get its spending under control. The promises of Social Security and Medicare cannot possibly be paid under the current benefit structure and market conditions. What happens if the political class continues to not address the national debt and deficit spending? Will street rioting become a facet of our lives? Will civil servants go on perpetual strike, like they do in Greece, to force politicians to raise taxes on non-government employees to pay their pension and other benefit programs? The longer we wait, the more difficult eventual cuts will be. Also, by waiting, we are likely to be less precise in what government programs get cut, placing those in need more likely to absorb the spending sins of politicians like those in Illinois are currently experiencing.

Every expenditure in life results in a bill that has to be paid at some point, most rationale people understand that simple relationship. However, politicians desperate to stay in office suspend belief in this principle in order to get re-elected. Their ignoring of this reality does not make the reality go away. In fact, by ignoring it for so long, that reality comes back, like it has in Greece, Illinois, and California, with a vengeance and bites you even harder than if it had been better managed over time.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.