Who’ll Pick Up The Check?

By William L. Garvin
"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government.  A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury.  From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy, (which is) always followed by a dictatorship."  Alexander Tyler, 1887, on the fall of the Athenian Republic
The United States may be living on borrowed time as well as borrowed money.  Historians point out that great civilizations only last about two hundred years.  If we mark our genesis as a great civilization from the writing of our Constitution, a paradigm shift from the divine right of kings, we're thirty-plus years past our prime.
If you want a glimpse of "Christmas Future," look at the European landscape, with which our ruling class seems so enamored.  France has elected socialist Francoise Hollande as its new president.  The champion of government spending immediately said "In all the capitals ... there are people who thanks to us, who are hoping, who are looking to us, and who want to finish with austerity."
Not to be outdone, the perpetually government-dependent Greeks hoisted their insatiable appetites back to the public trough.  According to the New York Times: "While a flurry of attention was trained on the rise of the new Socialist president in France…investors around the world were more riveted by a crippling parliamentary election in Greece, where far-left and neo-Nazi parties dealt a blow to the dominant political parties… Now, with a fiercely anti-austerity crowd dominating the Greek Parliament, some investors think it is only a matter of time before the country reneges on the promises the previous government made of deep spending cuts and higher taxes to secure the bailout."
Meanwhile, Spain's government bonds are yielding over six percent and nobody's buying.  Likewise, Italy has had to raise its yield to nearly eight percent, a three percent increase over the last month alone, to attract investors.  Obviously, these are unsustainable rates.  Look for the International Monetary Fund to continue to put the squeeze on members to pony up more money.   Recently, IMF chief Christine Lagarde indicated that the $390 billion the IMF currently has available for lending may not suffice should the global outlook worsen.   She has said that the group of twenty nations is prepared to boost the fund's resources as the European debt crisis threatens the global recovery.  The U.S. is but one of the twenty but contributes nearly one-fifth of the money.  What else is new?
We have reached the tipping point where there are more people not paying income taxes than those who pay them.  There are many out there who don't pay taxes but are clamoring for taxes to be increased on "the rich."  Since they have no skin in the game, it's no skin off their nose.  Unable to see past the end of their collective nose, they don't have a clue about the long range ramifications of their short term gratifications.  In California, nearly five businesses a week are fleeing the state yet people are surprised that the unemployment rate is eleven percent.  The California Public Employee Retirement System and the California State Teacher Retirement System continue to fail miserably below the rose-colored projections of returns on their investments.  That's billions and billions of dollars short which will have to be made up from the general fund….which means more "revenue," which means higher taxes, which means more businesses will leave, which means unemployment will increase.
Nationally, the rates on student loans will not go up.  Why not just eliminate the Social Security tax entirely?  Pet government businesses will be subsidized and failing businesses will be bailed out.  Open borders and free scholarships.  Income tax refunds to people and children who have never lived in this country.  Freebies here and freebies there.  If it feels good, do it.  If you want it, you got it.
Neither California nor our country is willing to impose the critical measures necessary to right the fiscal ship.  Politicians of every stripe will continue to promise more and more to more and more until they kill the goose laying the golden eggs.  As Margaret Thatcher so aptly noted: "The problem with socialism is that eventually you run out of other peoples' money."