The unethical federal budget

Is it ethical to make a commitment that you know you can’t keep? Heck, no! Some employers used to promise retirement benefits that they didn’t set aside money for. The government decided to outlaw such unethical behavior: now the law requires employers who promise retirement benefits to set aside funds to pay when the benefits come due.

Sadly the government isn’t about to do what it’s required employers to do. The government has promised Americans that they’ll be covered by Social Security and by Medicare, and—if they’re poor—by Medicaid. The costs of these “entitlement” programs are growing steadily as:

1.       the baby boomers are just starting to come under Social Security and Medicare. (The first boomers, born in 1946, become 65 next year, then an avalanche in the next ten years.)

2.      life expectancy is increasing—babies born this year have a 50-50 chance of living to 100

3.      medical care gets more expensive as people grow older, and

4.      medical science is developing ever-more-expensive treatments.

All in all, this “perfect storm” will either bankrupt the country or force America to break its promises to the elderly.

So what are our politicians doing to fix this problem? Some are calling for budget cuts, knowing that the entitlement programs are not cut-able under present law. Others are calling for reform, knowing that reform can’t come close to solving the funding problem. Every one of our legislators knows about the problem. But it’s not being addressed. This is profoundly unethical behavior: they agreed to do the people’s work if they were sent to Washington, and having won election they are sloughing off the problem to our grandchildren.

Whose fault is it and what can be done? I’ll address this in coming blogs.

Clap your hands if you believe.

The journey of a thousand miles begins with a single step. Maybe the single step was the invitation of Congressman Mike Pence (R-IN), chairman of the Republican Conference , to President Obama to address the Republican retreat in Baltimore today.  The President spoke for twenty minutes, then took questions for an hour.

He ended his introductory remarks this way: ”We've gotten caught up in the political game in a way that's just not healthy.  It's dividing our country in ways that are preventing us from meeting the challenges of the 21st century.  I'm hopeful that the conversation we have today can help reverse that.”

The session was—as diplomats describe difficult negotiations—frank. Even combative. But both sides—the President and the 140 Republican congressmen—appeared to listen. There was real conversation going on. The President wrapped up the session with this:

“And so the question is, at what point can we have a serious conversation about Medicare and its long-term liability, or a serious question about -- a serious conversation about Social Security, or a serious conversation about budget and debt in which we're not simply trying to position ourselves politically.  That's what I'm committed to doing.  We won't agree all the time in getting it done, but I'm committed to doing it.”

The ideal of Niebuhr—the political fight waged with good temper and integrity—seems a little closer today than it was yesterday. Clap your hands if you believe.

What kind of people are they on Wall Street?

The beginning of ethical behavior is asking yourself, “What kind of a person do I want to be?” Next comes “What kind of group (or company or town or society) do I want to be a part of?”

Lincoln asked if we wanted to be part of a nation that was half slave, half free. John Kennedy asked if we wanted to be part of a wealthy nation with millions suffering from hunger. It’s time for Wall Street leaders to ask themselves whether they want to be part of a society that pays top earners thousands of times as much as it pays ordinary hard workers, and enables the top people to live in 18,000 square foot homes while some ordinary workers live in their cars.

These questions have been posed before—by Spartacus, by Nat Turner, by Marx, by Mao. When the questions came as demands from people on the bottom they always had terrible results—think slave revolt or the “Great Leap Forward.”. But when they were posed by leaders of society they often led to constructive change—think Social Security or the Marshall Plan.

It’s time for Wall Street leaders to lead, or risk provoking our political system into a “cure” that will likely be far worse than the disease.