CA Drowning in Red Ink
By Ron Meyer
Published in the Santa Barbara News-Press
Young people have an obvious stake in our future: We are the future. More importantly, we are the generation that will have to deal with the long-term problems currently being created by our local, state and national governments.
How many U.S. Congress members are there under 30 years old? One: Rep. Aaron Schock, R-Ill., who is 28. People under 30 are the most underrepresented demographic in the U.S. Congress, state legislatures and city councils across the nation.
What’s wrong with that? People with more life experience should be our leaders, right? I would normally agree, but unfortunately these folks with more experience have been loading up my generation with their debt.
People my age can no longer afford to be apathetic, especially in Santa Barbara.
Last week I wrote about how city salaries and pensions have forced the city to precipitously withdraw money from our city’s rainy-day fund. We have $1 million left; that’s enough to cover 1 percent of the annual budget.
Once that fund is gone, we have three options: raise taxes, cut union-backed positions, or borrow money. We know option No. 2 is probably off the table.
Paying down the deficits the city accumulates and the subsequent tax hikes will hurt Santa Barbara’s economy. The current politicians aren’t going to be motivated to act because these problems will not come to the forefront until after their terms have expired.
Future generations will be stuck paying for current excesses. This has become an unfortunate theme in American government. While Santa Barbara’s fate isn’t exactly desirable, the city’s future deficits and taxes seem rather minor when compared to the debt piled up by the federal and state governments.
The non-partisan Legislative Analyst’s Office reported that California — the token welfare state — will accumulate more than $100 billion in budget deficits between now and 2015. California’s spending has grown by an astounding 50 percent in the last five years, and the state has shown no sign of stopping anytime soon.
The federal government is even worse. Our national debt has reached a record $12 trillion; that’s almost $40,000 per person in America, and the future looks even dimmer. In 10 years, the interest on the debt alone will be $500 billion and in 2030 the debt will surpass GDP.
These numbers are tough to grasp, but in real terms this means tons of future taxes. We have had to sell bonds to pay for our debt, and many of these bonds are short-term bonds with reasonably low interest. Unless we figure out how to miraculously pay for these bonds in the next couple of years, this debt will have to be rolled over into higher-interest bonds.
The hard part will come when we can no longer roll over our debt because we have so much that no one will buy our bonds. Then we have to pay for it with tax revenues, and this is where my generation will have to come in.
We get to fork over these future taxes — that is, unless we do something about it.
To stop this rapacity, we must address the third rail of politics: entitlements.
In Santa Barbara, this means addressing pensions; we can only promise to pay current employees what we know we can afford in the future. The city needs to take the first step and make long-term budget projections so people know what’s coming.
In California, binge spending and revenue shortfalls have been dangerously mixed with a growth in entitlement spending. Illegal immigration is causing some of this growth and is consequentially costing the state billions of dollars. California needs to get serious about illegal immigration, but let’s face it, the budget issues run deeper than that.
California has unraveled the welfare reform of the 1970s and 1990s and has built a state that is once again encouraging government reliance instead of individual responsibility. New welfare reform is in order.
The federal government’s challenges are almost insurmountable. Welfare reform is just the first step. Social Security and Medicare are the definition of unsustainable.
Current workers pay for the current retirees; in 1940, there were 42 workers per retiree, but today there are about three. In 20 years ,there will be two workers per retiree, creating a $2 trillion deficit for these programs. It only gets worse after that.
Current and near-retirees should be given what they were promised, but we need to phase out these programs and put in place something that we can afford in the future.
Deficit and debt reduction will require action from the youth of this nation. More young people need to get informed, vote on election days, run for public office, and, yes, even write opinions for a local newspaper.
Older folks can advocate for us, but it’s about time we speak for ourselves.
Ron Meyer Jr. attends Principia College in St. Louis. He is interning at the News-Press.
By Ron Meyer / August 19, 2010
