Short vs. Long Term
One significant issue that has kept us from maintaining our elite status, as a country, is that we have had a very short-term focus. Most public companies tend to make decisions that maximize their performance from one quarter to the next. Many political decisions are made to support special interest contributors’ short term profits ignoring the consequences to the longer-term cost to the economy and resource availability.
One good example is the low price of fuel, which ignores the cost to maintain the transportation infrastructure. Does it make sense to encourage the sale of fossil fuels when all of the experts recognize that this resource is limited? The only disagreement is just how much time remains before exhausting this resource. Would longer-term thinking dictate that higher fuel taxes with proceeds dedicated to infrastructure improvements make more sense?
Another example is the out of control Federal spending that tends to satisfy current political agendas but which mortgages the future for many generations to come. The facts are that our internal population in both aging and is declining. Our total population continues to grow slightly via immigration, but our workforce continues to decline even with the addition of folks from other countries (both documented & undocumented). The decline means there are fewer workers to pay taxes to support spending, especially as it relates to social security & Medicare. The fact that healthcare costs have accelerated out of control and many times faster than wages adds to the problem. Average wages have only increased slightly since 2000, from $30,756 to $33,229 or less than 9%. For that same period, the median cost of a new house has increased from $165,814 to $315,815, or over 95%. During that same period, the cost of healthcare and advanced education have almost tripled! We started mortgaging the future several decades ago, and we are already experiencing the results.
There are many other examples, but one of the most recent was the tax reduction. It was deficit funded and is currently adding $150 Billion of red ink every year and will continue to do so for the next ten years. Not only will future generations have to pay the price, but the middle class did not receive their fair share of this redistribution of income. Our National debt is well on the way to $23 trillion and will reach that level early in 2020. Currently, we are adding $1 million to our debt every 35 seconds! Two years ago, we were running an annualized deficit of approximately $800 Billion. Today that is running $990 Billion. Believe it or not, that is the good news. The level of unfunded liabilities for all the budget area commitments now exceeds $125 trillion. These are costs that we have committed to pay but which we have not identified any revenues to support the costs. The unfunded liability for just one item, Medicare, exceeds $30 trillion.