Sen. Lindsay Graham, R-S.C., recently said that Social Security, Medicare and Medicaid are going bankrupt and unless current negotiations resolve the problem then all is hopeless.
A Washington Post fact checker debunked that statement indicating that bankruptcy was not a problem for those programs. So who should we believe?
As long as the people, through our federal government can borrow money, then bankruptcy is not the issue. If lenders keep lending, then no one will go bankrupt, period. All anyone has to do is just keep borrowing money to pay bills as they come due.
The trouble with that approach is finding lenders who will keep on lending money. The lenders will not even demand routine payments on the principal amounts of the loans on a routine basis. They just want interest payments, profits on such loans until the term of the loan expires.
Then they demand the principal amount on the loan to be paid in full, and our federal government does exactly that. They pay the principal amount due by, yep, borrowing 40 cents on the dollar to make the lump sum payments to bond holders.
Predicting “bankruptcy” is as much political hyperbole as saying that the federal government needs “just a little bit more” (from the rich). Both statements are designed to gain political advantage, and neither statement reflects the magnitude of the fiscal problems facing America today.
The real and underlying economic problem in America today is that we do not produce enough goods and services that can be sold around the world in a competitive market to grow our economy enough to pay all of our routine bills. Make more “stuff” and sell it around the world and our economy will reach a natural equilibrium.
Political slogans do not produce more things in America. Only Americans can do so, day by day over a lifetime.