How 'Dumb and Dumber' Perfectly Explains Our Economic Crisis
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In one of the iconic scenes of the comedic classic "Dumb and Dumber," Lloyd Christmas collects his roommate Harry Dunn’s last few dollars of savings and heads to the store to gather "only the essentials." But, Lloyd walks out of the store in a foam cowboy hat, playing paddleball, and balancing two boxes of Coors Light bottles. Lloyd then comes across a newspaper rack, and an X-Rated periodical catches his eye. As Lloyd attempts to grab the magazine, he accidentally drops his wallet into the newspaper rack, cannot open it back up, and so he runs out of correct change. He is left without any options, until a sweet little old lady in a motorized wheelchair cruises up and agrees to watch his things as he heads back to the store to break a dollar. The scene changes to Lloyd collapsing on his apartment floor explaining to Harry that he did not bring back booze because he "got robbed by a sweet old lady on a motorized cart" and he "didn’t even see it coming."
Though I am not one for foam cowboy hats and I am pretty sure my wife would not approve of me reading adult magazines, I do feel a little bit like Lloyd Christmas right now. I am currently getting robbed by a sweet old lady, and I didn’t even see it coming. This larceny is a bit more subtle than riding away with a few boxes of Coors Light, but it is far more dangerous and threatens the financial stability and viability of our nation going forward.
Stan Druckenmiller, founder of Duquesne Capital Management LLC and one of the best performing hedge fund managers of the past three decades, pointed out this transfer payment theft in an interview with Bloomberg on March 1. Druckenmiller explained how entitlement spending or transfer payments have gone from 28% of government outlays in 1960 to 50% of outlays in 1994. Currently transfer payments are a staggering 67% of government outlays. The scariest part of all this is the fact that NONE of it is due to material demographic changes. This is happening because seniors have a powerful lobbying group that has essentially allowed them to steal from future generations. Druckenmiller explains that since 2000, we have had 4.5-4.8 workers per retiree. By 2050, that number will drop to 2.4 workers per retiree, a course that is clearly unsustainable.
Anyone who is serious about our national debt and has researched the subject realizes that the ONLY means to return things to a sustainable and viable course is to enact major entitlement reform. The CBO, OMB, Peterson Foundation and anyone else with a calculator can tell you that any material change to our budget must start and end with entitlement reform. That is why the sequester, despite all of the noise, really will have zero impact on the future fiscal health of our nation, as it does not address transfer payments in any way. Unless politicians choose to look further than 10 years down the road and stop bickering about current menial tax and spending programs and shift their focus to what is really driving our future deficits, we will never get any closer to solving our nation’s budgetary problems.
Younger generations continue to pay their share into government retirement programs, only to see those coffers dwindle with each passing day by massive outlays to current retirees. In other words, we are being robbed by sweet old ladies in motorized carts (likely covered by Medicare), but at least this time we see it coming.
Weigh in below: Do you agree that entitlement reform is the biggest obstacle to economic growth? How should the GOP approach entitlement reform?