AMERICA'S TICKING BANKRUPTCY BOMB

Peter Ferrara

Subtitle: How the Looming Debt Crisis Threatens the American Dream and how we can turn the tide before it is too late. Broadside Books, NY., 2011, 415 pgs., index, end notes

Reviewer Comment - The reader will have seen that the author has focused each chapter one one of the components of the welfare state that contributes to the result, deficit, debt and unpayable liabilities. While it is necessary to consider each of these separately in order to examine it in detail, one must also recognize that they are all highly integrated components, each an integral part of the total welfare state's power. Near the conclusion of the first chapter he writes, "On issue after issue, the agenda (his proposals) involves shifting power away from centralized, big bureaucracies based on coercion and over to the average working man and woman, and to students, retirees, families, the poor, African-Americans, Hispanics, and other minorities. In short, this book presents a true vision of power to the people, which was the ultimate liberal goal." This may have been at some point in the early 19th century a classical liberal goal, but with the creation of the welfare state by Bismarck in newly unified Germany and its expansion to the United States by 'progressives' it is the opposite of the agenda of those who control the welfare state. The welfare state is all about power, as was the purpose of the 'state' from its origin in Italy circa 1500. The claims advanced by progressive liberals today to justify each of the programs described in these chapters are all designed as justifications to legitimate the political power of the welfare state just as they were by Bismarck to legitimate the unification of the independent German states under the Kaiser.
The author describes each of these components in detail showing their fallacies, deficiencies and destructive results. He offers excellent alternatives in each case which would achieve in reality the goals claimed by progressives that cannot be achieved by their actual policies. But he does not provide a practical political course of action that overthrow the entrenched progressive establishment. Mr. Ferrara bases his book on the idea that the current progressive programs will destroy the "American Dream". In this he has joined many other observers who have denounced one or another (or all) of the components described above. And he is right. But it is exactly the "American Dream' that the radical progressives denounce and disparage and seek to destroy in favor of their own 'social justice dream'.

Chapter 1 - Lighting the Fuse - How We Started Down the Road to National Insolvency
- The author states his view in the first sentence. "The failures of federal, state, and local officials of both parties, over many years, have primed a ticking bankruptcy bomb for America that will explode the American Dream if we do not disarm it." He believes it is not 'too late' to 'reverse course'. But this will 'require fundamental structural reforms of all levels of government and our most politically sensitive entitlement programs." He believes this can be accomplished. "How to achieve those goals is explained in this book. He believes the looming catastrophe is a bipartisan result. He continues, "By the end of President George W. Bush's eight years in office, America had abandoned every one of the four major planks of Reaganomics, as explained in Chapter 6." Then President Obama accelerated all the detrimental programs. The author fills this introductory chapter with specific data describing this process. He notes also the growth of the unfunded liabilities of the several states. Among the facts cited are: "Under current policies, federal spending will rocket to 40% of GDP by 2040." "This would fundamentally transform America into a static, low-growth, socialist European state." It gets worse after 2040. Actually this projected outcome is impossible, but the reactions of society and the progressive elite when they find out it is impossible are terrible to contemplate. The rest of the chapter is a general description of the over-all problem with the author's assertion that his recommendations (see subsequent chapters) can save the day.

Chapter 2 - America's Coming Bankruptcy - The Overwhelming Swirl of Deficits, Debt, and Unfunded Liabilities
The chapter contains an overall look at the current and future impact of the expanding government debt. By 2010 it was already 62% of GDP. (I personally do not believe the GDP statistic measures anything real, but for purposes of considering this kind of book we go along with the author.) The author continues with the statistic that bny 2021 the debt will reach 110% of GDP. Mr. Ferrara describes the reality of the Social Security 'trust' fund and the coming impact on retirements by the 'baby boom'. He considers the various claims by the establishment that 'not to worry', and the efforts of the FED with monetary policy.

Chapter 3 - The Baby Boom's Retirement Bomb - Personal Account Prosperity for All
- The chapter focuses first on 'The coming bankruptcy of Social Security.' Already the annual FICA tax is less than the annual payout of retirement benefits. The previous surplus resulting from FICA tax being greater than current expenditure was never invested, but was spent promptly at part of the annual government budget, which was nevertheless still in a deficit. The author describes all this in unpleasant detail. He also describes the alternate method employed successfully by Chile and that used by Galveston. The Federal Thrift Savings Plan is another workable example. The author presents his concept as proposed in 2005 by Congressman Paul Ryan. He explains why this did not become law.

Chapter 4 - Obamacare: Death and Taxes - Repeal and Replace with Patient Power
The author turns to financing of medical/health needs, beginning with Medicare as it was in 2009. Already at that point expense was out of control. He titles the following section. ."Obamacare: Pouring Oil on the Fire' A very apt description. He examines only the worst financial aspects. Obamacare, and the whole topic of medical/health financing have been dissected by many authors. Mr. Ferrara requires a lengthy chapter just to hit the highlights of what this misbegotten program will do. He believes that some form of "health savings accounts' and changes in tax structures would provide a better result for the money. But he does not consider that the entire conceptual basis for the current nor Obamacare 'insurance' is not insurance at all. Nor does he think of the real objectives of the progressive egalitarian - to eliminate wealth as an influence on the quantity and quality of medical care. Everyone is to have exactly the same access to medical care up to a certain age limit after which the experts will determine the cost effectiveness of each medical procedure allowable for each individual.

Chapter 5 - The Welfare Empire - Liberate the Poor and Taxpayers
The author comments that the American public has been sold on the concept that ever larger government expenditures for 'welfare' are justified, and that current programs are too meager. He notes that in addition to medical financing, there are 184 means tested welfare programs. And these are being expanded as much as President Obama can manage. Mr. Ferrara again describes many of these in detail. Again, these programs have been dissected by many critics. This chapter is a good summary. He points to the several attempts at reform, some of which were successful.

Chapter 6 - The End of the American Dream - How the Government Caused the Financial Crisis
The author turns to the financial crisis created by the government attempt to provide housing for millions of people who could not afford to buy houses. Of course the progressives continue to deny that the government was responsible in any way. Again, the issue has been thoroughly examined by many others. Mr. Ferrara presents the liberal contentions and the refutations by many critics. He faults the Bush administration for not putting a stop to this or at least curtailing it. But the intellectual support to justify it came from non other than Lord Keynes.

Chapter 7 - The Prosperity of Freedom - Let's Get America Booming Again
Theauthor states his positive position. "The foundation for averting the coming bankrupcy of America is to restore booming economic growth. This is a very common and popular idea. Namely expanded economic activity will generate greater government income from taxes and this can be used to decrease (would have to eliminate of course) annual deficits in order to reduce the total government debt. He discusses 'Taxation: principles, facts and policies"

Chapter 8 - Failed States - Renewing Prosperity for your State
The author turns to the fiscal crisis in state and local government. This is directly due to goverenments creating extragant pension and medical benefit programs for public employees. The governmnent bureaucrats are not paying with their own money, but that of tax payers. Moreover many of the bureaucrats are themselves recipients of the pensions and medical insurance. The chapter includes many examples of the difference in economic expansion between states having high and low taxation, regulations and favorable business policies. One freat example is a comparison of the U-Haul rental rates for self driven trucks between California and Texas. The truck rental charge for California to Texas is $3,236 while the charge Texas to California is only $399. The reason is the much greater number of people moving and using the trucks from California to Texas, which requires the company to pay the costs of driving the empty trucks back to California.

Chapter 9 -The Equality of Freedom - Equality of Rules Versus Equality of Results
The author describes many of the progressive policies that seek to shift the "American Dream' from equality of opportunity and equality before the law into the objective of equality of outcome. But he does not include one of the least understood but most egregious agenda items. This is decribed vividly by Stanley Kurtz in Spreading the Wealth: How Obama is Robbing the Suburbs to Pay for the Cities. In his book, Mr. Kurtz exposes Obama's very long association with the Aliniskyite groups that are attempting to shift realestate taxes from the suburbs to the inner cities via expanded 'regionilization. The egalitarian agenda of eliminating every manifestation of differences in wealth is the central driving goal that links all the different policy items.

Chapter 10 - New Labor - Prosperity Unions - Power to the People for Working Families
Again, the real issue is power. Labor unions are controled by individuals who seek power, just as in any other organization. Mr. Ferrara describes the situation. In mhy opinion he has an overlyh optomistic belief that such power can be wrested from the union boses.

Chapter 11 - The New Civil Rights -Economic Empowerment
The same situation as with unions pertains to the self appointed leadership of the Civil Rights aggitators.

Chapter 12 - The Rebirth of America - More Free and Prosperous Than Ever - In this 3 page summary the author states again the list of principal causes for national bankruptcy and his recommendation. "The Federal government's deficit, debt, unfunded liabilities, and other potential financial losses are swirling out of control." The Keynesian policies added greatly to both deficits and debt. The country is more vulnerable to another recession which would create financial and economic catastrophe. The only solution is to generate a financial, economic boom. This requires lower tax rates, reduced government spending and regulations, return to a sound money, all part of a smaller government.
"The solution involves not wooden tax increases and benefit cuts, but fundamental, structural reforms of our entitlement programs from the bottom up to produce a modern, 21st century social safety net ensuring that the essential needs of the poor and vulnerable regarding income supports, health care, retirement, housing, and nutrition are met." We can achieve the real liberal social goals. "The key is to transform the programs to rely primarily on modern capital and labor markets to achieve the goals..." It includes replacement of socialized medicine, replacement of federal welfare state empire, and replacement of current retirement systems.