The Haves and the Have-Nots

by Marilou Long on May 23, 2012

in Debt,deficit spending,Fiscal Policy,taxes

While the administration continues to bash business, there is a growing sense that the haves are the public sector and the have-nots are the private sector.  Ed Yardeni’s morning briefing ties together the fiscal problems faced around the world by the unfunded entitlements and pensions given to public sector retirees.  Whether it is Japan, Europe, or California, the deficits continue to climb.  He finishes the briefing with an editorial:

Editorial. I didn’t start with an editorial, but I will end with one. In many countries, the government has become the largest special interest group, with the power to squash the interests of all other special interest groups. These governments have lost any sense of pursuing policies that are best for the national interest. Instead, they are beholden to defend the excessive pay, benefits, and entitlements of their number one constituency, namely, public employees.

Most of these workers are entitled to retire early. Like the rest of us, they are living longer lives–maybe longer than the rest of us because they are less stressed during their many retirement years. The cost of supporting the retirement benefits of public employees is soaring and eating up budgets to fund employment of the public employees we need to teach our kids and protect our communities. On a present discounted basis, most of them are millionaires. In the private sector, workers would need to retire with a minimum of $1 million to afford the retirement lifestyle of public employees, who are the true 1%!

I am hoping that Americans will see the light as the outlook for Europe gets darker. It could still be “Morning in America.” The Wisconsin vote could turn out to be an important endorsement of the kind of fiscal sanity promoted by Governor Walker. At the national level, the Supreme Court could rule next month that ObamaCare is unconstitutional. So if Obama is reelected, he will need something new to leave as his legacy for the economy. Why not push for the Simpson-Bowles fiscal responsibility plan that was proposed by his very own commission at the end of 2010? That plan might also be a winner under a Romney presidency. Then instead of falling off a fiscal cliff, we might enjoy a new record high in stock prices early next year.

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