The word apocalypse has several meanings of severity, one being catastrophe. The answer to the title question is that our great nation is already on the edge of Cliff Catastrophe with towering wave crests crashing onto the rocky shoals below. That is a word picture describing where the United States of America is right now.
Here is a partial list of our current fiscal position: National debt = $20.4 trillion; current fiscal year budget deficit = $684 billion, student loan debt = $1.5 trillion and unfunded liabilities = $108 trillion (includes social security, Medicaid A, B & D, federal public debt & federal employee and veteran’s benefits). Public and private sector retirements are underfunded by trillions of dollars. Our federal debts will not be liquidated or balanced in our lifetimes; perhaps never. We have become the leading debtor nation in the world and the leader in production of products and services and military strength.
While this financial news is unsettling, the state of Illinois with 12.8 million population has $14.6 billion of unpaid bills, is running a $6 billion deficit in the current budget and pension liability of $130 billion. The population is descending since 2014, university enrollments are shrinking and Chicago schools must borrow money to keep going until the end of the school year. What is happening to our nations’ financial structure?
The answer is not as complex as you would imagine; our bureaucracy staffed by inept politicians and government hacks has ceded authority to pressure groups and public and private unions. Union bosses have demanded wages and benefits that exceed cash flow from employers and taxpayers who foot the bills. While 28 states have passed right-to-work legislation, Illinois is one of the 22 with a legislature that exercises union loyalty and denies right-to-work legislation. States that have passed right-to-work laws have experienced increased economic activity.
A case that will be soon be on the Supreme Court docket may be helpful to those in Illinois who want to increase industrial activity. The case is Janus v. AFSCME (American Federation of State, County & Municipal Employees) that may result in a finding that state laws requiring public employees to pay union agency fees are unlawful. Such a ruling may reduce the number of dues-paying members of the 1.3 million member organization.
The USPS (Postal Service) lost $5.6 billion in fiscal 2016, its 10th consecutive year of losses. One of the reasons for these losses is the employment and retirement benefits that have been bargained by the five main unions that run the USPS. Here’s a snapshot of the organization: 509,000 career employees and 131,000 non-career workers, 227,000 vehicles, $71.4 billion revenue handling 153 billion pieces of mail annually to 156 million addresses. The government ‘management’ bureaucracy is apparently waltzed into submission by union bosses and actuaries that compile salaries and benefits but must have missed some math and computer classes.
According to the BLS (Bureau of Labor Statistics) federal employees receive paychecks totaling about $32,000 more per year than workers in the private sector. Here’s the math for this disparity; each of us working taxpayers pays increased yearly taxes of $1,054 toward the added compensation of each federal employee.
Turning to private industry, many companies including those traded on the NYSE and NASDAQ (National Association of Securities Dealers Automated Quotations) have some problems of accumulating enough reserves to cover long-term-care, a concept that became popular in the early 1990’s. General Electric (GE) for example is currently having actuaries review their reserves to determine if there is a shortfall that could amount to $2.5 billion or more. GE had sales revenue of $123.7 billion in 2016 and its stock has slipped 32% this year, causing the company to lose $93 billion in market value (GE shares closed at $20.79 on 10/27/2017). GE has been a component of the DJIA (Dow Jones Industrial Average) since 1896 with the exception of several months in 1898 and 1901.
Here’s the difference in government and private enterprise: By law, all 22 million businesses must file annual returns with the IRS, and pay their taxes. Federal government has no such constraints; budgets are created, spending exceeds budgets, the national debt increases unimpeded. And we keep re-electing them. The swamp must be drained.