RUSH: There's a story in USA Today that asks the question: "Is Social Security a Ponzi Scheme?" Now, of course, it is. Social Security at a Ponzi scheme. It is a Madoff-type Ponzi scheme. But, you know what?
USA Today, State-Controlled Media, they say (paraphrased): "No, no, no! Social Security is not a Ponzi scheme because our intentions were honorable. We really intended for Social Security to work out really well, so it can't possibly be a Ponzi scheme, because we intended it to be real." So the left, the Democrats, can do anything -- they can employ strategy and policy which is destructive -- and be excused for it on the basis that they had good intentions. And, by the way, that's how they skate on virtually every bit of destructive policy, which is every policy they have. There's not one that works as designed. Now, this morning... Folks, it just keeps getting worse, the news. I feel like I'm piling on. The CBO, the Congressional Budget Office today (just this morning, mere moments ago) released its updated long-term budget projections -- and it's worse than anybody thought.
The document is called "Outlook," the CBO projection document. In last year's document, the Congressional Budget Office projected that the national debt would be 91% of GDP in 2021. Can you even get your arms around that? Our national debt, last year, they projected to be 91% of GDP. Now they say it's gonna be 101%. They were wrong by 10%. Our national debt, will be 101% of gross domestic product (GDP) in 2021, that is ten years from now. In other words, let me put it this way: In ten years, our national debt will be larger than our economy. That's what that means. When we say that the national debt is 101% of GDP, that means that the national debt is larger than the economy.
But they're not through. By 2030, the CBO projects national debt will be 150% of GDP, or, in other words, one-and-a-half times larger that be the economy in total; and by the year 2037, 200% of GDP. The national debt -- if nothing changes, if we stay on this course -- if nothing changes, by 2037, the amount of debt that we owe will be larger, twice as large as our economy -- and, of course, the assumption is that it will continue to grow and grow after this. Of course there's no reason it's gonna stop! There's not a single policy in place to reverse this; and certainly no policy being offered, articulated, supported by the regime that does anything other than speed this up and expand it. I know what you're saying. "Okay, what can we do?"
Folks, it's not complicated, the answer. It's very difficult to implement. You gotta reform entitlements. You've got to get rid of Obamacare. You have to! Obamacare cannot be fully implemented. One of the largest contributing factors to these stats I just gave you is Obamacare, and it just frosts me 'cause they sold us this bill of goods on the notion it was gonna lower the deficit. It was gonna lower national debt. It was gonna lower premiums. It was gonna expand coverage. I mean, it was lie after lie after lie after lie -- and the media promulgated it, knowing full well they were lying on behalf of the regime. It's to the point now that if this monstrosity is not repealed and not defunded, I don't know how to illustrate life in a country where the debt is twice the size of the economy, or even equal to it!
I'll tell you this: We have a number of elected officials who have participated in writing laws, voting for laws, passing laws that have made this possible, who aren't gonna be alive in 2021, who're not gonna be alive in 2037 -- and a couple of them have even gone on record saying, "Oh, yeah, yeah, I voted for Obamacare. I'm not gonna be alive then. It won't matter to me. It will help my party now, and it'll get votes for me now, but I'm not gonna be alive." When you have the national debt equal to your economy, you're getting to the point where... Folks, we are already at the point where it is impossible to pay the debt back. The focus now is servicing it.
If you can't even do that, there's no... Literally everything will be the government's! They will have dibs on every dollar there is, and probably in 2022 they'll still be blaming George W. Bush for it. You see Greece is falling apart; Spain, you've seen the near riots that are taking place. Greece's GDP-to-debt is 125%, meaning that the total debt of Greece is one-and-a-quarter larger than their economy, and look at the problem they're having. We're on our way to two, the debt being twice as large as our economy, and we're gonna have similar kind of problems. Greece and the European Union are realizing they can't sustain this. They're going backwards. They're trying to reduce the size of their governments and so forth. That's why the people are rioting and so forth. Then the Federal Reserve: The Fed hoped that three years of printing money and giving it away would have stimulated the economy, and guess what?
It's falling short of promise.
Those details are coming up after this break.
RUSH: This business here about the Fed and their three-year rescue plan -- and, of course, you don't need the news stories to confirm the results. You need only to understand liberalism, and when they announce a plan to grow the economy, you know it isn't gonna work. When they announce a plan to create jobs, you know it's not gonna work. That ought to happen. Liberalism fails every time it's tried. It ought have been relegated to the ash heap of the world years ago. But, you see: "Good intentions." Ahhhh, yes, the big hearts! All of that compassion the left has. That saves them. USA Today, a story by Matt Krantz on Social Security.
Somebody sent him a question. It's one of these Q&A pieces. Some reader at USA Today (a typical idiot) writes in with a question of the day, and they assign some reporter to answer it -- and the question of the day from the assigned idiot of the day: "Is Social Security an Investment Ponzi Scheme?" So the assigned Matt Krantz to answer it, and Matt says: "There's just one thing that's worse than having a large chunk of money taken out of your paycheck: Taking a chance you won't get it back. Workers who see Social Security deductions taken from their paychecks every pay period can't help but wonder if they'll ever see the money again. That's especially true with younger workers, whose contributions are being used to pay benefits to the swelling ranks of Baby Boomers, who are reaching retirement age [now] or who are already retired.
"Making things even more troubling is the amount investors need to save in order to retire is only increasing, even as incomes are flat, or even down." It goes on and on to explain the program and why people are anxious about it, and then he finally gets (in the middle of next page) to the answer. "Social Security is not a Ponzi scheme because it wasn't an intentional fraud," says Jack Coffee, professor of law and securities law expert at Columbia Law School.
Social Security is not a Ponzi scheme 'cause it wasn't an intentional fraud. "In fact, the system has worked as expected since its creation in the 1930s. What's happening now is that, like many corporate pension plans, Social Security is running the risk of being underfunded as obligations grow faster than contributions."
Uh, what? How does that then differ from a Ponzi scheme? It pays out more than it has coming in? It doesn't matter when that happens. You know, Madoff lived and died on this for a long, long time. Finally he couldn't do it anymore. When the market tumbled and he couldn't give people money when they wanted out of the market, it was up, it was over. This dynamic's been going on a long time. The only difference is government is not gonna put itself out of business or put itself in jail like it did Madoff. The government will continue its Ponzi scheme, but you see it's not a Ponzi scheme because it had good intentions.
The same thing here with the Federal Reserve: They had wonderful intentions, bailing out all these entities. This is a New York Times story: "Fed's Three-Year Rescue Plan Falling Short of Promise." Well, we knew it was going to "fall short of promise" because it was a bunch of liberal ideas. "The Federal Reserve hoped that its..." Imagine this! The Federal Reserve: Home of financial wizards; home of financial experts, the best and the brightest; home of tax cheats. That's where Little Timmy worked. He was at the Fed, until he was discovered by Obama. I think Obama discovered him in one of the Lord of the Rings movies and said, "I need to get this guy for my administration!"
So he went out and found Little Timmy and put him in charge of TARP and then was learned that Little Timmy was cheating on his taxes. The regime said, "That doesn't matter! There's only one guy in America that can possibly understand what needs to be understood and help us through this mess that is TARP and that's Tim Geithner. The only person in America could possibly figure it out, the only person in America who could navigate the treacherous waters here is Tim Geithner." So he goes from the Federal Reserve to the Treasury secretary post. The Fed -- all these experts, the best and the brightest-- and they are "hoping." They are hoping. The New York Times: "The Federal Reserve hoped..."
That's like saying, "NASA hopes the shuttle achieves orbit." Well, naturally, hopes, but you're doing it on a little bit more solid ground than hoping! When you launch the shuttle, there is a full expectation it will reach orbit because it's done it a number of times before. The science has been tested, and it works. But here we are trying something that never has worked, and we're doubling and tripling down on it, hoping that that's why it hasn't worked: We just haven't spent enough. Hoping? The best and brightest in our country are engaging in policies and then "hoping" it works out? "The Federal Reserve hoped that its three-year-old economic rescue campaign would reach a climax at the end of June. It hoped that consumers and businesses by now would be spending more and more..."
Does this make you feel confident in the best and brightest, the people that told us they had the answers were hoping for a climax at the end of June -- and the closest they got, I guess, was Weiner. Then next they're hoping that you would start spending more along with businesses, and then after you did that, they could start spending less and less. That's what the New York Times says. But of course none of this is happening. Despite all the hope, despite all the great intentions and wonderful wizardry of intelligence, it doesn't happen. And the New York Times says: "That peak now looks like a long plateau. The Fed still is expected to announce [today] that it will halt the expansion of its aid programs at the end of June, as scheduled, when it completes the purchase of $600 billion in Treasury securities.
"But growth is sputtering, and economists now expect that the Fed will leave its $2 trillion of bandages, props and crutches untouched until next year." What does that even...? What does this mean? How is the Fed leaving $2 trillion untouched? I don't even know what it means. "The pace of economic expansion has repeatedly fallen short of the Fed’s predictions," I guess the hopes didn't pan out, "and the central bank is expected to lower its eyes once again when its releases a new forecast after a two-day meeting of its policy board, the Federal Open Market Committee."
Lower its eyes? What, are they embarrassed? They ought to be! Do you know why it didn't work? The New York Times says right here: The Japanese earthquake. That's why the $2 trillion in bailouts didn't work. Quantitative Easing 1, Quantitative Easing 2? I'm holding it right here in my formerly nicotine-stained fingers. That's why it didn't work, the Japanese earthquake. So what we've here (I'm not gonna spend any more time with the whole piece) is a vaguely written New York Times article. They do say that the Fed's bailout of the stock market has not increased spending. It was a bailout of the stock market.
The stock market -- and it was an indirect way. We've talked about this before. The Fed printed money, called Quantitative Easing. They distributed that money in such a way as securities were bought, shares of stock. This built up the stock market, grew the stock market, while nothing else in the economy was working. Yeah, it kept the illusion here that there was at least something growing in the economy, and it was hoped that that illusion would transfer into spending, increased spending by consumers and other businesses. "Oh, look at the stock market! Oooh! Okay, I guess there's a recovery go on; we can go out and spend."
It didn't happen. Consumers are not consumin' out there. So now after $2 trillion of this propping up the stock market, they're blaming the Japanese earthquake. It's kind of weird, too: There's no mention in this story of what this bailout cost the taxpayers in actual dollars, or in the devaluation of the dollar because of printing more money. But this has been a debacle, folks: $2 trillion of printing money and deploying it strategically and then hoping! What's laughable is the left says, "Well, we just haven't spent enough yet!" The Paul Krugman wing says, "We just haven't spent enough yet. Just stick with this awhile! Keynes will eventually be provable correct."
But I think the story is a little bit amazing in that the Times is admitting all of this has been a bit of a failure, a boondoggle. Also, if you read this, it don't sound like there's gonna be a QE3, which is good, but I'm not sure of that. It doesn't sound like there's gonna be a QE3, which means the Fed is gonna admit here that they're outta arrows, that they've got normal ammo to throw at this in the form of spending. I hope that's what it means, but don't hold your breath.
RUSH: Missoula, Montana. Kevin, I'm glad you waited. Welcome, sir, to the program. Nice to have you with us.
CALLER: Well, thank you for taking my call. I have two things -- and one thing I didn't talk to your call screener about, but I think the projections, the CBO projections are rosy compared to what's really going to happen.
RUSH: You're talking about government economic growth and debt and that kind of thing.
CALLER: Yeah. Well, they're basing on a projected rate of growth of maybe 2.3 to 3%, but what they aren't putting in here: Who's gonna by the debt it takes to service the debt? There are so many things that could happen.
RUSH: Yeah, I know.
CALLER: It just should scare the heck out of everybody.
RUSH: You know, they have the debt auctions occasionally that they can't find buyers, so they have to up the interest rate they offer.
CALLER: Well, and so you up the interest rates, so then you start to take the money back out of the system that the private market could borrow to create jobs.
RUSH: Exactly right.
CALLER: That brings me for the other thing: I wanted to thank you for starting a business during the recession, because the one thing that bothers me about some of the wealthy people -- and I don't mean to put you in that category, but you could put your money in a foundation if you wanted to. You know, and like Buffett or Gates or Turner, they put their money in foundations; they spend the interest. They don't reinvest it back into business that creates wealth -- and I want to thank you for that.
RUSH: Well, you're very kind. You're very perceptive, by the way, too. As you know... Well, no, I can't say that. You don't know. Let me tell you: I have people who routinely tell me that I should do a foundation.
"You need to do that, Rush."
I say, "Why?"
"Well, because you'd be able to take the entire annual charitable deduction off the top that year, but you only have to spend 5% of it."
"Really? So I can start a foundation with, say, a million dollars, but I only have to give $50,000 of it away, and I still get the million-dollars?"
"Yeah, you can do that."
"Oh, that's cool. But then I lose the money, right?"
"Well, yeah, of course you lose the money, but it's a good thing. It's going to charity."
"Okay. It's never really appealed to me unless the foundation's gonna be something that is its own functioning entity rather than someplace to park money. If it's a functioning enterprise that's gonna seek its own growth for genuine philanthropy, but it's never really appealed to me as a place to park money. I'd rather just, you know, write a check to a charity or whoever, rather than set up the foundation."
That's just me. We all have our individual quirks. But I appreciate your observation. I really do. That's very kind of you to say.
CALLER: Well, it makes a difference to more people to create job growth and create wealth than it will ever do to put money into a foundation to fund more nonprofits, and I do want to thank you.
RUSH: Well, you're more than welcome. I appreciate that. Profit does the most social good. There's no question about it. Every time I take a call we lose the network. Anyway, the point that he was making before that was that the projections that we shared with you on the Congressional Budget Office on how much of the US economy will be debt; and we get to 2021, that the debt will be as large as our total economic output; and by 2037 it will be twice as large. His point was that that's assuming an annual economic growth rate of 2.5 to 3%, and that's assuming a lot. We're not anywhere near that right now, and I wanted to make sure that point that he made was emphasized.