- The Washington Times - Saturday, April 11, 2009


Most Americans accept the continuing attack on tobacco companies and smokers, but how do they feel about the massive government deception?

Forty-six state attorneys general and major tobacco companies signed the Master Settlement Agreement in 1998. The major tobacco companies agreed, among other things, to give states $240 billion over 25 years to provide for smoking-cessation programs and cover the health costs associated with using their product.

In return, state attorneys general promised tobacco companies they wouldn’t sue the companies and would use their lawmaking power to protect the major tobacco companies from competition from small tobacco companies.

Of the $80 billion extorted so far, states have spent about 30 percent on health — not all tobacco-related — and less than 6 percent on smoking-cessation programs, according to the Government Accountability Office. State legislatures spent the bulk of their tobacco money for items such as museum building, tax relief, rainy-day funds and other expenditures having nothing to do with tobacco or health.

Congress’ deception was, and continues to be, a major player in our financial meltdown. Before the meltdown, Rep. Maxine Waters, California Democrat, said in congressional hearings on the soundness of Fannie Mae and Freddie Mac: “Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke. … Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines.” Rep. Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee, said: “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Other members of Congress gave similar assurances. Unfortunately for our nation, the forces pushing for “affordable” housing won the day and saddled us with today’s unprecedented financial disaster. How stupid is it of us to ask those who brought us “affordable” housing to turn to bringing us “affordable” health care?

Congressional deception about government finances means today’s children will face a financial disaster that will make today’s mess seem like a walk in the park. What’s called the public debt stands at $11 trillion and growing. That pales in comparison to the federal government’s unfunded liability — obligations that are not covered by an asset of equal or greater value.

Mike Whalen, former policy chairman of the National Center for Policy Analysis in Dallas, commenting on last year’s Social Security trustees’ annual report on the state of the Social Security and Medicare programs, said: “The report on the state of entitlement programs is rather grim — the combined unfunded liabilities of both programs are $101 trillion.” What that means is that for government to make good on its promises, Congress would have to put aside tens of trillions of dollars in the bank today. Keep in mind that our gross domestic product is just $14 trillion.

To meet its promises without massive tax increases or cuts in benefits, Congress must cease spending on one in four programs by 2020, such as education and highway construction, and one in two by 2030. By 2050 or so, all federal revenue would be spent supporting Social Security, Medicare and prescription-drug benefits.

Such a scenario is unsustainable. There will be economic and political chaos. Today’s politicians are unlikely to take measures to avoid the coming chaos because senior citizens, the major beneficiaries of Social Security and Medicare, vote in large numbers and will exact a high political price. Plus, neither today’s senior citizens nor today’s politicians will be alive in 2050.

I would be more optimistic if my fellow Americans were simply suffering from congressional deception as opposed to not caring about the economic calamity that awaits tomorrow’s Americans. I would be even more optimistic if today’s seniors started putting heat on Congress to allow those Americans who want nothing to do with Social Security to opt out.

Walter E. Williams is a professor of economics at George Mason University and a nationally syndicated columnist.