A ticking time bomb

Here is a problem you donít hear the candidates talking much about. And yet it will wreak havoc on our economy. And it will hit most of us in our pocket books for years to come.

The candidates donít talk about it because most Americans donít talk about it. Nobody wants to. It is like the subject of cancer when I was a kid. Most people back then said ďSheís got, ahem, you know... uhh, C.Ē If they said that much.

Well most people today will talk about cancer openly. But they wonít talk about Social Security and its problems. They barely mention it to pollsters. They cannot be bothered pestering their congress guys about it. Truth is, people donít seem to care about it. At least not in sufficient numbers to prompt politicians to do anything about it

To his credit, President Bush talked about it. Urged Congress to do something. Yawwwwwn. Not because the President was boring. It is boring to politicians because it is boring to voters.

Suppose you end up with a lousy credit rating. It will cost you. It will make all your borrowing more expensive.

Suppose you own a company. It has trouble making its loan payments. It falls behind on its bills. Pretty soon lenders will stop lending to it. Or will raise the interest rates on the loans. Suppliers will cut off credit. Or make it more expensive. In other words, lenders will take it out of your companyís hide.

Suppose you own a country. In fact, you do. Suppose the rating agencies lower the ratings on your bonds. Used to be they gave your country AAA ratings, the best. But now they lower your bond rating. To less than top grade.

That is going to cost you big time. And this is going to happen soon. Because some big agencies are threatening to lower their ratings on U.S. government bonds. Treasury Bonds.

Yawwwwwwn. Doesnít affect me. Sorry, but it does. It will.

The agencies will soon lower their ratings because politicians have stolen all the money. From your Social Security trust fund. From that mythical lock box Al Gore used to fantasize about.

They began their theft back in 1984. To pay for their excessive spending, they started lifting the money from the trust fund. The money that was there for future retirees. They took it and left behind IOUs. They have been like the little old embezzler in the small town bank. Once they started, they could not bring themselves to stop.

Soon Social Security will have to ask government to repay the IOUs. Because SS needs the money. Government ainít got it. Like the little old embezzler, they blew it.

To get the money, government will have to cut the benefits. Imagine politicians lining up to do that. Or they will have to raise the taxes. Either the Social Security taxes. Or income taxes. Doesnít matter. They will take it out of our hides.

They wonít want to do this. Hell, theyíre even afraid of talking about the problem.

So they will put it off. Yet again. The agencies will then have to lower the ratings on all the other bonds the government owes money on.

When that happens, government will have to pay billions more. In higher interest on their bonds. Thatís what happens when your bond rating goes down. You pay higher interest rates.

Where will government get the money for this? Out of your hide.

All of this will drive most other interest rates higher. Your mortgage interest rate, for instance. Your car loan interest rate. Your business loan rates.

Medicare has a similar problem.

If you stick their noses in the problem, politicians admit there is one. Then they turn their backs on it. And they conjur up another few thousand earmarks.

Investors Business Daily called this a ticking time bomb the other day. That is a fair description of it.

From Tom ... as in Morgan.

For more columns and for Tomís radio shows (and to write to Tom): tomasinmorgan.com.

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