Rewriting the Social Contract

By Bill Wilson

“A contract lawfully made cannot lawfully be broken.”—Thomas Hobbes.

Last week, Moody’s issued yet another warning that the U.S. was “significantly” closer to having its credit downgraded. In short, if interest owed on the national debt, currently at an annual 8.49 percent of revenue at $188 billion, rises above 14 percent, the U.S. will lose its Triple-A credit rating.

As ALG News reported last week, by the White House’s own estimates, the U.S. will hit that dreaded market-imposed limit on sovereign debt some time in 2014. In that year, under Barack Obama’s ten-year budget — which includes the unsustainable costs of ObamaCare — annual interest owed at $510 billion will represent 14.76 percent of revenue.

At that point, there will be nothing to prevent the nation’s credit from being downgraded — with interest rates skyrocketing and the dollar losing its status as the world’s reserve currency. By then, it will be too late.

In order to avert flying off this precipice, as reported by Bloomberg, Pierre Cailleteau, managing director of sovereign risk at Moody’s in London has stated that the U.S. may need to rewrite its “social contract” between the government and the American people.

But, in truth, the nation’s social contract was rewritten decades ago. It was rewritten with the ratification of the income tax; when the Federal Reserve was established; when Social Security, and then Medicare were instituted; and when Fannie Mae and Freddie Mac were nationalized, and the Troubled Asset Relief Program created.

In short, it was rewritten about the time that half of Americans were removed the tax rolls, and the other half ask to pay their way. When the U.S. became the entitlement state.

Get full story here.