No holiday for truth-tellers

Gary Shapiro President and CEO, Consumer Technology Association
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We have a holiday to celebrate our nation’s independence, a holiday to be thankful, holidays to mark religious milestones, and even a holiday to begin the New Year. What we need now is a holiday to honor and tell the truth.

Sadly, our nation is clinging to certain lies, oblivious to the facts that are before us. Here are five serious lies many of our nation’s leaders are pushing to our detriment:

1. A four-year liberal arts university degree is a valuable investment.

Many college majors have little value, and many students would be better served by pursuing technical degrees. Germany’s apprentice program is an attractive model that at least one company, Siemens, has successfully imported to America.

Those advocating four year liberal arts degrees cite research suggesting those with college degrees make more money. But this research suffers from methodological flaws, failing to separate those with marketable skills like accounting or software programming from those who studied puppetry. Today, 44 percent of recent college graduates are underemployed. As of 2012, an astonishing 36 percent of people under 31 were still living with their parents, according to a Pew Research Center report.

Yet Washington still encourages promiscuous loans to students no matter what they study. The elite Phi Beta Kappa Society recently launched a national campaign to encourage the preservation of four-year liberal arts degrees.

Colleges have little say in the federal student loan mess. They may not limit how much students borrow or even what they study. The result is that students now owe more than $1 trillion in debt, and there is a high likelihood that much of it will not be repaid.

We need to face the facts that not all majors are the same, and restrict loans with low interest rates to students who take classes that are likely to get them jobs after they graduate.

2. Our entitlement programs are self-financed and financially healthy.

The fact is, without changes, these programs will run out of money in the next few years.

According to trustees of the two trust funds, the Social Security Disability fund will run out of money in 2016 and Medicare’s hospital trust fund will run out of money in 2026. Social Security will fail in about 20 years.

The senior lobby continually pushes back against proposals to save the system, like a slow increase to the retirement age, or means testing and limiting the rate of growth by more carefully measuring inflation. Yet the numbers don’t lie. A system set up nearly 80 years ago, when people routinely retired and died around the age of 65, no longer works, with people still retiring at age 65 but living well into their 80s. And our fastest growing entitlement of disability payments was set up to compensate those hurt in a manufacturing economy with few other options for work. Now, many use “back pain,” sympathetic doctors and a system without an advocate for the taxpayer to get a lifetime of payments without working. 

3. Obamacare isn’t terrible, it just had to work out the website glitches.

The website was a huge PR and practical stumbling block to the success of Obamacare. The site could not handle the unexpected coverage of unique rules for each of the 23 states that decided not to have their own exchanges and also has major back-end and security issues. Still, the website woes are masking a deeper problem.

Millions of Americans are losing their health insurance policies under Obamacare. It will get worse as Americans realize they will not be able to keep their doctors, their health insurance costs have risen, and they must wait months to see a doctor as the patient population expands and many specialist doctors retire rather than deal with the challenges caused by Obamacare. Moreover, the nation will have to deal with the huge cost of the system and limited additional revenue.

No American should suffer from a lack of healthcare. Our challenge is how to provide healthcare without giving favored industries (pharmaceuticals) the right to protect profits.

4. The federal debt doesn’t matter.

We are now more than $17 trillion in debt. In a few years we will hit $20 trillion, and with a five percent interest rate, we will be spending $1 trillion just in interest on this debt. That amount will be more than almost all discretionary spending, leaving little for education, health and basic services like food and agriculture inspections. The next generation will suffer from our misdeeds.

5. Our economy is doing great thanks to the Fed.

Government continues on its spending spree with the Fed’s QE3 policy of buying some $80 billion monthly of our own debt. Just where do we think this money is coming from? The only thing that allows this financial shell game to continue is we have convinced ourselves and the rest of the world that it makes sense.

Our leaders don’t want this so-called quantitative easing to be stopped, because they know it will lead to inflation and interest rates will rise. Interest rates are artificially low because the Fed is pumping cash into the economy. When interest rates inevitably rise, the notes the Fed is holding will sink in value. This economic fraud will devastate the next generation, which will face steep interest rates and massive debt.

As a nation, we must stop ignoring these difficult economic truths. Maybe establishing a national holiday for truth-telling would open our eyes to the lies we refuse to face. If we continue on this path, our children and grandchildren will suffer the consequences. Let’s start celebrating honesty, and holding our policymakers accountable. We have to face the facts, cut spending and return to our roots as innovators pursuing the American dream.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA)®, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro.