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"Fact is, it doesnít matter. Not one bit. And Iíll show you mathematically"
Sovereign Man ^ | 11/7/2012 | Simon Black

Posted on 11/06/2012 10:53:27 PM PST by Prospero

Fact is, it doesn’t matter. Not one bit. And I’ll show you mathematically:

1) When the US federal government spends money, expenses are officially categorized in three different ways.

Discretionary spending includes nearly everything we think of related to government– the US military, Air Force One, the Department of Homeland Security, TSA agents who sexually assault passengers, etc.

Mandatory spending includes entitlements like Medicare, Social Security, VA benefits, etc. which are REQUIRED by law to be paid.

The final category is interest on the debt. It is non-negotiable.

Mandatory spending and debt interest go out the door automatically. It’s like having your mortgage payment autodrafted from your bank account– Congress doesn’t even see the money, it’s automatically deducted.

2) With the rise of baby boomer entitlements and steady increase in overall debt levels, mandatory spending and interest payments have exploded in recent years. In fact, the Congressional Budget Office predicted in 2010 that the US government’s TOTAL revenue would be exceeded by mandatory spending and interest expense within 15-years. That’s a scary thought. Except it happened the very next year.

3) In Fiscal Year 2011, the federal government collected $2.303 trillion in tax revenue. Interest on the debt that year totaled $454.4 billion, and mandatory spending totaled $2,025 billion. In sum, mandatory spending plus debt interest totaled $2.479 trillion… exceeding total revenue by $176.4 billion.

For Fiscal Year 2012 which just ended 37 days ago, that shortfall increased 43% to $251.8 billion.

In other words, they could cut the entirety of the Federal Government’s discretionary budget– no more military, SEC, FBI, EPA, TSA, DHS, IRS, etc.– and they would still be in the hole by a quarter of a trillion dollars.

4) Raising taxes won’t help. Since the end of World War II, tax receipts in the US have averaged 17.7% of GDP in a very tight range. The low has been 14.4% of GDP, and the high has been 20.6% of GDP.

During that period, however, tax rates have been all over the board. Individual rates have ranged from 10% to 91%. Corporate rates from 15% to 53%. Gift taxes, estate taxes, etc. have all varied. And yet, total tax revenue has stayed nearly constant at 17.7% of GDP.

It doesn’t matter how much they increase tax rates– they won’t collect any more money.

5) GDP growth prospects are tepid at best. Facing so many headwinds like quickening inflation, an enormous debt load, and debilitating regulatory burdens, the US economy is barely keeping pace with population growth.

6) The only thing registering any meaningful growth in the US is the national debt. It took over 200 years for the US government to accumulate its first trillion dollars in debt. It took just 286 days to accumulate the most recent trillion (from $15 trillion to $16 trillion).

Last month alone, the first full month of Fiscal Year 2013, the US government accumulated nearly $200 billion in new debt– 20% of the way to a fresh trillion in just 31 days.

7) Not to mention, the numbers will only continue to get worse. 10,000 people each day begin receiving mandatory entitlements. Fewer people remain behind to pay into the system. The debt keeps rising, and interest payments will continue rising.

8) Curiously, a series of polls taken by ABC News/Washington Post and NBC News/Wall Street Journal show that while 80% of Americans are concerned about the debt, roughly the same amount (78%) oppose cutbacks to mandatory entitlements like Medicare.

9) Bottom line, the US government is legally bound to spend more money on mandatory entitlements and interest than it can raise in tax revenue. It won’t make a difference how high they raise taxes, or even if they cut everything else that remains in government as we know it.

This is not a political problem, it’s a mathematical one. Facts are facts, no matter how uncomfortable they may be. Today’s election is merely a choice of who is going to captain the sinking Titanic.

TOPICS: Business/Economy; Politics/Elections
KEYWORDS: 2012; deficit; math; romney; sequestration
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Facts are stubborn things. Every election has consequences, sure. But every election is less a test of the incumbent or the challenger, or their Party or "ground game," etc., and more certainly a test of the electorate.

The nation might (or might not) have dodged a generation-scale bullet, tonight. Mitt Romney, for all his intentions, may very well live to thank "his lucky stars" for having dodged his own bullet, tonight.

1 posted on 11/06/2012 10:53:34 PM PST by Prospero
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To: Prospero


2 posted on 11/06/2012 10:55:20 PM PST by ConservativeMan55
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To: Prospero

Excellent post..thank you

3 posted on 11/06/2012 10:58:00 PM PST by SGCOS
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To: Prospero

Since the economic s*** may hit the fan in the next year or two, I have wondered why anyone would want to be president now. Perhaps it is better for this to happen under a Democrat regime, because the libs would have blamed capitalism (not something we’ve really had in a long time) if Mitt had won. Nobody wants to give up his particular government goodies, so the outlook for this country is indeed grim. I really doubt Romney could have made a difference.

4 posted on 11/06/2012 10:59:46 PM PST by Pining_4_TX ( The state is the great fiction by which everybody seeks to live at the expense of everybody else. ~)
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To: Prospero

We need to cut entitlement spending and we need to reduce the debt. And we need to slash discretionary spending.

Hussein knows that these things are what America needs. That’s why he’ll never even attempt them. He hates this country.

5 posted on 11/06/2012 11:02:41 PM PST by TBP (Obama lies, Granny dies.)
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To: Prospero

is this another one of those “feel good” threads?.....because the feel good threads are making me MORE depressed...

6 posted on 11/06/2012 11:08:19 PM PST by cherry
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To: Pining_4_TX

Because the DC elites, past and present, in both parties won’t have to
Dumpster dive like the rest of us when the crap hits the fan to try to survive
What’s coming.

7 posted on 11/06/2012 11:09:53 PM PST by tennmountainman
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To: Pining_4_TX

We have two paths now....

One the country collapses and the Dims take the Blame and we re-build the Republic...

Two the country collapses and a strong man steps up and takes power and we enter into the territory of totalitarianism...

8 posted on 11/06/2012 11:10:41 PM PST by GraceG
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To: Prospero

Two words:

Stalin. Ukraine.

Obama can balance the budget by killing off the elderly and the welfare recipients.

9 posted on 11/06/2012 11:11:27 PM PST by null and void (Day 1386 of the Obama hostage crisis - Barack Hussein Obama an enemy BOTH foreign AND domestic)
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To: Prospero

I hear ya. What do you see as the endgame? Hyperinflation a la Weimar?

10 posted on 11/06/2012 11:11:31 PM PST by Campion ("Social justice" begins in the womb)
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To: GraceG

I like the third option: State Constitutional Conventions, followed by splitting the USA into multi-State regions, with each region responsible for paying off their share, AND ONLY THEIR SHARE, of the National Debt.

Obama has proven that “we all can’t get along.”

So be it to our Union.

11 posted on 11/06/2012 11:16:41 PM PST by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: Prospero
Today’s election is merely a choice of who is going to captain the sinking Titanic.

You're probably right. Maybe it would've sunk a little bit slower with a Republican president at the helm, though.

12 posted on 11/06/2012 11:21:46 PM PST by Tired of Taxes
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To: Campion

What do you see as the endgame? Hyperinflation a la Weimar?

I am not Campion, but I believe we will see massive inflation and a world economic crash because the dollar is the reserve currency of the world. The World Bank/UN will at some point face overwhelming pressure to create a new world currency and we will no longer be sovereign.

Our political leaders are incapable and unwilling to make hard choices. They promised the checks and they will deliver even when the checks are worthless. We are on the path to disaster and I strongly encourage you and anyone else that believes this is possible (or probable) to prepare accordingly to take care of you and yours.

13 posted on 11/06/2012 11:23:25 PM PST by volunbeer (We must embrace austerity or austerity will embrace us)
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To: Prospero
While I certainly agree with Black that this coming financial chaos cannot be avoided, I still, after some lengthy internal arguments decided that Romney was perhaps the last chance we would have to slow the beast down for the sake of the country.

I have perhaps another 5 years to breathe the American air, and I did not want to die while at the same time watching my country die with me. I thought I had left something to build on to my children and grandchildren, but tonight I threw in the towel....

Obama will indeed own this and Romney will escape the same fate that GWB suffered. The Republican party however will be savaged by the dims as they divert responsibility and successfully label the GOP as the root cause of all of it since we still hold the House. (at least for two more years) I think it's time to have that moment of clarity now. That moment you only get a couple of times in any lifetime, and just grin....

14 posted on 11/06/2012 11:26:54 PM PST by Cold Heat
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To: Prospero
Here are a few more things to add to the list of inevitabilities:

We are stuck in a ZIRP trap. Because the deficit is so high, even with the Zero Interest Rate Program, the interest payments now suck up over 20% of our federal revenues. For Joe Taxpayer, it means we get a pitiful return on our savings, at a time when inflationary pressures are forcing up the costs of essential goods like food and fuel. Since raising the rates would cause our interest payments to skyrocket (thereby consuming even more of our Federal Revenues), we'll be stuck in the ZIRP trap for many years to come. Meanwhile, the dollars you saved or the money you earned loses value on a daily basis.

We've reached "The Tipping Point." Once debt exceeds 77% of GDP, any increase above the point causes a corresponding contraction in the private sector. We are now at 103% of GDP, and growing.

Europe has already recapitalized their banks, and has started their second Vienna Compact in an effort to save banks in emerging markets. Despite this, the economies are still contracting and the EU is crying to the IMF and ECB for more funds.

When Greece leaves the EU, it will send a shock wave across the derivative market to the projected tune of $22 Trillion (yes, Trillion) dollars.

England has already openly acknowledge they are in another recession.

I've been warning people for quite some time now that we are in a long-wave contraction. Too many conservative pundits and writers blamed the "Obama Economy" for the mess we are in; they were wrong. This is a global depression, and the next wave is going to hurt more than the first.

But most Obama voters don't want to give up their goodies, so they will be like Berlin, partying on while the world burns.

15 posted on 11/06/2012 11:29:38 PM PST by TheWriterTX (Riding the Long-Wave Economic Contraction, Baby!)
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To: Prospero
Today’s election is merely a choice of who is going to captain the sinking Titanic.


Have to admit, been listening more to prep talk(radio stations like RBN)lately than the political talking heads.

Politics has NO solutions to these problems...especially since they are responsible for most of them.

16 posted on 11/06/2012 11:38:11 PM PST by RckyRaCoCo (I prefer liberty with danger to peace with slavery, IXNAY THE TSA!)
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To: Prospero

I realize we call them entitlements, but people aren’t really entitled to them. I mean, they can’t sue to get them should we overturn the laws, can they? I never understood why we pretend like some laws are considered to be locked in. They can’t tie the hands of future legislators, in my opinion.

There is the matter of national prestige and repudiation if obligations. Whatever we have already borrowed we are obliged to pay back. We gave repudiated debt before, and on a massive scale, contrary to what most people seem to beloved. It was called going off the gold standard. But I’m not advocating that. Pay outstanding debt.

What I do advocate is repudiation of “unfunded liabilities.” These are liabilities why? Because the law says we have to oat them. What if we change the law before they’re due? Does that violate some principle of which I am not aware? Because as far as I’m concerned past laws cannot bind the future. We can simply change the law before it comes due. And this is not a matter of “we owe it to ourselves.” We don’t owe it yet, really. They do not constitute a contract, nor even a promise.

One Congress cannot have an irrevocable claim on the pockets of future generations merely because a law they passed happens to perpetuate itself. It can for what it borrows, because that is a real debt. But not what people decades after passage of Medicare, etc., thought maybe they’d get, you know, if the money was there.

17 posted on 11/06/2012 11:53:11 PM PST by Tublecane
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To: Prospero

To clarify I’m saying we won’t reform entitlements not because we’re locked in with no way out. We could take a hammer to the self-perpetuation machine. We won’t because no one will want to be seen as repudiating long expected goodies, at least not for people past a certain age. And even then we’re only willing to talk about weening youngsters off the entitlement juggernaut. Bush II kinda sorta tried, but fizzled. No one will go through wiyh it, I predict.

Entitlements will persist not because they are omnipotent, rather because we’re weak.

18 posted on 11/06/2012 11:59:19 PM PST by Tublecane
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To: Tired of Taxes
Maybe it would've sunk a little bit slower with a Republican president at the helm, though.

That is all I was hoping for with Romney. Maybe a few months of real growth before the collapse. Now the world has no short term growth possibilities. And the rich will continue their exodus from the US, as the middle class, shouldered with the burden, collapses.

19 posted on 11/07/2012 12:01:27 AM PST by justa-hairyape
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To: TheWriterTX

Excellent post!

20 posted on 11/07/2012 12:22:43 AM PST by scott7278 ("...I have not changed Congress and how it operates the way I would have liked..." - BHO)
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