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.
but Congress and all govt in this country anyway will not want to “violate” another congress’s work...but what they really mean is they really don’t want to change anything...they’ll look glum and talk a good game but most politicians really love the govt to own and run everything..
Alas you have bought into the DIm language that some program passed by one Congress can not be undone by another Congress. What you along with the DIms and MSMediots call mandatory spending or entitlements are in fact promises.
Some promises are kept and some are not. One Congress can not bind another Congress to keep its promises. So far with the more popular of these promises Congresses have gone along with past Congresses.
If the economy does not start growing and generating more revenue, that will not necessarily continue forever. When two workers are supporting one retiree, the retiree necessarily will get only some fraction of what the workers produce, no matter what the retiree was promised.
Welfare recipients? Ubama isn't going to kill off the Democrat party base.
Like being dead will stop them from voting???
Good point.
Very good post.
Your picture is irrelevant to my point.
Mind if I copy that and keep on hand for my friends.
People do not realize that we have spent and taxed ourselves into oblivion. Literally. The country cannot stay on this course. People will end up dying in the streets. Either from homelessness and neglect...or from civil war.
When the unemployment of our under 25 year old male population continues to climb, added to reductions in benefits and an weakening America abroad...it is a bad, bad mix.
The best thing now is to not anticpate any entitlements, save all of your money. Screw paying down debt..you can pay it off in a year with money worth a lot less. Buy hard assets, Gold, Silver, Guns, stuff that will work a long time and that can be mobile. Because if you do not own your home....you will be moving.
Hitler was born of a plurality.
I think that's what we all were hoping for. Now it looks like we're headed into the abyss. This journey should be interesting, to say the least. I noticed the president, in his victory speech, said something like, "Now we can continue with the work of perfecting our union..." Whoa. Frightening.
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