Posted on 03/16/2011 8:23:42 AM PDT by triumphant values
We have now gotten to the point — as I noted yesterday — where if national defense, interstate highways, national parks, homeland security, and all other discretionary programs somehow became absolutely free, we’d still have a budget deficit. The White House Office of Management and Budget projects that in the current fiscal year (2011), mandatory spending alone will exceed all federal receipts. So even if we didn’t spend a single cent on discretionary programs, we still wouldn’t be able to balance our budget this year — let alone pay off any of the $14 trillion in debt that we have already accumulated.
Just an Olympiad ago, in 2007, the picture was quite different. In fact, in that year, federal revenues not only exceeded mandatory spending, but they exceeded it by more than $1 trillion ($1.117 trillion, to be more exact). The next year, 2008, during which the gap fell to a still-huge $914 billion, the Bush administration released a report issuing a rather dire warning (p. 25). The report said that, “if left unchanged, mandatory spending alone is projected to exceed total projected Government receipts in approximately 50 years.” That dire prediction has now come true — about 50 years earlier than projected.
...
At the same time, the baby boomers’ retirements are looming, which means higher entitlement expenditures and a smaller proportion of the population available to finance them.
Just try to explain this to the "I want my Social Security check, dammit" crowd here on FR and watch the tantrum.
Forgive me, but what exactly grew since 2007?
SS? Medicare? And the “stimulus” (which was mostly Medicare)? Federal payrolls (would that be mandatory or discretionary? Seems like discretionary).
I am generally familiar with the numbers and the trends, but I don’t have a handle on EXACTLY what has increased so dramatically.
Harry Reid: “Social Security is Fine,” Crisis Being “Perpetuated by People who Don’t Like Government”…
Why do you hate government ?!should you be on a watch list?
Okay, I’ll bite. Eliminate the whole d@mn thing. Will I still have to pay the 15.3% on top of my Federal Income tax? You think they’ll go for that? I’ve got a pink unicorn outside too.
All that is left is hyperinflation. Oh great.
There is no such thing as “Mandatory Spending” for the federal government. Even the items listed in the Constitution are not given dollar amounts.
So what current spending is mandatory? None of it.
Well, they could write "Mandatory for all intents and purposes in a republic with universal suffrage", but that's a pretty cumbersome phrase that most editors would frown upon.
“Just try to explain this to the “I want my Social Security check, dammit” crowd here on FR and watch the tantrum. “
Yea, I’ve been through the wringer here on that also. We need to do one (or a combination) of the following two things:
1) Massive tax increases, along the lines of doubling income tax rates (or at least revenues), a VAT, and/or a $6.00 gasoline tax (per gallon). Do two of the above 3 and you just balance the budget (speaking in a static sense, assuming no effect on economic activity).
2) Serious entitlement cuts. This would mean making Social Security and Medicare into welfare programs, and even requiring family members with money to help out first, before the government carries the bill.
There is NO WAY people on this site will agree to either option (or even pieces of either option), so it’s pretty much game over for the US as an economic superpower. It was fun, and I enjoyed it...but I guess the Baby Boomers (at least those on the left) will FINALLY achieve their dream from their college days in the 60s, which was to wipe this country off the map (at least economically, and maybe militarily, if we’re not very, very, careful).
By the way, we are so into it now, that even ELIMINATING defense spending COMPLETELY will only take care of half of the problem...and cutting defense substantially pretty much makes us another has-been superpower, hoping that China and Russia take care of us in the future.
I’m sure Medicare has grown with the addition of the prescription drug benefit a few years ago.
Both SS and MC have a natural growth curve.
The economy has shrunk, or grown much slower than estimates. And evidently much slower than the baby-boomer coming online in SS and MC.
I’m afraid this has no good ending. It’s gonna get ugly.
Well...of the two ideas that theoretically work, in fact, #1 doesn’t really work in the real world as doubling rates won’t lead to 2X revenue and will just slow growth all the more.
So, really, the action is where it’s always been.
We have to cut entitlements.
Actually, there is a third option. We could grow out of this, in theory. But that would require eliminating corporate taxes, which is not politically realistic right now.
If we just sort of trimmed entitlements, and got growth happening through dramatic corporate tax rates going down, and including some other regulatory reform, that might work...but it will take another 3 or 4 Tea Party dominated election cycles to do that.
The other interesting thing is that the rest of the world is worse off than the US. Capital will come here, if we create the right conditions.....
US National Debt:
—
Jan 2001: $6 trillion
Jan 2009: $9.5 trillion
Jan 2011: $14 trillion
FEB 2011 alone: $225 billion (x 12 == $2.7 trillion increase)
Jan 2012 (est): 16.7 trillion
$3.5 trillion in 8 yrs under GWBush
$4.5 trillion in 2 yrs under 0failure
if we use this passed FEB as an average for the year, our debt will hit $16.7 trillion by next JAN.
that would make the total debt increase under 0failure:
$7.2 trillion
double what was spent under GWBush in 1/3 the time. or, SIX times the spending rate
SIX TIMES
and GWBush was working with 2 wars and rebuilding a military devastated by BJClinton
the ENTIRE 8 years under President Reagan, who was pushing Star Wars in an effort to win the cold war while recovering from the carter years, increased the debt a TOTAL of $1.7 trillion
The Republicans want to spend more and the Democrats want to spend more faster. Both parties have been on a pillaging spree since LBJ.
Not to be flippant, but pretty much everything.
I'm sure there's some program somewhere in the bowels of DC that didn't get increased, but it doesn't amount to anything more than change in the couch cushions.
mandatory=”all that the DC lobbyists have tightly tamped down so that CongressCritters and their staffs can’t touch it”
Thats all.
It merely depends upon how “mandatory” the sheep being feel it is...and whether they will have to go up to DC and tear up a lot of paper, wipe some computer drives, and shutter and padlock some agencies....
“The same mindset that created the problem, is not capable of the solution”
mandatory=”all that the DC lobbyists have tightly tamped down so that CongressCritters and their staffs can’t touch it”
Thats all.
It merely depends upon how “mandatory” the sheep being fleeced feel it is...and whether they will have to go up to DC and tear up a lot of paper, wipe some computer drives, and shutter and padlock some agencies....
“The same mindset that created the problem, is not capable of the solution”
The last I heard, we had more sheep grazing than were being sheared with tens of thousands entering the pasture each day.
(I really wore out the old sheep analogy there).
Here’s the problem.
We need to end this whole idea of “mandatory” and “discretionary” spending.
It’s all just “spending”. And it ALL needs to be cut.
Particularly the spending being done on things NOT enumerated in the Constitution the federal government has purvue over. All welfare programs, all education spending, all foreign aid and bribes (foreign welfare) so others will ‘like us’. All arts funding including NPR and PBS (a private company funded with public dollars and still 4-5 times a year begs you for money).
“Actually, there is a third option. We could grow out of this, in theory. But that would require eliminating corporate taxes, which is not politically realistic right now.”
Good point. I pretty much gave up on that option, given what we have in DC right now (i.e., strangulation of the economy from every angle).
As to not being able to double revenues by doubling tax rates - yep, you are right, we are in deep trouble.
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