Where the Budget Deficit Actually Came From(good article to see coming collapse of our lifestyle)

american thinker ^ | 4/20/11 | g richards

[bestintxas]

I found that in thinking about the budget, I did not have a good mental picture of where, exactly, and when, exactly, things had gotten out of line. So I decided to do a quick analysis of the "big pieces" of the federal budget just to get a feel for the magnitude of our financial problems and where in the budget they were located. It occurred to me that others might be interested in this as well, and that thought is the provenance of this essay.

Just to begin at the beginning, this chart is a "50,000 foot view" of the battlefield. This is a chart of GDP at the top and federal budget expenditures at the bottom.

(see chart)

The orange vertical line is at 2008, the end of the Bush (43) Administration. All the numbers and all the charts in this essay are in current dollars. That means that they are in dollars not adjusted for inflation. The growth rate of GDP that one typically hears -- 4% or 3% or 2.5% -- is a real rate that has been adjusted for inflation. But since the budget in any year concerns dollars for that year, there is no point in adjusting a historic study like this for inflation. Inflation is a different issue and is not important here because everything -- receipts, GDP, expenditures -- are in dollars of the same year and thus of the same value for that year.

This issue comes up right away in the above chart.. You might ask, "Where are the recessions?" in the GDP data. The reason you don't see them is that in current dollar terms they are very small -- they are significant in real

[bestintxas]

I wish that those we entitled over the years to watch the taxpayers' backside could be thrown in jail for what they have done to us and especially our kids.

[pigsmith]

bfl

[Beowulf9]

ping for later.

[Gator113]

No to jail.... the gallows is what they deserve.

[petercooper]

bttt

[massmike]

read later

[AppyPappy]

You mean “where it came from at”?

[arkady_renko]

Ditto

[fella]

“No to jail.... the gallows is what they deserve.”

As long as the rope in made from hemp, have to be PC,don’t ya know.

[jamaksin]

Your "... and when, exactly, things had gotten out of line ..." is too limited.

Go back at least to the New Deal, then overlay that with the decades of total Democrat control of all of the Federal government, and then overlay that with the GOP's "go along to get along" decades. [Even today the GOP has yet to master "Power Politics".] Then refine the above by removing the "accounting smoke and mirrors - shifting sands of "off books" and debt and deficit, ...

How you have kinda' a starting point.

[Paladin2]

1960 looks like the problem.

[businessprofessor]

The article is a careful dissection of the budget deficit. I think that 2007 would have been a better base year because the rats took control of Congress in 2007.

I think that the author has underestimated the impact of Social Security on the deficit. Social Security is now in a substantial cash flow deficit (about $55 billion). I think that the author is using the phony intergovernment interest transfer payments. Without these transfer payments, Social Security was in a cash flow deficit in 2010. With the reduced FICA rates for 2011, the cash flow deficit will grow.

The cash flow position of Social Security underscores the need to provide incentives for individuals to delay their Social Security benefits. I believe that individuals should be offered a payroll tax holiday in exchange for delaying benefits.

[MHGinTN]

Guillotines, we need several sharp guillotines, then use the leftovers for compost so we can keep up with Euro-trash trends.

[p. henry]

You are correct. Fiscal 2007 would be a better comparison year. The federal deficit that year was $161 billion.

[DannyTN]

Sources of the difference in the federal budget deficit between 2008 and 2011

It's not a bad analysis.

Social Security	$225 billion	20%
Medicare	$100 billion	9%
Medicaid	$100 billion	9%
Unemployment Insurance	$200 billion	18%
Defense	$150 billion	14%
Other	$170 billion	15%
Lost Recession Revenue	$300 billion	27%
Total	$1,245 billion	113%

Easily fixable items

• First the Lost Recession Revenue and the Federal Unemployment Benefits totaling $500 billion plus some of Medicaid should go away once the economy is back on track. You have to fix unemployment though and this administration isn't serious about doing that.
• The defense increase $150B can be attributed to the three wars we are fighting, and should be reduce-able if we will get serious and either win by taking out the remaining state sponsors or extricate ourselves.
• The wimpy republicans were supposed to reign in the $170B of other, but wimped out so far.

That leaves social security $200B, Medicare $100B and Medicaid $100B which are harder.

• Some of Social Security is demographics, some is fraud from people trying to get social security disability benefits because of the bad economy.
• Some of the Social security trend is early retirements due to the bad economy, that will not be a continuing trend if we will fix the economy.
• Medicare probably reflects the Bush drug plan, but I don't know how you reverse that. It's actually a smaller increase that I expect.
• And some of the Medicaid also reflects the economy. Get people working and you'll get a lot of them off of Medicaid.

Inflation adjusted charts would have been helpful. And claiming politicians have lied about social security is not generally true and not helpful, where else would you put the funds except to invest in government securities? And like any company that issues bonds, governments spend the money they borrow, or they wouldn't borrow it in the first place. Duh!

[USS Alaska]

I think that the author has underestimated the impact of Social Security on the deficit. Social Security is now in a substantial cash flow deficit (about $55 billion).

$ 55 Billion is chump change.

In order to get a mental picture of just how large our $14.3 Trillion Dollar debt is, consider this:

If you had a Trillion dollars and started to spend a MILLION DOLLARS PER SECOND it would take 32,000 YEARS, YEARS, YEARS, YEARS to spend Trillion Dollars.

Try and multiply the 32,000 by 14.3 and your head will explode, and that is the grave situation we are in.

[bestintxas]

In writing the same article in a year or two, the massive increases in interest payments caused by short-term borrowing decisions started by Clinton in the present of rising interest rates, will take over to be #1 in his list.

We are looking at another reason to jail/hang em.

[geologist]

We have a President that does not love America.

There are powers that are locked on to the idea of One World Government, One currency, and thus somewhere there is one power in control of it all. We are seeing complete loss of America's control of America in just over 2 years. Who would have believed it could happen so quickly? It did, it has, it is.

The process has been rather long, but suddenly on warp drive to accomplish it. The redistribution of wealth has been happening in ways for years. Foreign aid, The World bank (meaning America) the United Nations, they are weak, yet they have stolen millions of dollars over many years. We do nothing. We provide the place, the monies, and mainly the power. There is a traitor among us. One that has power, and is in a hurry!

Perhaps there is time to halt this process and work our way back: IF We get back to our Constitution and stop this tyranny of the minority, political correctness, and all such socialistic, communistic, Marxist policies and government. Pray to God for the return of a Christian America, built on Christian principles. in Jesus name and in repentance for our turning away from God. Nothing is impossible for God. Amen.

[Deo volente]

At some point, total revenues will equal the interest payment on the debt, and we'll have not a penny for anything else (defense, Social Security, Medicare, etc.). What are we going to do then?

[bestintxas]

am pleased to hear of a scientist with religious values.