There are going to be SO many people in this country who will shocked, shocked! when the USA goes over the fiscal cliff.
And I'm not talking about "Taxmageddon" either.
Our elite "betters" - those who we collectively refer to as "the Establishment" which covers both Democrats and Republicans alike - have kept a large portion of the populace ignorant about our fiscal circumstances. So here's a little remedial math to absorb and 10 "easy" steps to oblivion:
The Federal Government spends money in three ways:
1. Discretionary spending: this includes nearly everything we think of related to government– the US military, Air Force One, the Department of Homeland Security, TSA agents, etc.
2. Mandatory spending: this Mandatory spending includes entitlements like Medicare, Social Security, VA benefits, etc. which are REQUIRED by law to be paid.
3. Interest on the debt: the amount we pay to rent the currently $16+ trillion we owe.
Mandatory spending and debt interest get paid automatically. Like auto-drafting your checking account to pay your monthly credit card bill, the money is deducted automatically so Congress never gets to vote on this spending. It's gone, baby, gone.
Between the steady increase in retiring baby boomers, causing entitlement spending to grow ever faster, and the excessive borrowing to pay for the shortfall in spending vs. income, 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.
"Ha !!," you say. "That's 2025: plenty of time to correct the ship of state." Except that it won't take 15 years. It already occurred THE VERY NEXT YEAR!!
"Oh, shit !!," you say. Me, too.
4. 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.
Y'all with me so far? Good.
For Fiscal Year 2012 which just ended on September 30th, that shortfall increased 43% to $251.8 billion.
Just to keep that in perspective, you could eliminate ALL discretionary spending - that includes the entire military budget, plus the SEC, FBI, EPA, TSA, DHS, IRS, etc., and we would still be in the hole for over a quarter of a trillion dollars!
5. Raising taxes won’t help. Surprise! Yeah, you read that right, all of you tax-n-spenders, you "make the rich people pay"ers. It doesn't matter.
Since the end of World War II, tax receipts in the US have averaged 17.7% of GDP, with a range from as low as 14.4% to as high as 20.6% of GDP.
During that period, however, actual tax rates have varied wildly. Individual tax rates have ranged from 10% to 94%; corporate rates from 15% to 53% Gift taxes, estate taxes, etc. have all varied. And yet, total tax revenue has stayed relatively constant at 17.7% of GDP.
It doesn’t matter how much they increase tax rates– they won’t collect any more money.
6. 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.
7. 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).
You doubt the picture being drawn here for you? Just consider: 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.
8. Not to mention, the numbers will continue to only 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.
9. 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.
10. Bottom line, the US government is legally bound to spend more money on mandatory entitlements and interest than it can possibly 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.
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You just can't spend $4 trillion while only taking in $2 trillion. Even if, in the infinite wisdom of the Occupy Wall Street ("OWS") crowd, we were to confiscate the entire income of the top 1% of earners (i.e., without deducting any expenses) this one-time revenue windfall would only yield about $2.2 trillion (approximately 1.2 million households earning an average of $1.87 million each). And then what!!??
This is not a political problem, it’s a moral one. The numbers tell the whole frightening story. Last week's election is merely a choice of who is going to captain the sinking Titanic.
Q.E.D.
