- Almost $50 out of every $100 spent by the Federal government, $49.87, is nothing more than a massive redistribution of wealth process where the Federal government collects hundreds of billions of dollars every year in the form of Social Security, Medicare, and other taxes from some citizens and immediately turns it around and gives it back to other citizens in the form of Medicare cost coverage and Social Security income, after taking a healthy chunk off the top for itself and the government bureaucrats that operate the process.
- Thus, half of what the government spends goes to very few programs but these are the same programs that Washington politicians do not even want to hint that they need to be changed, which means that it will be nearly impossible to get out of control spending under control if you do not dare fix half of the budget being spent.
- And as more and more Baby Boomers retire, this $49.87 per hundred dollars spent is likely to go much higher, leaving fewer and fewer dollars for the other budget lines listed above.
- Defense spending is already almost $20 out of every $100 spent and Trump wants to increase this budget item, making the trend go in the wrong direction for getting this line item under control, leaving less and less money for other budget needs.
- While interest payments on the debt is only about $6.25 for every $100 spent, that is only because the Federal Reserve has kept the interest rates at historically low rates. As the Fed now starts to raise interest rates, that $6.25 spent could easily double or triple if interest rates ever get closer to historical norms.
- Obama’s ill fated budget reduction commission found ways to cut defense spending by about 15% without harming national security but Obama and every other Washington politician showed a total lack of courage and ignored the commission’s findings.
- Our book, “Love Our Country, Loathe My Government,” provided multiple ways to get Social Security spending under control including making it a means based testing for Social Security benefits, e.g. people like Bill Gates, Donald Trump, Warren Buffet, etc, would not receive Social Security benefits, allowing other, far less wealthier people to receive their full benefits.
- Every month we discuss ways to get medical costs like Medicare under control via our continuing series of posts under the theme, “The Unfolding Disasters Of Obama Care.”
- It is no secret that government programs like Medicare, Social Security, and others are so inept and inefficient that they lose upwards of $200 billion a year to criminal activities, a tragedy that should be immediately addressed with stepped up law enforcement and prosecution.
- Other, less prevalent budget line items should also be cut to just essential government services, just because a government expense is small is no reason to continue it.
- The CBO recently released its “2017 Long Term Budget Outlook” analysis which lays out Federal budget budget and economic projections for the next 30 years.
- Their analysis concludes that “time to fix the nation’s skyrocketing debt levels is running out and Congress must take immediate action to avert a future fiscal disaster.”
- Failure to act will not only be economically disastrous but will also endanger our safety and national security.
- The CBO concluded that unless spending changes are made, the public part of the national debt will rise from 77% of GDP today to an unsustainable 150% of GDP by 2047.
- Compare this 150% to the historical norm of around 40%, with the ratio being as low as 35% as late as 2007.
- The annual Federal government deficits would rise from the historically high levels of 2.9% today to a whopping 9.8% in 30 years.
- As we pointed out above, interest payments are now about 1.4% of GDP today but would go as high as 6.2%, almost four times as high, by 2047 unless spending changes are made.
- And within ten years, interest payments would consume more of the Federal budget than defense spending will.
- Things are so bad that higher taxes will not be able to resolve the impending debt disaster according to the CBO analysis. Taxes will reach 20% of GDP by 2047, severely reducing Americans’ economic freedom and still not denting the ever increasing debt level.
- In other words, Americans are not taxed enough, and cannot be taxed enough to fix the debt problem, only drastic and quick reductions in government spending will fix the debt problem.
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