Due to the expansion of government that occurred slowly over the past 100 years and unbelievably rapidly in the last 2 years
we now have a baseline budget of $3.8 trillion dollars that is only set to expand.
With economic growth expected to be slow at best the country is facing annual deficits in excess of $1 trillion dollars for the foreseeable future.
Medicare, Social Security and Federal Pensions are all projected to grow considerably in the coming years as the number
of retired citizens increases.
Not suprisingly, a full 7 years earlier than predicted Social Security will pay out more than it collects.
Now Social Security should have trillions of dollars in a trust fund as they have for decades collected more money
than they have paid out in benefits. Unfortunately the short sited morons in Washington have been spending that surplus
and simply putting I.O.Us in the Social Security trust fund. That means that we now must borrow more money in order to be
able to pay out those I.O.Us.
Read for yourself: Social Security to See Payout Exceed Pay-In This Year
That makes these numbers impossible to decrease and almost guaranteed to explode upward.
If you look at the Year to Date figures shown at http://www.usdebtclock.org/ for today,March 24, 2010 here is what you will see.
|Federal Expenditures (entitlements)|
|Medicare ||$184.6 Billion|
|Social Security ||$160 Billion|
|Interest on Debt ||$47.3 Billion|
|Federal Pensions ||$45 Billion|
|Total ||$436.9 Billion|
Total Tax Revenue
That leaves $60 Billion to fund everything else the federal government does, i.e defense, IRS and Home
Land Security. Hence we have a year to date deficit of $308.2 Billion dollars.
These are year to date values, meaning we have spent and borrowed this much between Jan 1, 2010 and March 24, 2010
With interest rates already as low as they have ever been the interest on the debt can only go up as both interest rates rise
and the debt continues to pile up.
Take a minute to let that sink in.
Our entitlements and interest payments now consume almost every single tax dollar the government collects
and the baby boomer retirement explosion has not yet taken effect.
Interest rates are at the absolute lowest they can possibly be, a full 3% below the historical average.
If interest rates where just at their normal level we would have paid nearly $100 billion in interest so far this year.
At some point we will no longer be able to borrow enough money to pay for all the other services so entire portions of the government will be forced to
shutdown. It is not a matter of if it will happen, only when. Please, please, please understand that.
Will it be the defense department, the IRS, the federal parks, all of it? Something will have to give as the laws
of economics like the laws of physics cannot be broken.
Need some proof, here you go:
Rates rise after weak auction results
Lets say 90% of your income went to paying your mortgage and credit card interest each month.
You would have to borrow from the bank every month to pay for everything else you do that cannot
be covered by the remaining 10% of your income.
How long would the bank continue to loan you money?
Once you owed them 5X more or 10X than you make in a year do you think they might cut you off?
If you made $100,000 a year and owed the bank $500,000 do you think they would
continue to loan you $5000 per month to pay your bills?
The following chart cleary illustrates the cliff we are heading towards
The thing to take notice of in this chart is that the amount of taxes being collected right now has fallen all
the way back to what it was in the late 1990s. We have essentially not grown our economy at all in the last 12
years and yet the size of government has doubled.
There is something else this chart clearly shows. No matter who has been in charge or what the state of the economy is the
size of government increases nearly every single year. You can find only two years in this chart spanning nearly 50 years where
the size of the federal government did not increase. In 1986-1987 and 1994-1995 we had years where spending was nearly unchanged
but those years came after a few years of significantly fast increases. The country experienced multiple recessions over this period
and yet the government never felt the need to live within its means like everyone else.
So what are the people in Washington planning to do now in the middle of a long economic downturn, create more entitlements. Grow
government larger. Healtcare has now been added to Social Security and Medicare as unfunded entitlements that
must be payed for. The total unfunded liabilities of the federal government now totals in excess of...
Be sure to put your pinky to your lip Dr. Evil style when you read that number aloud.
How we got here >>