National Debt

The Problem
The government intends to spend $3.83 trillion in 2011, that would have a deficit over $1.3 trillion. About $2.4 trillion comes from mandatory spending programs (Social Security, Medicare, Medicaid, Unemployment benefits, and interest on the debt. That rises about 5-15% every year. So about half of our spending is on old people.

The discretionary spending, what everyone likes to talk about, is $1.4 trillion ($650 billion is defense). It increased 13% in 2010 and will increase again in 2011. Obama proposes freezing part of that amount AFTER 2011. It is not even a drop in the bucket, it is a drop in the dolphin tank.

Past few years the feds have had between $2.4 and $2.6 trillion in revenue. To balance the budget we would need to cut spending (from Obama's plan) by $1.3 trillion. Not easy.

How do we balance the budget?
Well if it was just out discretionary spending alone, all we really need to do is cut around $1.1 or $1.3 trillion from that to get down to the revenue level. Wait, that would mean cutting defense by 90%. Not a good idea. What if we raise more revenue? Overall tax revenues would have to be increased by 40%. Does that sound like a good idea to you? What kind of tax hikes would be required for that? We would turn into Sweden or France with their 50% tax rates, and not just for rich people mind you.

What about economic growth to push up revenues? That has always been done through tax cuts, but even then the economy would have to expand dramatically for a while for us to catch up to what we owe. We will never be able to catch up to the skyrocketing costs of social security and medicare alone in the next twenty years.

What if we get rid of the old people? Euthanasia would certainly solve the problem but its not really a popular option. Wait, raising the retirement age is probably a better option, more humane, and cheaper than the roving death squads needed for the first option. Life Expectancy in 1945 was 60, retirement age was 63. Now its around 80 years, but retirement is 65 or 67 I believe. So really Social Security was never meant to provide income for people for more than 5-10 years really. If only all that smoking, red meat, and dangerous toys had thinned the heard.

As someone who will be paying into Social Security for the next thirty to forty years, and will likely have to be part of the generation that pays off the $12 trillion debt, these aren't policy choices, they are necessary.

Forget what Republicans and Democrats say about discretionary spending cuts and economic growth to push up tax revenue. Until we can make the really hard decisions we are fixing for a FALL in probably 10-20 years. A Great Depression and a likely fall of us as a Global Power. Without us there will be war in numerous places across the globe. Tyrants will seize the opportunity of a now fallen US.

This country will have to accept the fact that the federal government was not meant to be involved in education, housing, banks, healthcare, and unemployment payouts. In the past sixty years we have gone far beyond the original intent of the founders, stretching the Constitution to the breaking point. It has had its consequences.

As a country we are getting weaker every year while potential rivals China and India appear to be growing. The power gap between us and other world powers is shrinking. We need to accept the fact that we will not be the dominating superpower we have been over the past twenty years. We should aim to be #1 for as long as possible, but to do that we need to get our own house in order first. Until then, I believe our time at the top is very short.