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Saturday, January 5, 2013

Just write a check!

I am very, very dismayed at the current state of affairs in Washington, especially concerning the budget. I have posted on various other times about our need for term limits (the House of Representatives was set up with two year terms for a reason - rollover), responsible elected "leaders" that will make tough decisions, and responsibility from the elected and the electorate. If you have an interest in my thoughts on these matters, dig around the archives here. You might find a surprise or two anyway, this blog is VERY eclectic.

The current issue of the budget and the idiotically named "fiscal cliff" arguments are extraordinarily annoying. First, the much touted 'fiscal cliff" was created by the politicians that are whining about it now. The great gnashing of teeth that is taking place amongst the members of congress and the news media is ridiculous. The "cliff" was created by the inability of the elected to do anything about the actual budget problems. It was brought about by the debt ceiling deal cobbled together in August of 2011. A hard date was put into the agreement to raise taxes and cut expenditures dramatically at the end of 2012. It was reported like no one knew it was coming. The congress had over sixteen months to work it out. But, amazingly, getting themselves re-elected took priority over any mundane subject like working out a budget crisis. As I have written and said many times before - the only way to address the inaction and poor performance of congress in addressing their responsibilities is term limits. We the people must insist on it.

But, this is not the direction I was looking to take this. I wanted to address the budget, specifically spending and revenue, directly. In the post at this link I covered (in great mathematical detail) the budget deficit growth. I will not repeat it, so here:

Politicians, especially democrats, are constantly talking about taxes; tax cuts, tax increases, taxing the rich, etc. I hope to demonstrate to you that are willing to listen that tax revenues are not the problem - spending is. I am now going to numb you to tears with figures. (fyi, the dollar amounts are all in constant 2005 dollars, for no other reason than the charts I am using for documentation are also)

One of the problems I see with our current state of affairs is the way in which HUGE numbers are thrown out with no realization as to how huge they really are. A billion, for example, how large is a billion. One example is a stack of pennies. If you stacked one billion pennies atop one another they would reach a height of about 1,000 miles. If you make $50,000 a year, in 20 years you would have earned a million dollars. But, to earn a billion would take you 20,000 years! And just for giggles - it would take you 20 million years to earn a trillion. I actually heard a talking head on the radio talking about some expenditure cuts that would amount to tens of billions of dollars that said basically it was a waste of time. That amount was not worth worrying about as it was such a small percentage of the overall problem. Tens of billions is tens of billions. There are many, many countries of the world where tens of billions of dollars represents their entire government expenditures.

Speaking of expenditures, here are some facts. (remember 2005 dollars so you can compare)
The first year the U.S. spent a trillion dollars was 1945 (close in 1944) due to WWII. Then things started getting back to "normal" and it was not until 1968 until the trillion dollar level was breached again. After a few years of "backsliding" in 1972 the expenditures exceeded a trillion and never went back below. It took twenty-eight years, until 2000 to hit two trillion. Now the fun really starts. It took just six years to exceed the two and a half trillion (2006) and then just three years to cross the three trillion threshold. The U.S. government has spent well over three trillion a year every year since.

To compare this to the population of the U.S. The population went up 32.2% from 1972 to 2000 with a doubling of expenditures (all figures rounded). The population from 2000 to 2006 went up 5.7% with an expenditure growth of 25.6%! From 2000 to 2011 the population went up 10.3% with an expenditure growth of 53.2%. The bulk of that growth has been from 2008.

Over THREE TRILLION dollars a year in expenditures. This is not sustainable. As I have said before, we cannot tax people enough to pay for this. Now the real problem: we also cannot keep borrowing to pay for this. Now to give you the other side of the equation (and I am going to be brief as I gave you a link to details above) with revenues:
In 1972 (remember, the first year of non-stop trillion dollar expenditures) the total revenues of the U.S. government were just a shade over 908 billion dollars. The revenues exceeded two trillion for the first time in 1998. The largest revenue year ever was 2007 at over 2.4 trillion dollars. The second highest year of receipts was 2006 at over 2.3 trillion. (but wait you may say - these were both years AFTER the dreaded Bush tax cuts one and two took effect! Correct, but not the point of this blog post).

Now, as any of you that run a household budget or a business know, the problem comes in when expenditures exceed income. Although there have been more years since WWII where this has occurred than where it has not (only nine without a deficit), the first trillion dollar deficits have all happened in the past four years (including 2012, which is not finalized yet). FYI, except for WWII years, the deficit had never exceeded even half a trillion per year except for the past four!!

Spending is the problem. We MUST cut spending. ALL spending: defense, social security, welfare, unemployment, foreign aid, support for the arts, crop support, FEMA, transportation, and any and everything else.

So, in addition to the cardinal rules - THERE IS NO GOVERNMENT MONEY and CORPORATIONS DO NOT PAY TAXES, PEOPLE PAY TAXES;  we now have a new one: WE MUST CUT GOVERNMENT SPENDING!  (and maybe that term limit thing)