Money and Taxes - or We are BROKE!

The current administration is being labeled with many names. Most of these are due to two of the major activities being carried out (or that are being tried to be carried out!) - dealing with and deporting illegal aliens and government spending. I will leave the former for later after just saying that having a country where anyone can show up and get similar (or better?) benefits than long-standing citizens, there is a serious issue. Starting out by breaking the law is no way to start a relationship. But, enough of that subject.

On spending. Since reading details does not seem to be what a lot of folks do these days I will break it down to the heading of this post - WE ARE BROKE! I am going to offer many facts and figures to document this, but if you don't read any further, remember that fact. 

I have not given my list of absolutes in a while, as I do not post nearly as much. I have been writing books for the last seven years and that takes time that I would have spent writing here. (there are many posts on this site where I go into detail on these and others, so I will try to make this brief) Here are the facts:

1) There is no government money. ALL money comes from two sources: first, from taxes or other levies like fines and tariffs or second by being newly printed by the Treasury. Both put a burden on the taxpayer/citizen. The first by taking income and the second by devaluing money. That means you either have less to spend or what you do have buys less.

2) Businesses/Companies/Corporations do not exist to offer jobs and benefits. Outside of a few non-profits or charities that are run as such, these entities exist to get a return on capital for their owners. Any salaries and/or benefits offered should be whatever is required to obtain employees to do the jobs needed. Mandating a minimum wage above that level is inflationary.

Now to what I started on - the fact that the USA is broke. As of this writing the US National debt is over $37,000,000,000,000! (that is thirty-seven TRILLION) if you want to see it going up, go to US Debt Clock.org. It has a lot of facts on the page and counter style "clocks" that are tracking our debt and other figures. The entire GDP of the world is said to be just over $111 trillion dollars. (GDP is the total output of an economy - the value of everything spent and produced). That means that the US national debt is equal to one-third of the entire world's output!

Why does this matter? Who do we owe the money to anyway? Why not just default and start over? 

The money is owed to citizens that hold bonds, companies that hold government securities, the Fed that holds lots of securities, and other governments hold about one-fourth of the total. If the USA defaulted it would bring down the world economy for the most part. The debt matters for that reason and the fact that the interest on the debt is now the second largest expenditure by the Federal government. It is more than all the other areas of expenditure except Social Security. (if you add Medicare and Medicaid together they do exceed the interest by a small amount. So it could be number three.) Here is a snapshot of expenditures so far this year - 2025 (the Federal budget runs from October 1st until September 30th of the following year - so fiscal 2025 is almost over) 

I was not going to get into it, but I know that some of you are thinking - "Why is Social Security listed? I paid into it! That is my money!" True, but most people get more out of social security than they paid into it. It is paid by the government as an expense. There is a trust fund that is backed by government bonds, but the checks come from the Treasury. (BTW, that is another reason you don't want the government to default on the national debt. Bonds are part of that debt. If the government defaulted the Social Security trust fund would default as well.)

If households were run like the Federal Government as far as budgeting here is what 2024 would have looked like:

  

That would be pretty irresponsible, yes? Irresponsible indeed!

 

This is also about the time that the cry goes up to "TAX THE RICH!" The rich already pay a disproportionate percentage of income taxes. How much is enough? I am not sure. I do know that in other countries that have continued to tax the rich at increasing rates, the rich have taken their wealth and gone elsewhere. We need to be careful of that as well since the wealthy pay a lot of our taxes now. See the chart: 

 They also paid at the highest tax rates! (even after the rich got all the Trump Tax cuts the percentage paid by the rich went up) See here:

 One of my rules/laws I left out at the beginning was purposeful. I wanted to bring it up now. Another cry is "TAX THE CORPORATIONS". Corporations do pay a relatively low tax rate. However, corporations DO NOT PAY TAXES! Their customers do. Every business has a line on their financial documents that show taxes. They are accounted for as a cost of doing business. If they paid more in taxes the people that bought their goods and services would just pay more to cover those taxes. I have seen the arguments that say "They can't raise prices because of competition.". If every corporation pays a higher rate, every corporation will raise prices to cover it without a worry about competition. People pay taxes, not corporations.

 

We must cut spending. ALL departments need to be held accountable for what they spend and how they spend it. DOGE was hated by those that live of of the government teat. What DOGE was and to some extent still is trying to do is cut waste. The Defense Department has failed every audit since World War II. Since that is the area where a lot of taxpayer dollars go, that is not acceptible. The issue is, the Defense Department is a favorite of Congress-critters to "spread the wealth" in their States or Districts. The Defense Department has come up with a list of facilities that can be shut down on several occasions. Because it will mean a loss of income for that area the Congress-critter makes sure the Fort, Camp, Field, or whatever stays open. We also have billions (with a B) if dollars worth of equipment that is spread all over the world. These weapons and equipment also fail audits when checked. 

 

Medicare and Medicaid both are riddled with fraud. I know, you hear the opposite from those spending the money, but when you can catch people buying a Lamborghini and owning her own business but receiving Medicaid, do you really believe she is the only one? (in late July 2025 a woman in Slidell, LA. was arrested for Medicare and other fraud - https://www.live5news.com/2025/07/29/woman-arrested-after-buying-lamborghini-while-getting-medicaid-benefits-authorities-say/ )

 

Finding a small amount of fraud and theft is like finding one roach in your house. Unless it just came in on a bag or package, you have a roach issue. Same with mice. The odds of seeing signs of one mouse are slim to none. If you do, get out the traps or call the exterminator.

 

In one of the older posts I have on this site I offered a solution to some of the expenditure problem. If you know anyone in government you probably know that September is a big month for buying excess for a lot of departments. As mentioned above, September is the last month of the Fiscal year. When you don't spend your budget you may have your next year's budget cut. So, you spend all the money. You load up on "stuff" to make sure you are poor when the budget committee reviews the numbers. (I know there are many government employees and departments that are underfunded. I also know that there are employees and departments that spend a LOT in September.)

 

Any money budgeted but not spent would have half given as a cash bonus to employees and half would be returned to the Treasury. The next years budget would be reduced by the half amount returned unless it was shown that growth was needed due to increased staffing or something legitimate. With bonuses going to the people overseeing the money I am betting the money would be spend more carefully.

 

Bottom-line, we MUST cut government spending. All areas, all departments. If we don't there will come a day that we have no money to spend as the government won't be able to write any more bad checks.