So You Think You Can Spend?
I know, the title is a bit…game show-y but lets be real here, our federal deficit is a serious problem. The CBO (Congressional Budget Office) released a new report basically stating that if we continue on this path of extreme spending and the United States government continues to fail to live within its means we risk total and utter annihilation! (Ok, I added that last part for effect, we all know that won’t happen until the Zombie Apocalypse.)
The fact of the matter is, we are in trouble. According to the CBO “Unless policymakers restrain the growth of spending, increase revenues significantly as a share of GDP, or adopt some combination of those two approaches, growing budget deficits will cause debt to rise to unsupportable levels.” UNSUPPORTABLE LEVELS!! Do you even understand what that means? Probably a massive economic collapse, a la Greece. For a good look at the national debt and the real numbers associated with it, check out the U.S. Debt Clock. I should warn you, the clock has been known to make you feel dizzy, sick to your stomach, angry and anti-government spending. Click that link at your own risk.
The CBO goes on to explain more consequences of out of control spending and lack of revenue.
One impact of rising debt is that increased government borrowing tends to crowd out private investment in productive capital, because the portion of people’s savings used to buy government securities is not available to fund such investment. The result is a smaller capital stock and lower output and incomes in the long run than would otherwise be the case.
Another problem that comes out of excessive spending and borrowing is that the more we borrow the more we must pay in interest. If you pay 5% interest on a $100 loan, your yearly interest payment would be $5. But if you take out a $200 loan with 5% interest, your interest payment doubles to $10. The same thing happens when the U.S. government borrows money from…say China. Our interest payments go up every single time. It doesn’t really make much sense to borrow without increasing revenue to pay our interest. And that’s really the only option we have if we need to keep funding entitlements like Medicare, Social Security, and accumulating unfunded liabilities.
Here’s a great video I found that explains our debt crisis in pretty basic terms.
Another shocking visual to explain to you how much our taxes would have to go up simply to cover entitlement spending.
Note: This doesn’t even include defense spending and other necessary spending by the government.
Now, I know there are some of you that are ok with seeing the top tax brackets pay nearly 90% in taxes. But it’s fair to keep in mind, that top tax bracket, is your employer, you know, the guy who makes it possible for you to have a job. If his taxes continue to go up, guess who won’t have a job much longer, yeah, that would be you. And for those at the bottom of the tax bracket, you really think you could get by with 30% of your income being taken by the government? That’s nearly 10,000 from your 30,000 income, leaving you with only 20,000 of your hard earned money, that is, if you still have a job.
The growing national debt should be one of our biggest concerns. As congress continues to pass laws that require trillions of dollars, don’t you think we should be a little more concerned where that money comes from? There’s not a magic button the government can hit to make more money. We can’t just go to the money tree and take what we need. The easiest way to cure our debt problem is to start cutting entitlements. We cannot support them. Our government is writing checks with nothing more than an I.O.U. to pay for them. That’s not good fiscal policy, that’s simply leading us down the same path as Greece, and they’re bankrupt and in ruin. If you think America is a long way from that, I think you’d better think again.