Monday, October 21, 2013

Why This Country Is Doomed

FreedomWorks has a graph that shows what has been happening to the national debt:


Look at it carefully.  As bad as Bush's two terms were (about a five trillion dollar increase in the national debt), Obama has managed to exceed that with a more than six trillion dollar increase in less than one and a half terms.  As much as some like to blame the Iraq War, this was only (and I'll try not to gasp as I write this), $709 billion -- less than Obama's much vaunted stimulus package, and at most only about 14% of what Bush contributed to the national debt.  Doubtless, Democrats will blame the problem on low tax rates, and that certainly contributed.  But notice that revenues actually rose until the economy collapsed in 2008.

The core problem is that the corruption of the political class in America, in both parties, makes it easier to give out goodies, usually to those who are already rich, than to say no to them.  Money given out to the poor is a pretty tiny fraction of the problem, but it is what enables Democrats to keep pretending that they are the party of the poor, instead of what they are: the party of Wall Street and green looters of the Treasury.

UPDATE: What is really tragic is how easy it would be to fix this.  Here is a spreadsheet from the White House Office of Management and Budget that shows budgets in inflation adjusted dollars from 1940 through estimated 2018.  If the federal government would spend what it did in 2006 (you know, while we were fighting a costly war in Iraq), $2.655 trillion a year, combined with the 2013 estimate for receipts (2.712 trillion a year), we would have a balanced budget -- actually, a slight surplus.  Sure, we have more people out of work today than in 2006, and the government spends more on unemployment and various support programs -- but we are not fighting a war in Iraq, either.

9 comments:

Chris Byrne said...

I've got a pretty detailed breakdown of the debt growth in this post:

http://anarchangel.blogspot.com/2013/10/a-not-so-brief-explanation-and-history.html

ErisGuy said...

Obama can’t make America into a Communist country without wrecking the currency.

Weisshaupt said...

There was no Dot-Com surplus. This graph does not include interdepartmental debt- the money stolen from SSI and other govt pensions. Further, there is n mention of the unfunded liabilities- the governments real promises to pay out in the future to SSI, Medicare, Medicaid, Welfare, Obamacare -- which any private corporation would have to show on its balance sheet. Include those and we need another 30-200 Trillion in the next 30 years. You can't "fix" this as suggested. Going back to 2006 levels is just kicking the can. There is no choice now by an explicit default where someone doesn't get paid, a partial default where we pay pennies on the dollar or an implicit default where we simply debase the currency and pay for it with money printing. The US Treasuries already pay a negative return with regards to real inflation ( not the fudged number, the real one we see in the real world where dog food and lobster are not inter-changeable) Over and over, throughout history, this occurs again and again. Its game over for the dollar, and probably in the next 10 years. Plan accordingly.

Anonymous Snowboarder said...

The cost of Iraq is far larger - you neglect to account for the medical cost of care for the vets of the coming decades. That figure was estimated to be over 1.3T in 2010 by the Washington Times, a not very liberal paper.

Clayton said...

I don't doubt that there are substantial future medical care costs for Iraq vets, and doubtless play some part in current costs. If the 1.3T is over the next 30 years, that is about $43 billion a year. Not trivial, but relative to these enormous deficits, pretty small.

Clayton said...

The off-budget stuff was a clever little piece of fraud, but the numbers from OMB appear to be the actual out of pocket expenditures. We have enough revenue; we need to cut back spending to sustainable levels. At this point, even a balanced budget would so energize the economy and put so many people back to work that subsequent years would have strong enough surpluses to perhaps actually end the off-budget stuff.

Brian Sprague said...

The math in your update sound great. Unfortunately, when you adjust for inflation $2.655 trillion in 2006 dollars becomes $3.08 trillion in 2013. So, surprisingly, amazingly even, we're spending less now than we were then, by almost 14%.

SukieTawdry said...

Note to FreedomWorks: There was no surplus in 2000. The government borrowed from itself in that budget year just as it has in every budget year for decades.

Clayton said...

Brian Sprague: The numbers in the spreadsheet were inflation adjusted already, in 2005 dollars.