Deficit Spending - Cause & Cure V2.0

The Cause
(Hint: Defense spending is not the problem.)
Quoting the non-partisan Congressional Budget Office:

“under current law, federal spending on Medicare and Medicaid measured as a share of GDP will rise from 4 percent today to 12 percent in 2050 and 19 percent in 2082—which, as a share of the economy, is roughly equivalent to the total amount that the federal government spends today…

Federal spending on programs other than Medicare, Medicaid, and Social Security—including national defense and a wide variety of domestic programs—is likely to contribute far less, if anything, to the upward trend in federal outlays as a share of GDP.”

Click here and here to understand why our health care costs are soaring.

Click here to examine recent deficits.

Further substantiating the CBO quote:

According to The Washington Post, these are the trends in defense spending as a percentage of GDP:

World War II - “nearly 40 percent”

Korean War - “15 percent”

Vietnam War - “10 percent”

Currently - “less than 5 percent”

From the Congressional Budget Office
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From Heritage.org
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Again quoting The Washington Post (emphasis mine):

"The enormous sums committed to mandatory federal programs such as Social Security, Medicare and Medicaid dwarf all other aspects of the budget. Left unchecked for a decade or two, they will consume a larger share of the nation's GDP than all our federal programs today combined. Coupled with increasing interest payments on the government's rising debt, they will either force up taxes or produce dangerous deficits."

From the Congressional Budget Office
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From Heritage.org
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The Cure
(Hint: Higher taxes will NOT solve the problem.)
Higher income taxes will NOT produce higher revenues.
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Higher corporate taxes mostly just drive jobs offshore.
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Government spending (at every level) is out of control.
The answer is NOT higher taxes, but lower spending.
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Representative Paul Ryan has a workable plan.
I would prefer far deeper spending cuts.
But, this is a good start.
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Predictably, Dims prefer the path to certain destruction.
ObamaCare is guaranteed to take us there (even faster).
Click here & examine the entire Heritage.org presentation.

Deficit Spending - Cause and Cure

Entitlement spending is the cause and a massive reduction in entitlement spending is the ONLY cure.

In my previous post, we put into context the current size of the publicly held federal debt and examined the mathematical certainty of the looming fiscal disaster if we do not dramatically reduce entitlement spending.

Remember, we proved in that previous post that it is a mathematical certainty that we CANNOT tax out way out of this problem!

In that post, it was noted that:

“the amount of federal debt held by the public reached the two highest levels ever during World War II and the latter stages of (finally deciding to win) The Cold War”

But, examine the next chart documenting total defense spending as a percentage of GDP.

Click the image to view the source:


We see from the above chart that Reagan increased defense spending in order to win The Cold War and Bush 43 increased defense spending to wage war against Islamo-Fascism. But, we also see that defense spending, as a percentage of GDP, has, in general, been declining since about 1968.

Now, compare the above chart to the following chart from the previous post.

Click the image & read the CBO source:

Federal debt held by the public as a percentage of gross domestic product (GDP).

So, if not defense spending, what was it, in the 1970’s, that reversed about 30 years of progress in paring down the publicly held federal debt (accumulated by FDR)? Well, in 1965, LBJ signed legislation creating Medicare & Medicaid. And, as the next chart proves, shortly thereafter we (once again) lost all control over government spending.

Click the image to enlarge & view the source:

But, the previous chart does not include the spending spree initiated by the Dems when they took control of Congress in January of 2007. The next chart is identical to the previous chart except that it includes the spending spree after the Dems took control of Congress in January of 2007.

Click the image to enlarge & view the source:

Dems (VERY dishonestly) point to the budget surpluses during the Clinton years and allege that this proves pretty much anything they want it to prove. But, the ONLY thing this proves is that Clinton was the unwitting beneficiary of:

1) A Republican Congress.

2) The single largest speculative bubble in the entire history of humanity (the dot.com bubble).

During that bubble, most of what created the budget surpluses came from enormous increases in tax receipts from short term capital gains taxes paid, in particular, by day traders. That utterly unprecedented speculative bubble is documented in the following chart of the NASDAQ:

Click the image to enlarge this chart of the NASDAQ bubble:
Click here to reproduce the above chart.
Select a custom time frame from 1/2/92 to 10/17/2002.

Side Note: As the NASDAQ bubble deflated, it lost more than 70% of its value! By contrast, the housing “crisis” resulted in a whopping 15% average decline in home prices (and, those prices have been steadily rising since last February).

Dems promise they can reproduce the budget surpluses of the Clinton years while simultaneously offering a HUGE expansion in entitlement spending.

THESE ARE LIES! DO NOT BELIEVE THEM!

If you do fall for these lies, you will be absolutely, positively dooming your children to utterly devastating economic RUIN! GUARANTEED!

Click here to read the entire CBO report.