We’re Screwed

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For all the debate over spending and revenue, a few convenient facts seem to be ignored by most politicians and media. A simple graph shows the fundamental problem. Below the $0 on the upper graph is total federal spending by major category. You see a fairly dramatic and consistent increase in spending through 2016. The big problem is on the revenue side. You will notice a slight dip over the last few years as revenue peaked in 2008 and declined, as expected during the recession. The problem is the projection of revenues over the next few years. Does anyone really believe that revenue is going to increase by an average of 12% a year for the next 5 years? These revenue numbers assume the expiration of the Bush tax cuts and any additional tax increases passed as part of Obamacare, which in principle could increase tax revenue. But that much? We have been running trillion dollar+ deficits for a couple of years and the only reason those are forecast to go away is because of overly optimistic revenue increases. The fact is, revenue is not going to increase nearly that much because the economy is not recovering, and likely will not recover any time in the near future. Bottom line is, we will continue to run trillion dollar deficits for at least the next five years, taking our national debt from $14.3 trillion to upward of $20 trillion by 2016. Does anyone really believe that kind of debt is sustainable? If we are talking about a debt downgrade at $14.3 trillion, what sort of credit rating will we have at $20 trillion in a couple of years?

Congress is set to vote on a token spending reduction package so the debt level can increase. Baseline spending may get cut, but not anything significant that will slow down government spending. There are no real spending or budgeting reforms as part of the package. Somehow Washington DC thinks it continues to be business as usual and if they patch a few minor problems everything will work out. Bottom line: we are screwed and Congress and President Obama could care less. They continue to put their own political fortunes above that of the nation. Instead of fixing the problem now they kicked it down the road—where it will be even more difficult to fix.

About Craig Mayberry

Closed Account • Member since Jan 17, 2008

While writing his articles from 2008 to 2011, Craig lived near Lynden and taught at both Whatcom Community College and Western Washington University. He was active in politics and ran for public [...]

Comments by Readers

Tip Johnson

Aug 01, 2011

Craig,

What kind of budget reforms do you advocate?  And id it really Obama’s fault that revenues are not increased?  Wasn’t it the Republicans who categorically refused to raise any taxes?

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Craig Mayberry

Aug 01, 2011

Tip,

One of my points is that revenues have to increase by 12% just to meet the current projections.  Taxes are going up even if they were not passed specifically in this legislation.  As of today the Bush tax cuts are expiring for everyone so if the decision is made to keep them on everyone that earns less than $250,000 then the deficit gets even worse than it is right now.  You also have tax increases from Obamacare baked into the numbers, how much more do we need to raise taxes.  You cannot tax your way out of this, period.  Fine, tax the rich a couple of more percent on top of the increase they will see next year when the Bush tax cuts expire, it will not even make a dent.  Frankly, you could not double the taxes on the rich and it would help close the gap that much.

What would I do.  The first fundamental problem is the baseline budgeting process that is used.  The baseline budget increase every year to the tune of 6% or so if Congress does nothing and then anything that is done is called a cut (when in fact as we could define cut it is not really a cut).  This would be a little like your employer coming to you and saying that your income for 2011 is going to go from $50,000 to $60,000 and then coming back a little while later and saying I can only pay you $55,000 this year and then you whining and crying that your budget has been cut by $5,000.  Only in Washington (and Olympia) can a $5,000 increase be called a cut.  The process itself is dysfunctional.  The first step would be to eliminate baseline budgeting and going to a zero based budget.  The second thing is we spend too much money to begin with.  It is completely bogus that every time anyone talks about reducing spending that the democrats start whining that the poor and senior citizens will be hurt.  The government is bloated and inefficient and you could provide the same level of service at 80% of the cost if they would just think about it a little bit and do some major restructuring.

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Rob Stratton

Aug 02, 2011

Vote Ron Paul. He has voted no consistently against both pseudo parties. Why? Oh because he long foresaw this happening and actually checks if a law is constitutional. Something the majority of those in “power” do anymore.

We need to end the Fed, go back to a monetary system based on something real, we need to drastically reduce our military budget, and that spent on welfare programs (I include all the foreign aid we give federally to other countries). We need to repeal the 16 and17th amendments. Stop Federal bribing of States, states need to learn to float or sink on their own.

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Rob Stratton

Aug 02, 2011

Edit: I meant to say “those in power rarely do anymore”.

Is there a way to see this whole text box? It hampers my already poor editing process. :)

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Hue Beattie

Aug 02, 2011

Florida will seem to sink as sea level rises.

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