“As the Government Turns”

Social Security and Defense Held Hostage, Episode 75

The federal government is our alcoholic uncle addicted to power and money. He throws divisive words at the masses to distract us from the true issue…a bloated government. As political figures and their cohorts spend more money than most countries can produce, hard working Americans are left with the tab. The people who question this insanity areso.

Without significant spending cuts and changes to the way we spend the American people’s money, there will be no debt limit increase,” stated Representative John Boehner

There are deficits as far as we can see. Our projected 10-year federal budget has this borrowing-spending saga remaining throughout the remainder of the decade. Since 1962, the debt ceiling has been raised 74 times. This year’s federal spending topples $3.77 trillion and it has doubled since 2000. Only China and Japan are able to produce enough to maintain a federal government like ours. After 824 days of not passing a budget, credit agencies are threatening to downgrade our credit ratings. Not for extending our credit but our reckless spending. After Greece, Portugal and other European nations are forced into austerity measures, our political class continues to march us to serfdom. Accumulating debt even our grandchildren will not be able to overcome.

 “Under these circumstances, any credible economist would tell you that we should be reducing debt, not increasing it.” states Senator Harry Reid, March 2006

Politicians submit solutions not to solve problems but create distractions and divisiveness. Back in February, the Republicans proposed to cut $70 million from Planned Parenthood. Nothing could’ve been more divisive than introducing a social measure like abortion into the budget discussion. Luckily, the Treasury Secretary diverted catastrophe. With the latest debt crisis, the Tea Party was the culprit. Everyone but the politician was guilty of stopping progress.  As Washington diverts our attention, the rhetoric goes toward taxing the rich and closing loopholes, in essence…taxing Americans for more money.

“In the long term, we all know — long-term — we have over 50 trillion in unfunded liabilities and very popular programs that Americans depend on, Medicare, Social Security, Medicaid, that are simply on an unsustainable path,” stated Mitch McConnell

According to the Heritage Foundation, total Federal spending has exponentially outpaced the median income. This spending increased because our bureaucrats expand programs, not because there are more people added. Therefore, bankrupting the system to the point at which it cannot sustain itself, thus, program broken for everyone and both Democrats and Republicans have caused this debacle.

One of the themes is the catastrophe that defaulting will cause. Over the past century our country has defaulted in the past. In 1933, Congress passed the “Joint Resolution to Assure Uniform Value to the Coins and Currencies of the United States” where Franklin D. Roosevelt banned the ownership of gold coins that ended up devaluing the savings of Americans. Of course, it was branded as a loss of convertibility. In 1968, Lyndon B. Johnson looked to silver where everything invested in silver was lost. The next default
Richard Nixon in 1972, declaring us all Keynesians, converting our monetary system from a gold backed currency to one backed by paper and a printing press. We have been defaulting ever since.

“Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better”, stated by Senator Barrack Obama

The political classes have gotten themselves off the hook again. As the drama mounts, Americans are in a lose-lose situation. We can either 1) accept the Debt Commissions’
recommendations or 2) cut spending on Social Security and Defense. As there will be Democrats on one side yelling about Social Security and Republicans on the other screaming about Defense, the political minions who set up the scenario, look like saviors. Federal spending has grown ten times faster than median income since 1970.

Second, we always hear about raising taxes on the rich but our tax revenue always remains around 18% of GDP. It is not about someone giving their fair share, it’s about making the pie bigger. In the charts below show the amount of revenue collected compared to GDP. People change their habits when the government starts collecting more taxes. In the chart on the right, it shows the tax rate on the top individuals (those evil rich) during the same duration…it garnered no additional revenue. When tax rates change; people change their habits including the rich. The real answer is to expand our economy. If the pie is bigger, you’ll have more people employed to pay taxes and increase revenue.

And last but not least, the Federal, State and Local Government’s spending since 1965 has nearly double when compared to Median Household Income. If you think about it, a large portion of your paycheck is reduced for Medicare, Medicaid and Social Security, along with your federal taxes. At this rate, these entitlement programs cannot continue in their current form. Meanwhile, our government have decided that they must invest it.

America…the time has come to get out of the box as some throw accusations and plans that have been tried before. Politicians and their pundits scream false arguments intended to created animosity and friction amongst the masses. Meanwhile, we have blacks against whites, Republicans against Democrats or Tea Party against everyone else. While one side fumes at the thought of the other for reasons they don’t know, our political and elite class create boggy men so they can push their agenda while we are fighting over false choices. The ones with the solutions fight as the fox guards the hen house.

Congratulations to those Republicans and Democrats who stood for what was right, to cut Washington’s addiction–spending. It is that simple…reduce spending.

Stay tuned for the next episode of “As the Government Turns.” It is a shame that we have allowed them into all aspects of our life. Can’t wait to see the healthcare drama enter the story.