Entitlements consume, for all intents and purposes, every dollar of tax receipts in the here and now. Not tomorrow, not as growth in medical spending occurs, not in the future.
Right here, right now, today.
Note that we haven't spent one nickel on defense yet. Nor have we paid the interest on the debt, which is quite mandatory. Nor have we funded one of our so-called "discretionary" programs, including Homeland Security, Energy, Education, HUD, Department of State, Veterans Affairs, Justice or anything else.
What President Obama told you is that The Federal Government has no plan to deal with this, not now and not in the future. It cannot even meet its own entitlement spending from the taxes it collects, leaving the entirety of the rest of the government, including national defense, to be put on the credit card.
You were told, today, that our government is insolvent.
Not "might become" insolvent if we don't change our ways.
The United States is insolvent, right here, right now, today, and The President announced it for all who cared to listen worldwide on national television.
President Obama says "we can't afford" that $700 billion. But that number is over 10 years, as are all numbers proffered by the CBO and other agencies when talking about the budget and debt. Those numbers are thrown around because they make you think they're big now, which is especially important when a politician wants to lie to you about what they can and will do about deficits tomorrow.
In point of fact it's $70 billion a year, or about $5.8 billion a month.
The Federal Government accumulates, at today's run rates, approximately $4.1 billion in deficits per day.
That is, this big fat "$700 billion" amounts to roughly 5% of the deficit, and that is what we would "collect" if taxes go up and people do not shift behavior as a consequence (but they probably will.)
Got it yet?
The "Bush Tax Cuts" are absolutely irrelevant to this discussion. The problem is not found in taxes and cannot be solved via tax policy. President Bush, via signing Medicare Part D, dramatically exacerbated this problem, but he was hardly the one who started it. For that you need to look back to FDR and Eisenhower, along with all the others since including The Right's "standard bearer" Ronald Reagan.
It is mathematically impossible to solve this problem without dramatically cutting back on entitlement spending - by something approximating one third to one half.
That isn't going to happen (voluntarily) either.
Posted by | 9.21.2010 at 4:00 AM
He didn't put it like that, of course. Karl Denninger clears up the obfuscation. It's the entitlements!