Despite massive spending, underachievement prevails

r-SAN-FRANCISCO-MINIMUM-WAGE-HIKE-large570Did you know that the number of people on food stamps has grown over the past 13 years by nearly 30 million, which accounts for almost 20% of households receiving taxpayer-funded food subsidies?  At the same time, the federal government is spending more per household than ever before – in fact, a 152 percent increase since 1965.

Our middle class is shrinking – the rich are getting richer and the poor are getting poorer, due in large part to insanely complex government rules and regulations that only those with resources can bypass.  In fact, the top 7% of households own 63% of the nation’s wealth.  During the so-called economy recovery, the other 93% of families lost wealth, putting into question the effectiveness of big spending government stimulus packages and who, in reality, the recovery truly helped.

ABC News reports that nearly 50 million people in the United States live in poverty, but yet, most Americans view our nation as the most prosperous in the world, fundamentally superior to our foreign counterparts despite our poor education system, insanely expensive healthcare industry and THE biggest government that we’ve ever had.

In fact, our healthcare system spends twice as much per person than any other developed nation in the world, a cost that accounts for more than 16% of our nation’s Gross Domestic Product (GDP).  Our healthcare spending has increased at twice the rate of inflation, but yet our pharmaceuticals continue to kill and emergency rooms remain clogged with people using it as their primary care service.

A much-maligned segment of the population, the top 1% of income earners in the country have a greater net worth than the bottom 90% put together.  Perhaps this is due to nearly a quarter of all jobs in the United States that pay a wage of less than $10/hour.

Worse, spending in Washington continues to grow, more than it ever has despite record tax revenues.  Federal politicians managed to rack up $755 billion in deficits through the first eleven months of 2013′s fiscal year.  Spending during the same period amounted to a whopping $3.2 trillion.

Now, the government wants to take over healthcare.  Already the most expensive healthcare system in the entire world, the 10,500-page Obamacare monstrosity has authorized the government to spend even more money.  The new healthcare system’s broken Healthcare.gov web site cost the American taxpayer $634 million to build.  Obamacare has caused many insurance companies to cancel policies and create more expensive alternatives.  Premiums have risen and job hours have decreased to sub-30 hours to avoid Obamacare penalties.

The evidence of the big government effect is clear and overwhelming, and it is costing the American taxpayer trillions of dollars in reckless spending.  Both the Democrats and Republicans represent the cause of these problems, and our nation will never truly fix our ailing spending habits until we replace those responsible for it.

Debt: The New Religion

When our nation is faced with a presumed “crisis”, the government immediately jumps into spending mode.  The prevailing wisdom cites that the more the government spends, the more quickly our nation emerges once again as the shining superpower of the world.  However, what do the numbers prove about how “super” or power truly is?

First, before we proceed onward, a graph that everyone who cares about being an informed voter should take a look at. It depicts the amount of debt we have as a percentage of our national economy as measured by the Gross Domestic Product or GDP.  The graph starts with the aftermath of the Revolutionary war and covers through 2011.  This was posted last year by Quartz (source) and is a site not known for a conservative slant.  It shows, clearly, that when the nation is faced with a crisis, the national debt skyrockets as the government spends money.

One more time to let that sink in: when the nation is faced with a crisis, the government spends money. Simple enough logic and we’re easily able to see why. During war the government spends, after wars spending starts to curtail as we repair the damage done.  History clearly shows that even after World War II, spending declines in a trend that isn’t any different in slope (though greater in magnitude) than previous events. However, there’s two major anomalies to this graph.

First, we notice that spending stops its downward trend in 1980 and begins to climb despite the absence of war or a “crisis” The second is an increase in spending before World War II – The Great Depression.  These two sharp increases do not equate to any large scale conflict.  They also do not ‘trend downwards’ afterwards; instead, they seem to act more like spending floors which keep the average level of spending much higher than in previous generations.

In other words, when government spending increases, it rarely returns back to its original level.  Without a doubt, our obsession with keeping a massive debt started in the 1930′s and has continued today without ever falling back below World War I levels. Another graph is quite revealing:

Every year since 1936, the United States government has spent more relative to its GDP than it did during World War I.

That means, as cited by the Congressional Budget Office from which these graphs are derived, we are poised to spend more money on daily government operations then we did in World War II – during “crisis mode”. 

As a percentage of our GDP, we’re currently spending a hair over 35%, and if the spending trend continues past 2030, our nation will spend over 100% just for daily operation of our government.  Remember, these are not some conservative blogger’s opinion – this is from the Congressional Budget Office.

Spain, Greece, Italy, France and other countries now face 25% unemployment, and they all share something in common: their government spending as a percentage of GDP was far too high for their free markets to bear. Currently, according to the CATO Institute, Spain’s “government spending as a share of GDP leapt 2.3 percentage points to 41.5% in just one year.” (source)  That’s not much higher than we are currently spending. 

Not only is government spending a threat to free market economies, the graph below depicts the dramatic increase in the rate of total accumulated debt:

Currently held federal debt (source: Wikipedia)

These numbers look worse when you see the total amount of debt we’ve accumulated has tripled in just twelve years. Worse, the occurrence of negative real interest rates (whereby the inflation rate is greater than the interest rate of the debt) prevents the debt from ballooning even more. So in theory, we should have a very low debt due to reasonable temporary spending during periods where borrowing money was cheaper than interest paid on it — but we don’t. We simply have a slightly smaller mountain of debt despite all free market forces at work.

Why not spend reasonably and leave ourselves extra slack for when a true crisis emerges? Simply put, we have accepted the Religion of Debt in America. We accept it for ourselves when we buy cars or gadgets that we cannot afford. We accept it when we are told home ownership is the American dream. We accept it when we attend expensive colleges and universities. And, we accept it when it comes to our government.

Common rhetoric about anarchists, communists, socialists, and crony capitalists all serve to distract from the one truth: no one in government has any interest in reducing our spending to pre-World War I levels.  Not Republicans, not Democrats.  Instead, both are big government and argue over whose government gets to spend the dollars.

If we can balance the budget or (gasp) create a small surplus, the national debt will begin to erode itself naturally. Through both fiscal responsibility and natural market forces (such as negative real interest rates) we can get back to a modest, manageable debt and stop wasting so many taxpayer dollars on interest payments or government pork projects.

Want further proof that debt is the religion of the US?

Gallup poll on the power of the federal government today (source)

That’s right. The same folks who claimed the government was too powerful when President Bush was in power now find themselves wanting more power.  It is important to note, both government spending and power of the federal government has only increased since 2003.

Our nation is so consumed with debating the rationale of spending and flexing the powerful arm of the federal government that nobody asks whether nor not we should. The question needs to be “should we?” instead of “how should we?”, and every election, millions of voters are tricked into blindly pulling the R or D lever.  If you vote for ‘the lesser evil’ or for a single party a majority of the time, you need to get out of the voting booth. You’re the problem.

It’s time to wake up, kill the rhetoric, and disassociate yourself from a party. 

Please, you’re killing us all with your religion.

Cato: Successful nations cut debt, taxes and spending

The Cato Institute published an article citing direct evidence that countries that effectively manage their spending and debts thrive, while nations that allow out of control spending, senseless tax increases and an expanding GDP, suffer.

Alan Reynolds contrasted nations like Brazil, Russia, India and China – dubbed BRIC – and praised their potential growth due to their cuts in taxes and controlled government spending with countries like Portugal, Italy, Greece and Spain (PIGS), who’s GDP grew sharply between 2007 and 2010, resulting in far less stable economies and a meager future outlook.

Obama demands tax hikes on rich before any compromises

Days after the re-election of Barack Obama, the president said that any compromise from his office on the issue of taxes and the national debt will hinge on the inclusion of tax increases for wealthier Americans in an fruitless effort to slow our nation’s rising debt and limit the ensuing economic calamity.

“I’m committed to solving our fiscal challenges, but I refuse to accept any approach that isn’t balanced,” the president said.  Apparently to Mr. Obama, “balanced” means nothing more than offsetting any spending cuts with further tax revenue from this country’s job providers.

Obama insists on raising taxes on those who make more than $250,000 a year, although hard numbers on how much of a rise remains unknown.  According to Obama, a majority of Americans also believe this nation’s punitive tax system should be strengthened for those who are considered “wealthy”.

“I just want to point out, this was a central question during the election. It was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach,” he said.

This news comes at a time when deficits remain at all time highs.  October, the first fiscal year in 2013, has already seen a massive increase in budget deficits — $6 billion above the estimated $114 billion.

Feds cannot account for $30m in GSA bonuses

Reported by a CBS affiliate television station in Washington D.C., the federal government apparently cannot account for a whopping $30 million in taxpayer-paid bonuses in fiscal year 2011, proving once again that our federal government is neither prepared nor responsible enough to manage virtually any amount of money.

According to the CBS affiliate, the General Services Administration reported only 1/3rd of its actual bonus payouts and did not respond to interview requests.  They did issue a statement that indicated the GSA will look  into the matter and how the agency manages compensation – but who actually believes that?

http://www.wusa9.com/news/article/214978/158/WUSA9-Investigation-Finds-30M-GSA-Bonuses-Not-Reported