May 15 . 3 min read
America: We Have a Problem (Vol. 104)
Every thoughtful Citizen need to know our country’s financial problem.
Most informed citizens understand there is a lot of debt in our country, but do not understand the magnitude of the problem and what lies ahead if we continue to ignore it. I have heard many times ‘I don’t worry about it because there is nothing I can do about it.’
Our politicians first job is to get elected. Their second priority is to get re-elected. They are very smart people who are concerned about our future, but will not do anything that they think will alienate their constituents.
That is us, and we need to be informed about our situation and support meaningful change if we want the politicians to move in a logical direction. We need to understand the problems and what is needed to fix them and communicate that to our elected representatives.
So, are the problems really bad? You judge, here are some key facts from the most recent published financial statements prepared by the Department of the Treasury as of September 30, 2022:
That is $121,800,000,000,000. 121.8 TRILLION DOLLARS. My eyes glaze over, it is too big to comprehend. And 31 Trillion of that is interest bearing debt, which is today stuck at 31.4 Trillion because of the debt ceiling but will go to 50+ Trillion in the next 10 years, according to the CBO, Congressional Budget Office, IF we don’t add any programs. Deficits as far as the eye can see. Really? Isn’t that special.
Entitlements and non-discretionary spending are over 70% of the budget. Social Security, Medicare, and Medicaid create over a trillion dollars of deficit every year and the deficit is growing.
Social security has 2.6 workers pulling the wagon for each retiree, it used to be 15 in the 50’s, and much more before that. The Fund that was accumulated in the past will be gone in 11 years at which time the law requires cuts to benefits to keep the program solvent of around 25-28%.
Medicare, Part A (hospitalization, the part paid for by your payroll deductions) has a Fund accumulated which will run out in 4 years, then benefits must be cut by law.
Medicare B and D (doctors and drugs) are worse. There is no fund and they are voluntary for which users pay a fee. However, the fee only covers 26% of the cost, the rest comes from us, the taxpayers.
Medicaid has no source of revenue other than our taxes. The Federal portion of that paid to the States is over ½ trillion dollars per year.
Get the picture yet. I certainly hope so.
So the Federal government borrows enormous sums to pay for all these deficits. If the lender asks the question, how are you going to pay me back, what will the government’s answer be? There is only one choice, since there is never a surplus (profit), only deficits.
‘I am going to borrow more money’.
That, folks, is called a Ponzi scheme.
So, I get the problem and ask myself, ‘what can I do about it?’. EDUCATION. And that is why I started Main Street Economics. This is a public service, nonpartisan, nonprofit organization to explain the problems, and solutions, to all concerned citizens. If you understand the problems, and that there are reasonable solutions, you will express those opinions to our representatives loud and clear.
Abraham Lincoln once said that with public support, anything can be accomplished.
That is what I am hoping to accomplish, get public support for logical solutions to our ridiculous fiscal problems. There is a disaster looming in the future if we sail the Ship of State into the proverbial iceberg. And make no mistake about this, we are headed there if we do not change course.
There is a lot of material on our website.
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