The debate over the debt ceiling should be comical considering that the debt is, at this point mostly fixed, or set to rise each and every year until spending is controlled and economic growth sustained. It’s sad, but true…the bulk of America’s spending is mandated spending:
Medicare and Medicaid: 23%
Social Security: 20%
Defense Dept: 19%
“Other” Mandatory Spending: 13%
Those 4 items TOTAL: 75% of the U.S. Budget!
6% more is interest on the national debt, MOST of it to Bond Holders in U.S. Treasury Notes, which the government CANNOT default on. That brings it to 81% mandated spending.
That leaves a scant 19% in Discretionary Spending, but just WHAT IS “discretionary spending”?
Well, it’s ALL the infrastructure spending (roads, bridges, emergencies), it’s farm subsidies, it’s education, the nuclear regulatory commission, the Dept of Veterans Affairs and it also includes FBI and Homeland Security spending, as well as some foreign intel (CIA) spending.
Here’s a nice pie graph: http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2011.png
While many Democrats are loathe to cut any “social programs,” it’s primarily Republicans who are loathe to cut any Medicare/Social Security (they curry the “Senior vote”) and corporate and farm subsidies.
In fact, some of the biggest supporters of the $60 BILLION “Superstorm Sandy Relief package” are Republicans like Peter King and a bevy of Upstate & Long Island Republicans.
The spending mess is entirely bipartisan. Neither Party has done anything, since Gingrich, to slow down spending.
YES, the Gingrich Congress DID briefly return the U.S. to fiscal sanity and the Misery index swooned – down to 6 points, America’s lowest since 1957.
The idea that “we can spend to “stimulate” our way out of this problem,” is NOT regarded by any reputable economists – Joe Stiglitz aside.
The time tested approach continues to be that “Only prolonged economic growth (driven by pro-business, low tax policies) can improve a slumping economy.” There really is no debate over tax increases versus spending cuts. Higher tax rates reduce economic growth just as surely as “government jobs” are net COSTS, NOT net producers.
Tax increases don’t bring in significantly more, if any more revenues, as people respond to incentives. Projections that “the 2001 tax cuts cost X dollars” are based on the fantasy of everyone working, investing, creating at the SAME rate as they did after the tax cuts went into effect, which was significantly higher than that of the period just prior to those tax cuts.
It’s impossible to tax our way out of debt. EVEN if taxes were cut to such a point that huge deficit reductions occurred, the shortfall that accumulated cannot be made up by increasing taxes down the road.
Private sector economic growth is the ONLY way out and that translates into a reality in which many now desk-bound government office types will have to accept the new emerging (private sector) jobs in mining, fracking, exploration etc. To the good, those jobs are often in scenic places like Montana and Wyoming and offer productive work in the great outdoors, away from fluorescent lighting.
Those new jobs and the enterprises that generate them will not only expand productive (private sector) employment, they’re making America increasingly energy independent.
It’s an overall “Win-Win” and the only real way to move out from under the weight of this massive debt.