All levels of government should be required to join “Slim Fast” because most of them operate “Half Fast.” The size and intrusiveness of our governments at all levels has been a consistent theme in these columns, but how is this massive monstrosity fueled? What feeds it? Obviously the taxpayers and compliant lenders are the greatest sources for satisfying the voracious appetite of government. Don’t overlook the licenses, fees and fines the various agencies levy….seemingly arbitrarily. If you are one of the few remaining Luddites who still has a landline telephone, scan your next bill very carefully to find the layers of fees and taxes collected by government…..many of which you have not noticed over the years.
Total Spending by Function
|
Note:
1. Federal spending after 2010 is budgeted.
2. State spending after 2009 and local spending after 2008 are “guesstimated” by projecting the latest change in reported spending forward to future years
1. Federal spending after 2010 is budgeted.
2. State spending after 2009 and local spending after 2008 are “guesstimated” by projecting the latest change in reported spending forward to future years
You may suspect that there’s an error in the chart shown above because it lists $6.2 trillion in government spending versus the $2.2 trillion dollar budget that is thrown around in the national dialogue. So, if we’re borrowing in the neighborhood of $1.3 trillion to $1.7 trillion in order to meet our obligations, where does the other money come from? Also, you will note that interest payments on the debt are not included in the disbursement totals. If we get an increase of a couple of basis points, interest costs would soar. Even with tighter spending controls, the National Debt will increase to nearly $22 trillion by 2014. That’s assuming that Congress stays within its budget….which isn’t likely.
 Click chart for briefing on Federal Deficit. For deficit as %GDP from 1950-2015 click here. |  Click chart for briefing on Government Debt. For debt as %GDP from 1950-2015 click here |
One of the measures of economic freedom for a nation is the percentage of the Gross Domestic Product (GDP) that is consumed by the non-productive public sector. That percentage is a very good indicator of a nation’s prosperity.
GDP / Spending
 Click chart for chart of Gross Domestic Product. For Real GDP from 1950-2015 click here. |  Click chart for briefing on Total Spending. For Spending as %GDP from 1950-2015 click |
If these glide paths continue, then government will absorb 38% of the GDP in the United States in 2014. Historically for the past century or so, government has consumed 18-22% of GDP. In other words the government’s consumption and wasting of our productivity will nearly double in the next two years. This is a prescription for disaster on two fronts: 1) private sector wealth and prosperity will be more difficult to acquire because government is gobbling resources;2) individual freedom and opportunity will be more severely restricted because of the enormity of the government apparatus. So total government spending….local, state and federal will claim 40cents out of every dollar’s worth of value produced in the United States….if interest rates ratchet upward as is likely, then the figure is higher.
We are headed for economic, fiscal and social upheaval. As government continues the current path of growth, the resources available for research, development, investment and job creation will wither. The overall GDP of the nation will shrink, and governments’ shares will grow larger. It’s a downward spiral toward collapse. Politicians are fond of saying that spending must be controlled, but they are too clever by half. Government spending must be severely REDUCED in order to service the massive public indebtedness. There is another lurking danger to our economy and our way of life. Personal and commercial indebtedness is higher than normal. If taxes, fees and other government revenue streams are increased, private sector entities will have fewer funds available for their debt service thus further compounding the problem.
One of the ironies of expanding government is that the interdependence created by the growth destroys the so-called “safety net,” and places every sector of the nation in economic risk when government falters. It’s the ultimate “all your eggs in one basket” illustration. For too long we have lived under the illusion that government cannot and will not fail. For too long we have been deceived…..or self-delusional. As the charts clearly show, our government, our nation’s economy and our personal and economic freedom are approaching the “tipping point” at warp speed. Once government begins to consume half of the GDP of the nation, freedom becomes a quaint historical concept and prosperity will be limited to the “black market” underground. In most business organizations…51% means you have control. For the moment we are out of control, but government’s share grows by the minute, the hour and the day.
Our fearful political leaders fail to understand the enormity of the problem, or if they do, they lack the courage to forthrightly address it. To save our nation’s plunge into mediocrity and socialism requires massive spending cuts, elimination of entire agencies and departments, and repeal of numerous laws, rules and regulations. The mantra for many in this election cycle is ABO (Anybody but Obama). That’s “OK,” but it is not enough. Review the charts….whoever succeeds Obama will be in power when the economic wheels fall off our country---unless they have the brains and the courage to use chainsaws instead of scalpels when attacking government spending. If they don’t vigorously reduce spending, they may be succeeded by someone more deadly than Obama because of the chaos we will encounter. Be careful what you wish for.
Comment: cearlwriting@hotmail.com
No comments:
Post a Comment