Archive for October, 2013

Fiscal Realities

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Great, succinct post over at Questions and Observations, Where the money goes (h/t Doug Ross).  The highlight is this chart:

budget2

 The data isn’t sourced, but looks about right. The totals pretty much jive with numbers from the White House. The main point is that we are spending more than we are taking in on just mandatory spending and debt service. Both constitutionally and economically, we must first service our debt. So we can’t cut that at all, or for that matter, stop its increase if we continue borrowing, or if the current historically low interest rates should rise. Mandatory spending is spending we are legislatively bound to. It’s mostly entitlements. We’re not going to spend less here unless we change the laws. Further, if the laws don’t change, we will be spending more here as the baby boomers start collecting social security. This leaves defense and all other spending. While these areas can and should be streamlined, they cannot be eliminated and even if they could, we would still be spending more on mandatory spending and debt servicing than we take in. Therefore, short of action, we will need to borrow more and the debt servicing budget will continue to increase in a viscous cycle.

Another note: Nearly one-third of our spending is unfunded. The White House projects our revenue to close the gap with  skyrocketing spending. Not sure how they intend to do that. Hyperinflation?

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Economic Analogies

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I keep hearing about how budget analyses like the one where you take six* digits off the Federal figures and apply it to a family lack understanding in economics.

FedGovAndFamilyBudgetDec11_6_0

 

I admit it’s a simplification, but when our President says, “If you’re in negotiations around buying somebody’s house, you don’t get to say, well, let’s talk about the price I’m going to pay, and if you don’t give the price then I’m going to burn down your house,” that kind of opens up the playing field for my own analogy. Here goes:

If you owe lots of people lots of money and need to continually rack up more credit cards, you might want to tighten your belt.

Don’t ask me how. On the analogy level, if you go out to eat every day, taking your lunch on occasion can bring savings. On a macro-economic level, one might think of disability fraud, but that’s been debunked.

*eight, my bad.

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