We have Donald J. Trump for President-elect.
How will he fix this problem?
I've harped on this many times in this blog, and I've been very inactive on this blog for the last several years for many reasons, not the least of which is that because with a GOP-controlled Congress and a Democratic President, and with the particularly acrimonious environment in Washington D.C. these days, I didn't think it was even worth my time to discuss this.
But elections have consequences, and now it will be the GOP in charge of both the Executive and Legislative branches of the U.S. Federal government to figure out what to do with the mess we've gotten ourselves into. They have run the good run, but as many people on CNN, MSNBC and all the alphabet broadcast news outlets have stated, they are now the metaphorical dog that has caught the car.
For your consideration, I'd like you to look at this graphic, taken straight from the Congressional Budget Office, a non-partisan department of the Federal government whose job it is to monitor how much money the U.S. government collects in revenues, and how much it spends.
There was a meme going around the internet last year that showed that military spending was 57% of the Federal Budget. You can find it for yourself. This chart was very deceiving, because it only showed the discretionary spending. In the statistical world, this is known as "cherry picking" your data.
Any analysis of the U.S. Federal budget must consider the whole pie, not just one-third of it.
The first thing that you should notice is that the pie for revenues is smaller than the pie for spending. This is done on purpose, because the actual shortfall is about $445 billion dollars. If we divide the shortfall by the total spending, we get about 12.066%. Compared to my blog posts in 2010, this is a huge improvement. It also reflects that as the 2009 financial crisis moves further in the past, the revenues are slowly catching up with spending. Go team!
But as you can see, this is still a pretty big shortfall. Imagine that you earn $50,000 a year. But you spent $56,000 and ended up being $6,000 in the hole. That's exactly where the federal government is as of this year.
The favorite budget target of progressives is military and defense spending. This is a huge chunk of the budget, representing about 16% of the total amount spent. Now, I will not get into a debate as to whether the United States needs a Navy that's bigger than the next 8 navies combined, but I will say that 2016 finds the United States dealing with foreign ascendancy that we only had glimmers of in 2010. Russia has taken the Crimea from the Ukraine and is making considerable trouble in that country still. Russia is also spending a lot more on tanks, airplanes and warships and they are now fielding new equipment that may be a match against the best the West has to offer. Consider this. The U.S. M1 Abrams tank, a mighty engine of destruction, was developed in the 1970's and has been our main battle tank since the early 1980's. The Russians have now put into production the "Armata", and it doesn't look good for our side. China is pushing hard to claim the South China Sea as it's own backyard even though Japan, the Phillipines and Vietnam also have equally good claims in that territory, and much merchant sea traffic moves through that area.
The only reason I bring this up is to illustrate a point. The world is competitive and an ascendant China and a resurgent Russia are going to complicate our lives greatly whether we wish it or not. And yet, the Navy is down from 600 ships in the Reagan era, to 271 ships in 2016.
So, with that stage set, let's consider the following:
Between discretionary nondefense spending (transportation, education, veteran's benefits, health, housing assistance and the like) and mandatory government programs (unemployment, federal retirement programs, supplemental nutrition programs, we are spending just slightly over 30% of the Federal budget.
The three big categories in mandatory spending are Medicare/Medicaid and Social Security. Everybody says that we cannot recalculate the formulas for those programs, and yet they account for nearly half of all Federal spending.
And then there's the debt servicing, which accounts for 6% of all spending. Ouch. By debt servicing, we mean the money the federal government has to write out to those who have purchased the Federal debt, such as the U.S. Federal Reserve, Saudi Arabia, Qatar, the United Kingdom, China and others just to pay the INTEREST owed on the debt. I repeat, that does not go against paying on the principal owed, just the interest.
It is completely silly for anybody to argue that we can balance the budget by simply reducing the defense budget. To do so would completely emasculate the military and at the same time put millions of people out of work. Can we do better in the military-industrial complex? Sure we can. And since Trump has a lot of say over how the money is spent on the discretionary spending side, I hope that he focuses on the rampant waste and corruption in that segment of the budget. Lawsuits and prison time should be the order of the day. But let's say that we reduced the DISCRETIONARY side of spending only in order to balance the budget. Well, goodbye military. And also say goodbye to any hope of rebuilding our decaying infrastructure, or assistance for health, housing and education. Those programs plus the military would have to be cut by 50%, at a time when more Americans are collecting some form of assistance and at a time when the world seems like a more dangerous place than ever.
President-elect Trump says he will immediately begin funneling money into both the military and the infrastructure projects. With what? Where's the money, sir?
President-elect Trump says that he will not touch Social Security or Medicaid. So the money ain't coming from there. That means the only place he can pull money from would be the "Other" category. About $200 billion from that "Other" category. Read the balloon under that category and tell me if that isn't going to hurt a lot of people.
President-elect Trump says that he will lower taxes across the board. Asinine. Cannot be (prudently) done without grossly inflating the deficit to levels seen back in 2010 and 2011. And that will also dramatically increase the net interest payments our country will owe to our debtees buying that deficit, assuming there are any debtees to be found. For they will become skeptical that the U.S. has the political will to get their financial house in order.
So how will he fix the problem? Well, that was a trick question. For those of you who understand U.S. civics, you already know that the budget originates from the House of Representatives. The President has a hand in that budget, but is can only be approved by the House and then sent to the Senate for reconciliation. If both sides of Congress can then agree (and they eventually will, after they've added a couple of tens of billions in earmarks to be sent back home to their consituencies), then they send it to the President for approval. Ha ha ha.
There is one group of people, mightier than the President and Congress that can fix this problem and they are the electorate. That's right. That's YOU. Every American currently receiving assistance from the Federal government should be looking at what they NEED vs. what they WANT. This is literally the moment that John Kennedy was talking about when he said "Ask not what your country can do for you, ask what you can do for your country."
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