A Logical and Principled (Though Difficult) Approach to the Debt Crisis

July 29, 2011 by
Filed under: Uncategorized 

I was recently discussing the debt problem with a friend, and explaining how our federal spending is broken down; how 22% goes to National Defense, 21% to Medicare & Medicaid, 20% to Social Security, 14% to “Safety Net” programs, i.e. handouts – Earned Income Credit, WIC, Federal Housing Assistance, etc., and 8% to the interest on the national debt – which total 85% of our federal spending.  I also mentioned how for every dollar we spend, 40 cents is borrowed.


Unless I’m mistaken, I have heard well intentioned people such as Sean Hannity, Phil Valentine, and others talk about how “if we don’t increase the debt limit (which don’t turn away, I do not support raising the debt limit – this is not a pitch to increase our debt further), we don’t have to worry, because we can pay Social Security, Medicare/Medicaid, National Defense, and interest on the debt with money to spare.”  And then it hit me… NO, we CAN’T!!!  [NOTE – my understanding of Phil’s position was mistaken, he corrected me in the “comments” section below]


While all these guys are well intentioned, I believe their missing a VITAL piece of the pie in this equation.  It seems as if they are simply figuring “we pay the important 85%, we’ll still have 15% left” without considering the drop in revenue to the Treasury of the U.S. when we quit borrowing.  I think they’re forgetting to subtract the $1.44T we’re borrowing to pay or bills; then refigure their percentages!


Follow me here:  the federal government last fiscal year spent $3.6 trillion (from which those percentages were acquired).  The actual dollar amounts of those programs were National Defense – $782B, Medicare/Medicaid – $753B, Soc. Sec. – $708B, Safety Nets – $482B, and Interest – $302B; a total of $3.027T.  If we are borrowing 40% of the $3.6T we spend, then that means we are only taking $2.16T in revenues (i.e. tax dollars) into the Treasury.  When you refigure; $782B may be 22% of $3.6T, however it is 36% of $2.16T!!  And Medicare/Medicaid may be 21% of $3.6T, but it’s 35% of $2.16T; and while our interest is currently 8% of spending, it would become 14% of what is actually coming in to the Treasury!!  So no, we cannot cover all these expenses at their current costs.  In fact, just paying for the National Defense, interest on the debt, Social Security, and Medicare/Medicaid would cost us $2.545T, leaving us $385B in the red.  Oops…BUSTED!!


So our Treasury is now $385B in the red, and we have not even touched paying our Safety Net programs, other “entitlements,” Congressional pay, our Secret Service, the President’s vacations and upcoming birthday bash in Chicago, nor tissues for John Boehner to wipe his tears; we’ve not spent any foreign aid (which I admit is a good area to save), we haven’t funded the EPA, Dept. of Education, BATFE, Dept. of Agriculture, HUD, or the Dept. of Health and Human Services (these last six departments are on my cutting block, or have targeted cuts within them anyway, which can be seen here, but still); our State Department has still not been funded, nor have the employees and costs of the U.S. Treasury itself!!  Friends, we are in trouble…bad trouble!  There is no way around this; we cannot sustain our current path, nor can we fully honor our past commitments.


Those who know me know the love and respect I have for the military, especially those who dedicated their lives to the service of our nation for an entire career and have now retired.  Furthermore, I have grandparents receiving, and parents quickly approaching the age at which they will start to receive, Social Security and Medicare; so do not accuse me of “hating old people.”  What I’m about to suggest hurts, but it is necessary if we are to save our nation for posterity.  It may not be easy for you, and you may not like it, but you are going to have to take a pay cut.  I’m sorry, but the dire situation we are in demands it.  For you military veterans; you have served before, so serve again, by accepting a pay cut of 10%.  Social Security and Medicare recipients; I know you paid in your whole life, but it was a ponzi scheme from the outset, and Congress, for years, has been spending the money that was supposed to be in your “lock box.”  In short: blame past congresses.  (The reality, however, is that you will get three to four times more money and benefits than you paid in anyway, so you’re not really going to “lose” anything; you’re going to simply “get” less.)  So seniors, it pains me to tell you, but a pay cut of 10% is mandatory for you as well.  “Shared sacrifice” should not mean stealing more from the rich to dig deeper into our hole, it should mean assisting those who have sacrificed already, thereby sacrificing ourselves.


Forgive me, but my sympathies for able-aged and able-bodied individuals living off the public dole run very shallow, so I have very little (close to none, actually) compunction about telling you what I’m about to say: as for you on the public dole, it’s time to get a job…your free ride is over.  (It is absolutely not the job of the federal government, and clearly unconstitutional, to assist you anyway.)  Bad economy, I know, but maybe you’ll start to take your elections a bit more seriously, and vote for people who will cut regulations and taxes, making it easier for new businesses to originate, and end our unemployment woes.


And for those of us who have not been as adversely affected, this is where we come in.  We have brothers and sisters, moms and dads, friends and foes who need our help.  Why don’t we try what has been taught to us by our Founders, our Christ, Mother Teresa, and others: why don’t we help to take care of those in need?  It is our duty – our responsibility – to help out others in need.  These people will be taking a cut in their lifestyle to assist in fixing a broken nation; we need to ensure that we pick up the slack for their sacrifices.  Donating to charities, personal direct assistance, meals to their homes, etc. would all be a good place to start.  We must all be in this together.


The Department of Defense I am only willing to cut by 5% right now, which I know we can find that just in waste.  I was in the U.S. Air Force; I know there is plenty of waste.  But at least the Department of Defense is constitutionally justifiable – in fact required.


So, with our newly enacted cuts – which amount to over $668B – we are now actually in the black by $283B; but we still have to deal with the rest of the federal budget.  That, however, is easier than you would think…


Although there are always “bits and pieces” people want to cut from federal spending – foreign aid, earmarks, grants, congressional pay, etc. – thinking that it will cure what ails us; it is important to understand that all of our federal spending, after the five afore mentioned items – the other 15% of federal spending – only amounts to $540B.  If you consider that we were $283B in the black before dealing with the remaining 15% of government, then we are down to only having to cut $257B to balance our budget, without borrowing a dime!!


Do you remember those six programs I mentioned earlier (EPA, Dept. of Education, BATFE, Dept. of Agriculture, HUD, and the Dept. of Health and Human Services)?  Well my proposed cuts from these programs alone save us over $192B (the BATFE is only $1.12B, but it’s an organization that is unnecessary and contrary to our liberty); so eliminating them would leave us only $65B left to cut!!  I think I’ve done enough; ask your congressman to figure out where to cut the rest.


Now, am I really an “extremist,” or is this at least possible?  Did I in any way undermine the U.S. Constitution with this plan?  Is it absolutely unthinkable to seriously consider what I’ve just laid out??  This is a serious situation, friends, and the solutions will not be easy.  “For wide is the gate and broad is the road that leads to destruction…but small is the gate and narrow the road that leads to life.”


Do I expect Congress to jump all over this plan?  Sadly: no.  Do I believe it would work?  It’s simple math; do it yourself and tell me where I’m wrong.  It may be a hard pill to swallow, but the fact is we cannot truly solve this problem without seriously reforming (and eventually, eliminating) Social Security, Medicare/Medicaid, and handouts.  I have just shown you the numbers, and those three categories currently eat up over $1.9T annually – or 90% of the money coming into the Treasury!!  We cannot keep kicking this can down the road for the next generation to deal with.  It is immoral; it is unconscionable.  George Washington himself warned and taught us in his Farewell Address; “As a very important source of strength and security, cherish public credit…preserving it is to use it as sparingly as possible, avoiding occasions of expense…avoiding likewise the accumulation of debt…not ungenerously throwing upon posterity the burden which we ourselves ought to bear.”


Benjamin Franklin said upon signing the Declaration of Independence, that “we must all hang together, gentlemen, else, we shall most assuredly hang separately.”  We are dangerously close to that ourselves.  We need serious, principled people willing to rattle cages and hurt feelings when necessary to do the right things, regardless of popularity or political cost, or this great nation is over.  Friends, family, and countrymen, it is really quite simple: either we end this reckless spending, or it will end us.


6 Comments on A Logical and Principled (Though Difficult) Approach to the Debt Crisis

  1. Phil Valentine on Fri, 29th Jul 2011 12:55 pm
  2. Actually, what I’ve been saying is we have enough to pay for interest on the debt, which is about $200 billion, Social Security ($708 billion), Medicare/Medicaid ($753 billion) and federal salaries including military salaries ($172 billion). That’s a total of about $1.8 trillion. We’re bringing in $2.2 trillion per year.

    After you pay all that, there’s precious little to pay for other things and the debt ceiling WILL have to be raised but this gives Congress a couple of weeks to prioritize and cut things we don’t need. We’re in deficit by $1.5 trillion this year. Once they cut everything they can then we may find we’re in deficit just $900 billion. At that point raise the debt ceiling by $900 billion and immediately begin the process anew for the next budget year. We can have a balanced budget in about 3 years with this process. Heretofore, they have not even looked at where they need to cut. They’ve just been negotiating over raising the debt ceiling. Hitting the debt ceiling limit forces them to make the tough choices.

    Phil Valentine
    The Phil Valentine Show

  3. admin on Fri, 29th Jul 2011 1:37 pm
  4. As stated, “unless I misunderstood”… Apparentl​y I misunderstood. Due to my schedule, I don’t get to listen to you much as I used to. I get to listen to Hannity for about 1/2 hour on my work drive, and I have heard him make the statement that we can pay S.S., Med., interest, D.O.D., and still have left over.

    When I actually got a chance to listened to you last night, I thought you were saying the same thing (and I was already well into my article). Understand, I DID NOT, and I DO NOT think you (nor do I think Sean) did or would intentionally mislead. I assumed it to be an oversight.

    The fact is we are in DEEP, DEEP trouble, and we don’t need political games. I know you understand that, I WAS NOT trying to imply that you didn’t. But it’s clear, from what I’ve heard Sean say, that he hasn’t taken into consideration the loss of the more than $1.4T that we will NOT be taking in if we refuse to borrow more. I assumed you were making the same mistake.

    Also, as stated, do I think Congress would EVER do anything like I’ve stated?? No, but I would love to see principled stands. Getting government out of personal affairs, finances, and matters of personal responsibility would be a huge step in the right direction.

  5. Van on Fri, 29th Jul 2011 1:50 pm
  6. Best answer would be to put our country back on a stable gold standard. You can’t have a sound nation with unsound currency.

  7. Phil Valentine on Fri, 29th Jul 2011 2:34 pm
  8. Here’s something else to consider. Congressman Jerry Nadler says if we have virtually full employment (the unemployment rate at around 5 percent) then the yearly deficit will be eliminated. How have we historically lowered the unemployment rate? By CUTTING TAXES. No one, including the Republicans, is talking about cutting taxes to stimulate the economy and put people back to work.

    We need to cut the budget to the bare bones. Cut out nonsense like rebuilding mosques in the Middle East. Cut everything that is not essential. Cut taxes and stimulate the economy and get back into surpluses like we had after Newt and the boys slowed the growth of spending in the ’90s. We had a surplus as recently as 2001. We can do it again if we quickly stimulate this economy and the only way to do that is to cut taxes.

    Phil Valentine
    The Phil Valentine Show

  9. admin on Fri, 29th Jul 2011 2:53 pm
  10. I absolutely agree. It’s just common sense: when those “evil rich” have more money in their pockets, they want to invest it in new opportunities, which creates jobs. It enacts “the Invisible Hand.” It worked for Kennedy, it worked for Reagan, it worked for Bush….. (And I’ve said before, that even if it doesn’t “work,” it is IMMORAL to take money from the citizens to redistribute, or for anything above the scope of what government is supposed to do. If nothing else, cutting taxes is moral and just.)

  11. admin on Fri, 29th Jul 2011 3:07 pm
  12. Van, I’m not by any means opposed to the gold standard, but it’s not by any stretch the only anwer…or even necessarily the answer. What gives gold/silver value? It is the fact that universally ANYONE will accept it as payment, because it’s valued by all, and also because you can’t counterfeit it. You can make it impure, and thereby dilute it, as a form of “counterfeit,” but you can’t just manufacture gold/silver.

    People berate “paper money,” but with modern technology, it has become increasingly difficult to counterfeit. The threat of counterfeit is nearly extinct (not completely, but mostly). So the value then comes from everyones’ faith in others to accept it universally. The dollar has had that for YEARS, even without a gold backing. Why? Because the U.S. economy was strong on account of our PRINCIPLES. The loss of the value of the dollar has nothing to do with it being “paper,” the loss in value is a reflection of the lack of confidence the world has in our Congress to manage the supply of that medium of trade.

    Again, I’m not saying I’m opposed to the gold standard, but it’s not the sole answer that so many think it is. American paper money is fine, so long as Congress is in check, and the world has confidence in the U.S. of A. Right now, Congress has caused the world to question the validity of our money supply.

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