Mark Steyn Says America is Committing “Slow Suicide”

While I haven’t had a chance yet to read Mark Steyn’s new book “After America,” from what I’ve read and heard about it he is right on. Below is a 10 minute interview that he did with Sun News that does an excellent job of summarizing his positions. BTW, Mark Steyn lives in New Hamsphire . . . where America’s few remaining tax havens still exist.

photo by: Stemack Street

“The Penny Plan” to Eliminate the Federal Deficit

four cents
Creative Commons License photo credit: Robert Couse-Baker

We all know that Uncle Sam’s trillion plus dollar budget deficits are unsustainable. Debt is now larger than Gross Domestic Product and we are well on our way to Greece-level debt (and that excludes our “off the book debt,” see sidebar for our true debt levels . . . around $77 trillion). Adding insult to injury, the states are running huge debts of their own.

At some point, Uncle Sam is going to have to sober up and face reality. The reality is that the budget deficit needs to eliminated and budget surpluses must become the norm (American households need to listen up as well).  One solution that I recently came across was “The Penny Plan.” They describe the plan as thus:

The One Cent Solution is beautifully simple: If the government cuts one cent out of every dollar of its total spending (excluding interest payments) each year for six years, and then caps overall federal spending at 18 percent of national income from then on, we can:

  • Reduce federal spending by $7.5 trillion over 10 years.
  • Balance the budget by 2019.

Moreover, instead of using inflated budget “baselines” to claim nonexistent spending “cuts” a common practice in Washington, the One Cent Solution calls for real cuts.  Under the One Cent plan, the sum of all discretionary and entitlement spending will have to go down from one year to the next, by one percent or more.

Another cool feature of the Penny Plan is that it comes with anther great Remy video shown below.

But alas, I fear even this attempt may be too little too late. Even with a balanced budget by 2019, we will still add trillions of dollars to the national debt. Thanks to President Obama’s policies, the national economy will still be struggling to recover over the next few years. This is a recipe for an explosion in our debt-to-GDP ratio. Check out this history of recent debt ceiling increases to see how unsustainable our path already has become.

And if it all becomes too depressing, turn to Remy again for some more amusement with “Raise the Debt Ceiling.”

The Real Federal Debt

Geronimo!
Creative Commons License photo credit: TimothyJ

I’m so sick of this debt ceiling debate because it is all a ruse.  The federal debt, as defined by the debt sold by the U.S. Treasury, is only a small fraction of all the obligations that the federal government owes.  Thankfully, I just found this nifty debt clock (in the sidebar) from the good folks at the Institute for Truth in Accounting.  Here is how they derive their higher estimate:

The Institute’s Debt Clock is an estimate of the nation’s publicly-held federal debt, intergovernmental debt held by the various branches of the government, the unfunded obligations related to social insurance programs as well as the pensions and retirement benefits promised to military veterans and government workers.The debt represented by notes, bonds and bills are known to the penny and can be seen here.

Estimates of the unfunded portion of America’s obligations are not so precise.Unfunded obligations include Social Security, Medicare, pensions, etc, and the components of the estimate come from several agencies, the most important of which are from the Social Security Administration’s trustees.

Typically, the trustees make their actuarial estimate and release it on April 1st, each year.This figure represents the trustees’ best estimate of the demographic factors that will affect the receipts and payments that the system will pay for old age and medical benefits for the many Americans receiving benefits. This year, the trustees have deferred issuing their estimate because they want to have more time to calculate the effect of the new health care law.Their estimate must cover the next 75 years rather than the 10 years of taxes and the six years of benefits the Congress used to estimate reform’s costs.We expect that their estimate will be released  in June, at which time we will reset the Institute’s Debt Clock.

Click here for a more detailed explanation.

Watch it and weep . . .

The Debt Ceiling: How High Will It Go?

Square Money
Creative Commons License photo credit: The.Comedian

The Congressional Quarterly has a fascinating infographic showing when the debt ceiling has been increased in the past back to 1980.  Here are some factoids that I found interesting:

  • Since the “Great Recession” began in 2008 the debt ceiling has been raised 5 times increasing to the current $14.29 from $9.82 trillion–an increase of $4.47 trillion.
  • In contrast, it previously took six years to increase the debt ceiling 5 times between 2002 and 2007 increasing the debt ceiling to $9.82 trillion from $5.95 trillion–an increase of $3.87 trillion.
  • The difference between total U.S. debt and GDP is now a mere $700 billion.  The question is not if, but when will U.S. debt exceed GDP.
  • The trajectory of the growth in debt has significantly accelerated in the past few years.
Not a pretty picture . . . hat tip to Vermont Tiger.