Posts Tagged ‘U.S. expenses’

Captain Rick: Walmart, the world’s largest corporation turns everything it touches into gold, whereas  the U.S. government has succeeded in breaking almost every good program created … and the U.S. economy.

I suggest we hire Walmart to fix the mess that our President and Legislature have demonstrated they are totally incapable of accomplishing.

My email to President Obama:

Mr. President,

I have concluded that you and the 535 members of our legislature are ineffective and incapable of fixing our economy and the many good programs that have been broken. I have a solution, but first I want to remind you of some facts which relate to the many failures of your administration and those that preceded:

a. The U.S. Postal Service was established in 1775. You have had 238 years to get it right and it is broke.

b. Social Security was established in 1935. You have had 78 years to get it right and it is broke.

c. Fannie Mae was established in 1938. You have had 75 years to get it right and it is broke.

d. War on Poverty started in 1964. You have had 49 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want more…and it is broke.

e. Medicare and Medicaid were established in 1965. You have had 48 years to get it right and they are broke.

f. Freddie Mac was established in 1970. You have had 43 years to get it right and it is broke.

g. The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. You had 36 years to get it right and it is an abysmal failure…and it is broke.

You have failed to fix any of the many government service failures, while overspending our tax dollars to drive America $17 trillion into debt, an amount exceeding the combined debt of all other nations on earth.

AND YOU WANT AMERICANS TO BELIEVE YOU CAN BE TRUSTED WITH A GOVERNMENT-RUN HEALTH CARE SYSTEM?

Lets pause and examine an American corporation that has a track record of turning everything it touches into gold.

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Photo above shows Walmart’s current logo used since 2008

Walmart was founded by Sam Walton in 1962…when I was in high school, just before the birth of Medicare and Medicaid. Since then the Walton family transformed it into the world’s largest corporation with $469 Billion in revenue, 8500 stores in 15 countries with 2,200,000 employees.

If Walmart were a country it would have the world’s 26th largest GDP…but more importantly, it would be the world’s most profitable country…unlike the U.S. which goes $1 Trillion farther into debt each year, with all of its programs on ‘death row’.

I love my country and hate to see you and our legislature destroying it. With all sincerity, I respectfully urge you to consider hiring Walmart to manage America’s failing economy and programs. But, I think that if that were to happen, the Walton’s would fire you and most of the legislature.

Captain Rick

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Economy

U.S. Debt Crisis

Captain Rick’s Fiscal Cliff Course 101

President Obama

Obamacare

Entitlement Reform

Corporations

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Captain Rick: Sandi Bartlett, an Arizona political activist for liberty, speaks of her disgust for Arizona’s passing of Medicaid expansion. She presents her ‘GOOD GUYS – BAD GUYS’ list of Arizona Senators and Representatives who voted against/for the legislation.

Sandi is an energetic and dedicated person who works tirelessly in Legislative District 17 of Arizona to ensure that citizens are paying attention to important political events and our Senators and Representatives cast the proper vote. Such was the case in recent weeks as Sandi worked with intensity to stop the $300,000 annual expansion of Medicaid in Arizona.  The ‘Obama carrot’ of nearly 100% of expansion costs being covered by the federal government, paid for by more debt dollars on top of America’s already massive $17 trillion debt, is a fiscal hoax that will not last. That ‘carrot’ will soon be replaced with fiscal realism and Arizona will be stuck paying the expansion costs. Sandi’s insight of this fortifies her dedication and motivation.

I invited Sandi to present guest commentary.  She graciously accepted. I am confident you will enjoy this…

Guest Commentary

by

Sandi Bartlett

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I am an average citizen who was never involved in politics until later in life. I became involved when I felt that the Government was growing too large and out of control. Our liberty and freedoms were rapidly being taken. I felt I was alone until I met many people who felt the same way. I now see that the Government is only as good as the people we elect and how knowledgeable we are. So I set out to elect the best person for our district and spent close to 2 years working to elect Matt Salmon (U.S. Congressman – Arizona District 5) . Now I am an active Precinct Committeeman, on the board of the East Valley Tea Party and Arizona Legislative District 17 board member.

The Republican Party is soul searching at this time. Our party is diverse and I try to respect the opinions of everyone because the issues are not easy. However, we must find a way to be on offense rather than defense. Take action to grow the party and find solutions to our problems. We should try to stay focused and positive. Show others that we are an inclusive party and welcome those who believe in smaller government, fiscally responsibility, freedom and liberty even though how we achieve those goals may differ.

I plan to continue my efforts in electing honest conservative politicians and then holding their feet to the fire. Our Republic depends on the citizens to be actively involved and not let the government take away our unalienable rights. Thomas Jefferson said “The natural progress of things is for liberty to yield, and government to gain ground.” We must not let that happen any more than it already has.

I will keep fighting the good fight.

Medicaid Expansion in Arizona has passed despite all of the hard work in opposition

The house session was appalling and disrespectful. For 12 hours or more the Democrats and 9 Liberal Republicans would not answer a single question from our good Republicans about the budget or Medicaid Expansion. If they thought the budget and bill was so great, they should have defended it by answering questions. It was if Arizona Governor Jan Brewer had placed taped over their mouths so they could not speak for themselves. Jan Brewer was willing to remove Arizona Senator Andy Biggs and Arizona Representative Andy Tobin from their leadership position to get this done. Outrageous !!

I was so proud of our “good” Republicans. Their floor speeches were passionate but you could feel the anger in that room. They stood tall and tried their best to flip some of the Liberal Republicans but in the end could not. They deserve our praise for fighting the good fight.

I really held back my true feelings after watching 8 hours of that session. It was really enlightening but very discouraging.  It is no wonder our government whether it is state or federal is in such disarray. I am more motivated than ever to elect the best candidates for office. I hope that plans are being made in each of these districts that voted for Medicaid expansion to run someone in the primary. We must not forget the rallies and numerous contacts that we made with them with no success. The tactics they used to pass this Medicaid expansion was disgraceful.

Final Voting Results on Medicaid Expansion in the Arizona State House and Senate

Sandi Bartlett’s GOOD GUYS – BAD GUYS List

GOOD GUYS voted against Medicaid Expansion – BAD GUYS voted for Medicaid Expansion
Data listing order: Last Name, First Name, District Number (all are Republican)

BAD GUYS – ARIZONA HOUSE – 2013
Brophy McGee, Kate, 28
Carter, Heather, 15
Coleman, Douglas, 16
Dial, Jeff, 18
Goodale, Doris, 5
Orr, Ethan, 9
Pratt, Frank, 8
Robson, Bob
Shope, Thomas, “T.J.”, 8

BAD GUYS – ARIZONA SENATE – 2013
Crandall, Richard, 16
Driggs, Adam, 28
McComish, John, 18
Pierce, Steve, 1
Worsley, Bob, 25

GOOD GUYS – ARIZONA HOUSE – 2013
Allen, John, 15
Barton, Brenda, 6
Borrelli, Sonny, 5
Boyer, Paul, 20
Fann, Karen, 1
Farnsworth, Eddie, 12
Forese, Tom, 17
Gowan, David, 14
Gray, Rick, 21
Kavanagh, Joh, 23
Kwasman, Adam, 11
Lesko, Debbie, 21
Livingston, David, 22
Lovas, Phil, 22
Mesnard, Javan “JD”, 17
Mitchell, Darin, 13
Montenegro, Steve, 13
Olson, Justin, 25
Petersen, Warren, 12
Pierce, Justin, 25
Seel, Carl, 20
Smith, Steve, 11
Stevens, David W., 14
Thorpe, Bob, 6
Tobin, Andy, 1
Townsend, Kelly, 16
Ugenti, Michelle, 23

GOOD GUYS – ARIZONA SENATE – 2013
Barto, Nancy, 15
Biggs, Andy, 12
Burges, Judy, 22
Crandell, Chester, 6
Griffin, Gail, 14
Melvin, Al, 11
Murphy, Rick, 21
Shooter, Don, 13
Ward, Kelli, 5
Yarbrough, Steve, 17
Yee, Kimberly, 20

UNDECIDED – ARIZONA SENATE – 2013
Reagan, Michele, 8 (She voted Yes in the first vote out of the Senate and No in the final vote.)
_________________________________________________________________________________________

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Medicaid: https://atridim.wordpress.com/category/medicaid/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Captain Rick’s Fiscal Cliff Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Federal Grants: https://atridim.wordpress.com/category/federal-grants/

Obamacare: https://atridim.wordpress.com/category/obamacare/

State Government: https://atridim.wordpress.com/category/state-government/

Captain Rick: Dr. Thomas C. Patterson, an Arizona critic of Obamacare Medicaid expansion, explains why this expansion is bad and encourages all to “look behind the curtain.” These are important words as the Arizona Legislature votes on this monument expansion of welfare spending. Arizona is one of about 30 states that have not yet hitched their ‘train car’ to the ‘Obamacare Medicaid Expansion Train’ that is headed down a track that ends a few miles ahead at the edge of the real ‘Fiscal Cliff.’

Dr. Thomas C. Patterson is a graduate of Yale University and the University of Nebraska. He was elected to the Arizona State Senate in 1989, serving as minority leader from 1991 to 1992 and majority leader from 1993 to 1996. Patterson was the author of legislation creating Arizona’s charter school system and welfare reform program. Until 1998, he was a practicing physician and president of Emergency Physicians, Inc.. Patterson also served as president of the Arizona chapter of the American College of Emergency Physicians. In 2000 he became chairman of the Goldwater Institute. Tom is a retired physician and resident of Paradise Valley, Arizona.

I asked Tom why he was contributing his words to Atridim News Journal. Tom replied “I write it because I don’t want to be part of the generation that let liberty die out on our watch or at least I want to know that I did what I could to prevent it. I would like some of the good things about America to be there for my grand-children.”

image Tom Patterson

The pressure from the Obama administration for Arizona to expand our Medicaid program is enormous. Gov. Brewer is on board and even some legislative conservatives seem to be wavering. But legislators should take one more look before they make what could be a fateful leap.

Here’s how it works. If we raise the eligibility requirements for Medicaid to 133 percent of Federal Poverty Level, the feds will drop additional subsidies of $1.3 billion annually into our state over the next three years.

Moreover, this raise can be accomplished with no general fund dollars. The state’s hospitals have agreed to pay additional taxes of $369 million to fund our share of the match. Gov. Brewer points out this is a phenomenal 10:1 “return on investment.”

When politicians use words like “investment” and “return”, your humbug detectors should start going off. If something seems too good to be true, it probably is.

First, the Obama administration pretty much struck out in their attempts to persuade states to establish insurance exchanges, so they’re frantic now to avoid a complete breakdown in the implementation of Obamacare. They’re pouring on the big bucks. But they’re spending borrowed dollars and that can’t last long.

For Arizona, taking on a financially unstable partner in a massive long-term venture wouldn’t be very smart. In fact, the feds are already considering extensive Medicaid cutbacks in their budget negotiations. The bigger point is that sharp reductions in the federal subsidy are a matter of when, not if. By 2020, even the promised subsidy ends. When that happens, Arizona will be left holding the bag.

That bag will be enormous. Of course, the rolls will be swollen by then with the eligibility expansion. But we will also be on the hook for the “woodwork effect”, the high number of patients who have been eligible for Medicaid but never signed up.

A 2010 Harvard study found that barely half of eligible Arizonans were signed up in AHCCCS (Arizona Health Care Cost Containment System), our Medicaid program. These are mostly younger, healthy people who don’t consume much medical care and don’t really need the insurance. If something happens, they can sign up any time.

But with the mandate under Obamacare to provide proof of coverage, the popularity of free insurance will skyrocket. In addition, employers with large numbers of low income workers may drop coverage or shift more workers to part time, making them Medicaid eligible under the new standards. Finally, people on SSI disability, a booming program, are automatically Medicaid eligible.

Medicaid costs have been ballooning 8 percent annually, compared to 1 to 2 percent economic growth. But apparently that’s not enough for the spenders. Total Medicaid spending under Obamacare is projected to grow from $400 billion to $900 billion by 2020. State budgets already stressed by high Medicaid spending will be in big trouble when they’re forced to pick up the tab.

The hospital tax is also deeply problematic. Hospitals are more than willing to go along, because it’s obviously in their best interests. But at heart, it is just a way to force paying patients to fund a welfare expansion that we can’t afford.

But there’s a bigger problem. The tax is unconstitutional unless approved by a two-thirds majority of the legislature. Proposition 108, a voter-passed amendment from 1992, states clearly that any net revenue increase to the state, including fees and special taxes, falls under its provisions.

The Brewer administration, recognizing it is unlikely that two-thirds of each house will sign off on their scheme, has tried to argue that the hospital tax is just a bureaucratically set fee and thus exempt. Whoops, there go the humbug sensors again. They’re not only almost certainly wrong, they’re playing with fire.

If they impose the bed text without legislative super-majority approval and it is later struck down, they would be in a world of hurt. They would lose their revenue and possibly their match and face gigantic Medicaid costs. Plus, there’s little meaning in prop 108’s super majority requirement if it doesn’t apply to this “fee”.

The more you look at this plan, the more serious problems keep bubbling up. Short-term, it has to be tempting to take the money. Ten years from now, the decision is going look a lot different.

Arizona legislators are under intense pressure to pass the Obamacare Medicaid expansion. They’re getting it from all sides.

“Do the math” the governor condescendingly demands, as if it takes special genius to figure out there is short-term gain in accepting these federal funds. “It’s your Christian duty” helpful ministers explain, apparently forgetting that Jesus preached personal compassion for the poor, not government lobbying.

Even the business community is on their case, claiming more Medicaid business will create jobs and stimulate the economy. Of course, if government spending really created net jobs, we would be awash in jobs because we have definitely tried massive spending in recent years.

The opponents of Medicaid expansion are commonly depicted as crazed ideologues blinkered by their opposition to Obamacare. After all, the creators of Obamacare were so frantic to get the states on board with the Medicaid piece that they agreed to provide near total funding initially for this nominally state-operated program. Even by 2012, they promise to provide 90 percent of the funds. Such a deal.

But Arizonans might be wise to look behind the curtain. As time rolls on, Obamacare is already defaulting on most of its key provisions.

For example, we were told that the average family would save $2500 annually on insurance premiums. It turns out the cost of health insurance will increase from $2100-$5000 yearly when Obamacare is fully implemented.

Obama himself promised that under his plan, “if you like your doctor, nothing will change”. Yet a recent poll from the consulting firm McKinsey estimated that over 40 million people will lose their employer-provided insurance. So much for that whopper.

The president also told us that no American families with incomes under $250,000 would see a tax hike. But there are over 20 new taxes in Obamacare. Many of them, like the tax on medical devices, a new tax on drugs, another tax on certain high-end health plans and reduced deductibility for medical expenses all fall squarely on the middle class.

There’s much more. We were told that Obamacare would cost “only” a trillion dollars over 10 years, that the costs would be partially offset by massive reductions in Medicare spending on the elderly, and that we would achieve virtually complete universal coverage. It’s all false, false, false. With a track record like that who could believe their next promise?

Gov. Brewer’s response is to create a “circuit-breaker”, a provision that calls for Arizona to revoke the benefits expansion if the federal funding falls below 80 percent. That sounds good and she is undoubtedly sincere. But she likely won’t be the governor when that day comes and whoever is will be under intense pressure to somehow maintain the program.

That’s the way the welfare state works, the “ratchet effect”. Whatever government provides, it’s never enough and the demands for more stuff never ceases. When benefits are granted, it’s nearly impossible to retract them.

So right here, in Arizona’s intense Medicaid debate, we see how Big Government rolls over and co-opts good people. It pulls the bait-and-switch, puts them in an untenable political position and forces them to support even this unpopular program that is certain to fail.

There is a growing recognition that Obamacare is an ugly hybrid, combining the worst aspects of government medicine and highly regulated private sector medical care. It was never intended by its advocates to be a permanent solution to America’s problems with affordability and access to care. Pres. Obama and others have candidly stated the real goal is a completely government controlled medical system.

That’s why it’s critical to stop Obamacare now and replace it rather than let it fail amid calls for a government takeover. We are going to end up either with medical care dictated by federal bureaucrats or one in which the power of free markets and patient choice prevail.

Real tort reform, price transparency, ability to buy insurance across state lines and many other possible reforms are out there, but we will never get them if the Obamacare train isn’t stopped.

Obamacare must have buy-in from the states to proceed. The stakes for the Legislature are enormous.

Captain Rick: After Tom’s commentary was posted, I asked Tom if my report served his words well. He replied “Everything is fine. Thanks for all your effort to alert Americans about erosions of our freedom. I am happy to be part of it”. Those words gave me great honor.

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Medicaid: https://atridim.wordpress.com/category/medicaid/

Entitlement Reform: https://atridim.wordpress.com/category/entitlement-reform/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Fiscal Cliff Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Arizona Law: https://atridim.wordpress.com/category/arizona-law/

Arizona: https://atridim.wordpress.com/category/arizona/

Captain Rick: Federal grants are a good thing when they are funded by real money … but the fact is many of America’s federal grants come from money that does not exist and adds directly to the U.S. national debt. Many federal grants are robbing the future of our children and grandchildren by burdening them with monumental debt.

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U.S. Budget Facts

U.S. Tax Revenue: $2.5 trillion
U.S. Spending: $3.6 trillion
U.S. Deficit: $1.1 trillion

U.S. Budget Details

Obligated expenses (backed by U.S. law)
Social Security: $781 billion (dedicated funded from the Social Security 6.2% payroll tax)
Medicare: $419 billion (dedicated funding from the Medicare 1.45% payroll tax)
Medicaid: $400 billion (a social welfare program, using money from the federal general fund)
Interest on National Debt: $223 billion (mandatory debt payment to prevent U.S. default)
Federal Pensions: $216 billion (includes civilian and military retirement benefits and veteran benefits)
Sub total: $2 trillion (this leaves only $500 billion for all other expenses before consuming all U.S. tax revenue)

Discretionary expenses:
Defense/Wars: $664 billon
Income Security: $352 billion (incudes unemployment compensation, various welfare programs such as family support and nutrition programs and earned income credits)
Other (including Federal Grants): $500 billion
Grand total: $3.6 trillion (a deficit of $1.1 trillion)

Conclusion: it is obvious that unless America wants to totally eliminate all money spent on defense, wars, unemployment, family welfare, etc. there is no tax revenue left to spend on any federal grant of any kind.

U.S. National Debt

America’s debt is now at a staggering $16.8 trillion and rising at a high rate of speed.
America’s debt represents a debt of $53,277 for every person in America…$148,265 for every tax payer.

Its time for everyone in America realize the seriousness of America’s debt crisis … including local and state politicians who love to accept those federal grant dollars that come from the ‘black hole’ and add directly to the U.S. National Debt.

Federal Grants 101

In the United States, federal grants are economic aid issued by the United States government out of the general federal revenue. A federal grant is an award of financial assistance from a federal agency to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States.

Some federal grants like those from the U.S. Department of Transportation for roads and transportation projects are partially funded by dedicated fuel and tire taxes, however the balance (about 1/3) comes from the general fund which is supported primarily by federal income taxes via tax returns. On the other hand, federal grants like community development block grants (CDBG) from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Homeland Security (DHS), have little or no dedicated tax funding and are mostly paid for by money in the general fund. Because the U.S. general fund runs a negative balance of $1.1 trillion each year…in essence, all federal grants not specifically funded by special taxes are adding directly to the U.S. national debt.

Federal grants are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977, as incorporated in Title 31 Section 6304 of the U.S. Code.

A Federal grant is a
legal instrument reflecting the relationship between the United States Government and a State, a local government, or other entity when
1) the principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and
2) substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.”

Types of grants
Block grants are large grants provided from the federal government to state or local governments for use in a general purpose.
Project grants are grants given by the government to fund research projects, such as a research project for medical purposes.
Formula grants provide funds as dictated by a law. Categorical grants may be spent only for narrowly defined purposes and recipients often must match a portion of the federal funds.
33% of categorical grants are considered to be formula grants. About 90% of federal aid dollars are spent for categorical grants.
Earmark grants are explicitly specified in appropriations of the U.S. Congress.
They are not competitively awarded and have become highly controversial because of the heavy involvement of paid political lobbyists used in securing them.

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Info from previous reports:

Federal Grants: https://atridim.wordpress.com/category/federal-grants/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Fiscal Cliff 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Captain Rick: Republicans are calling it the “Obamaquester” … $1.2 trillion in spending cuts over 10 years. $85 billion in 2013. Defense will be cut 13%. Everything else 9%. Officially called the “sequester”, its part of the “Fiscal Cliff” that was postponed on January 1, 2013.

The forced budget cuts were created during the 2011 debt ceiling debacle, passed by Congress and signed by the Whitehouse. It was a worst-case scenario, so bad that it would force lawmakers to make a deal. But, no deal was ever made and thus its become a poison pill that Americans will most likely have to swallow on March 1, 2013. The sequester was put in place 18 months ago to be a hammer, not a policy. On March 1, that hammer slams down.

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Sequester Spending Cuts taking effect after March 1 (partial list)

Head Start programs will be scaled back

Fewer meat inspections

Homeland Security cuts will mean longer lines at airports and scaled back cyber security

Furloughs and layoffs would effect civilian workers in the defense industry

IRS cuts will mean fewer tax return reviews and longer waits for tax refunds

Emergency housing for the homeless will be scaled back

Extended benefits for unemployed will be scaled back

National Parks may close campgrounds or reduce open periods

Little hope of compromise by March 1

Washington continues to play the “blame game.” Democrats are blaming Republicans for proposing devastating spending cuts.  Republicans blame the Democrats for getting used to being bailed out for their own lack of fiscal responsibility.

Optimism for a last-minute deal averting massive spending cuts is scarce. The buzz in Washington is that both sides actually want to let the sequester happen. Washington seems to be mainly squabbling over who will be to blame for the “meat cleaver” budget slashing set to take effect on March 1.

The latest national poles show America is leaning slightly towards letting the sequester happen…that it is time America stops “kicking its debt can down the road”.

The sequester is only a tiny contribution to reduce deficit spending. Those reading my earlier reports know that America must come to grips with its gigantic thirst for wild deficit spending beyond its means in order to save America from future financial ruin.

More info from previous reports:

Fiscal Cliff: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Captain Rick: France enters fourth quarter of recession as business activity slumps in Eurozone’s second largest economy. The French economy stagnated through the course of 2012. France’s performance in the first quarter of 2013 is shaping up to be the worst since the same period in 2009. Readings point to a contraction of 0.2% to 0.3% in Eurozone gross domestic product for the first quarter of 2013, after a 0.6% drop in the final quarter of last year.

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America is not alone when it comes to difficult economic times. European countries have been experiencing similar economic problems to those in America…perhaps worse. The world, including America needs to pay attention to what our friends in Europe are experiencing. We all should see events unfolding in Europe as a ‘crystal ball’ to vision into the future for what is coming our way…especially for America, if it does not correct its current suicidal course of spending far beyond its means. 

Follow my reports of the European Debt Crisis: https://atridim.wordpress.com/category/european-debt-crisis/

Captain Rick: If the U.S. Federal Government was in control of your household budget, you would be in serious financial trouble!  I have prepared this simple comparison to show you why:

Annual Financial Statement of the United States of America:

U.S. Tax revenue: $ 2,170,000,000,000

Federal budget: $ 3,820,000,000,000

New debt: $ 1,650,000,000,000

National debt: $ 16,571,000,000,000

Interest on the National debt: $ 222,800,000,000

Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s an annual household budget:

Annual family income: $ 21,700

Money the family spent: $ 38,200

New debt on the credit card: $ 16,500

Outstanding balance on the credit card: $ 165,710

Interest on the credit card: $ 2,228

Total budget cuts so far: $ 385

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What would happen if the bank froze your credit card, preventing more debt?

Can you imagine how bad your budget would be if you were spending $16,500 more each year than you received in income? The interest on your credit card balance would be $2,228 this year and would be added to your massive balance of $165,710. Each year your debt is growing larger at a rapid rate.

Now, suppose your bank lost faith in your ability to pay your balance. Its easy to guess that your bank will freeze your credit card, allowing no further debt. How will you pay the $16,500 in expenditures that were beyond your budget?  How will you make your loan payments, or even pay the $2,228 in interest on your credit balance? You would probably be left with one choice…declare bankruptcy. Luckily, you would have the U.S. Federal Government (Uncle Sam) to excuse your debt and allow you a new financial start.

What would happen if the bank froze Uncle Sam’s credit card, preventing more debt?

The situation with Uncle Sam’s budget is identical to yours, only exponentially larger. However, there is a large difference in who controls the credit. Uncle Sam’s debt is not held by a bank. It is held by a large number of investors, investing firms and countries all around the world. Japan and China hold a large portion of America’s debt. It is highly unlikely that all of the creditors would freeze Uncle Sam’s credit all at once. But, supposing one day China or Japan lost faith in Uncle Sam’s ability to repay their investment…or even the interest on it? Its easy to guess that they would stop further investments in the U.S. federal government.

When a large enough source of new investment is stopped, how will Uncle Sam finance America’s programs which count on $1.65 trillion of borrowed money each year? How will it repay its debt to investors…or even pay the $223 billion in interest on the balance? Unfortunately bankruptcy is not an alternative for Uncle Sam. There is no bigger entity to bail it out or give it a fresh financial start. Its only remaining option will be to reduce payments to various programs so that it stays within the limits of new debt which can be sourced. It could also mean that the U.S. would have to default on its debt owed. This in return would most certainly stop most, if not all of America’s creditors from making further investments. This would worsen the situation and virtually force America to live within its budget, drastically slashing its programs by $1.65 trillion per year. Programs like Social Security, Medicare, Medicaid and Defense would most certainly be significantly affected, as they are the largest budget items. Such massive cuts would most certainly cast America into a deep recession, probably far worse than the Great Recession a few years ago.

Captain Rick’s Solution Scenarios

Maintain Current Course of Deficit Spending with only small, token reductions:

This is not an acceptable solution. It will lead to failure of America’s financial system within a few years. The cost of America’s entitlement programs like Social Security, Medicare and Medicaid are growing in size at an astronomical rate. In a very short time these three programs will consume 100% of all Federal Tax Income, leaving nothing to support the entire balance of the government without deficit spending. With this course, its not a matter of IF the world’s creditors will cut off America’s credit…but WHEN.

Balance the U.S. budget within 10 years:

This is the course America must take if it is to survive. The Fiscal Cliff had a goal of cutting half of the deficit spending 10 years. That was a good start, but congress cant even achieve it. Congress continues kicking America’s debt can down the road, agreeing on allowing only token spending reductions and tax increases. America must do better…soon!

It will require major spending reductions affecting all programs and tax revenue increases across the board. It will also require significant entitlement and grant program reform. The days of Uncle Sam handing out money with a blindfold on must end soon.

Does America have the ‘guts’ to make these sacrifices? Time will tell…but time is running out quickly. I hope for our children’s sake that America gets its act together soon or our kids will likely find themselves living one day in a third world country.

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More Info:

Fiscal Cliff: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/