It’s A Math Problem

As the President and Republican politicians argue about the debt ceiling right down to the artificial “default” date of August 2, 2011, I have an observation.  No longer is the overspending and over borrowing of the Federal government a matter of political philosophy; it is a math problem.  Mathematics is not political or philosophical…it is what it is.  The United States of America is now at a time of reckoning.

Right now the national debt of the United States is roughly 100% of GDP.  Federal expenditures are roughly 25% of GDP, and should be no more than 20% of GDP.  This means that the Federal budget of $3.456 trillion should be no more than $2.8 trillion.  This demands an annual cut of about $600 billion in Federal spending.   If the United States is to regain its economic health, the following observations are relevant.

Painful and immediate cuts need to be taken in Social Security, Medicare, Medicaid, and Defense.  These cuts are not to be taken in the “out” years, as politicians always prefer, but NOW.  $600 billion needs to be cut immediately.  I propose cuts to the following budget items; Defense $150 billion, Social Security $100 billion, Medicare $200 billion, and Discretionary expenditures of $150 billion.

The Medicare program poses the greatest threat to American prosperity.  The Federal government’s promise to take care of the health needs of all Americans 65 years and older isn’t just a falsehood; it’s an outright myth.  Medicare is   underfunded to the tune of $90 trillion dollars; that’s 6.5 years of total US economic output.  That kind of money can’t be raised through taxation.  In the very near future, if you’re older than 65, you better be in good health because Medicare is going to have to draw the line on treatment.   Expensive treatments will be offered only to “younger” Medicare patients.  Those over a certain age will receive only palliative care.

The math tells the story; too many political promises and programs and not nearly enough revenue to fund them.  This is a result of politicians over-promising, but how do politicians get elected?  They have to please voters, who believe in Santa Claus.  There is no Santa Claus and there is not enough money for Government to fund the promises we’ve demanded that it make.  It’s reckoning time.  The party is over.

Americans will have to re-examine the American Dream.  Is that dream to live in a country where government feeds us, clothes us, tells us how to run our businesses and households, while at the same time promising us cradle to grave security?  Or, is America a place where government provides minimal assistance and leaves individuals free to create income and prosperity for themselves and their families?

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