Posts Tagged government spending

Why Do We Have a 7-Eleven Government?

Since Washington and the mainstream press corps are pretending that our deficit woes are the result of a roughly equal blend of excessive federal spending and insufficient federal taxation, let’s review the evidence.  According to official government figures published by the Congressional Budget Office (CBO), in fiscal year 2008, the federal government took in $2.524 trillion and spent $2.983 trillion.  So the federal government, then under the leadership of President George W. Bush and a Democratic House and Senate, was spending well beyond its means.  For every $6 that it had, it was spending a little over $7 — an unsustainable course.  At the end of fiscal year 2008, our national debt was $9.986 trillion (see table S-9) — and rising. 

 In the 50 months since — again according to official CBO tallies (see here and here) — the federal government has proceeded to make the profligate federal government of 2008 look downright frugal.  Over that 50-month span — all of which has coincided with Democratic control of the Senate and the vast majority of which has coincided with President Obama’s control of the executive branch (the House has been split roughly evenly between Democratic and Republican control) — the federal government has taken in $9.365 trillion in tax revenue, and it has spent $14.749 trillion.  So for every $7 it has taken in, it has spent a little over $11. 
 As a result, our national debt is now $16.370 trillion — a staggering 64 percent higher than it was just fifty months ago.

So, has this unprecedented spurt of fiscal irresponsibility been the result of far too much spending or far too little taxation?  Well, average annual federal tax revenue over the past 50 months has been 11 percent lower than it was in 2008, while average annual federal spending has been 19 percent higher.  So, in comparison to 2008, federal spending has risen almost twice as much as federal tax revenues have dropped. 

Moreover, that spread has widened substantially over time.  If we compare fiscal year 2012 to fiscal year 2008, federal tax revenues dropped just 3 percent.  (They were $2.524 trillion in 2008 and $2.449 trillion in 2012.)  Meanwhile, federal spending rose 19 percent (from $2.983 trillion in 2008 to $3.538 trillion in 2012) — more than six times as much as federal tax revenues dropped. 

But even this doesn’t tell the whole story.  The reason why tax revenues have declined since 2008 is not because income tax rates have declined; rather, it’s because most Americans aren’t making as much money as they made back when we had a relatively vibrant economy.  The decline in tax revenues is directly attributable to our decline in economic growth.  Thus, we need more economic growth, not higher tax rates.  Or as Marco Rubio puts it, “We don’t need new taxes.  We need new taxpayers, people that are gainfully employed, making money and paying into the tax system.  And then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again.  And that’s what we should be focused on, and that’s what we’re not focused on.”

So, to recap, over the past 50 months, a span of time during which the Democratic party has generally been in control of the vast majority (and sometimes all) of the federal government, federal spending has risen by almost twice as much as federal tax revenues have dropped, our national debt has risen by a whopping 64 percent, and for every $7 that our federal government has taken in, it has spent a little over $11. 

Our problem, therefore, is not that our federal government has been overly respectful of everyone’s unalienable right to keep the fruits of their own labor.  Our problem is that our federal government has an insatiable appetite for spending.  Those filling its offices of power are determined to spend whatever they want, even if they have to borrow $4 out of every $11 that they spend to feed that desire.  We are indeed headed toward a looming and frightening fiscal cliff, but it has nothing to do with the piddly fiscal step that Washington and the press corps are obsessed with.

So, what can be done?  The same thing that can be done when a family that makes $70,000 a year keeps spending more than $110,000 a year:  Stop spending the extra $40,000.

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Welfare Cost $746 Billion Last Year – More Than Social Security or Basic Defense

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By the end of 1963, the poverty rate in the United States was around 19%.  In his 1964 State of the Union address, President Lyndon B. Johnson introduced his War of Poverty program.  The first part of the War of Poverty was the enactment of the Economic Opportunity Act of 1964 which launched the Head State and Job Corps programs along with others to help those in poor families find a way out of poverty.

The second part of Johnson’s War on Poverty was the Social Security Act of 1965 which led to the creation of Medicare and Medicaid.  These programs were the first stages of a national healthcare system, providing federal health insurance for seniors and poor families.

In time, the poverty level dropped significantly in the U.S., but not necessarily because of Johnson’s War on Poverty, but largely due to an overall change in the nation’s economy.  The poverty level in 2006 was only 12.3%.  However, that level has been steadily climbing ever since and President Barack Obama’s War on Middle Class has been a large contributor the increase.

When Obama took office, 12.5% of the American people lived at or below the poverty line.  In 2009, that jumped to 13.2%.  In 2010 it jumped up to 14.3% and in 2011 it reached 15.1%.  That equates to over 46 million Americans living at or below the poverty line and there is no indication that the steady climb will end anytime soon.

The vast majority of these people turn to welfare to feed and clothe their families.  What originally started out to be a band-aid to fix a temporary economic wound has now become a permanent life-support system for millions of Americans.  And like the medical field, life-support costs a great deal more than band-aids.

Wanting to know what welfare was costing, Sen. Jeff Sessions (R-AL), the ranking Republican on the Senate Budget Committee requested a report from the Congressional Research Service.  When the report came in, it showed that welfare costs had risen from $563 billion in 2008 to $746 billion in 2010.  This is more than Social Security, basic defense spending or any other single chunk of change spent by the federal government.

Sessions’ Budget Committee staff also calculated that there is another $283 billion contributed by states to welfare programs, raising the grand total to $1.03 trillion in just one year.

 

The largest single part of the welfare spending is Medicaid which rose from $82 billion in 2008 to $296 billion in 2011.

Sessions responded to the report saying:

“No longer should we measure compassion by how much money the government spends but by how many people we help to rise out of poverty.  Welfare assistance should be seen as temporary whenever possible and the goal must be to help more of our fellow citizens attain gainful employment and financial independence.”

It’s been a long proven fact that just giving money to the poor only creates more poor people.  We need to stop just giving them money without anything in return.  Think how much more productive it would be to pay the poor to work at various jobs rather than to just give them the money lay around home.  They would learn skills and how to be self-sufficient and become contributing members of society instead of people who just sit back and feed off the rest of us like leaches.

Benjamin Franklin recognized that over 230 years ago.  I’ll conclude with his words of wisdom as he puts it eloquently:

“In my youth I traveled much, and I observed in different countries that the more the public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the more they did for themselves, and became richer. There is no country in the world where so many provision are established for them (as in England); so many hospitals to receive them when they are sick or lame, founded and maintained by voluntary charities; so many almshouses for the aged of both sexes, together with a solemn general law made by the rich to subject their estates to a heavy tax for the support of the poor. Under all these obligations, are our poor modest, humble, and thankful? And do they use their best endeavors to maintain themselves, and lighten our shoulders of this burden? On the contrary, I affirm that there is no country in the world in which the poor are more idle, dissolute, drunken, and insolent. The day you passed that, you took away from before their eyes the greatest of all inducements to industry, frugality, and sobriety, but giving them a dependence on somewhat else than a careful accumulation during youth and health, for support in age or sickness.”

“In short, you offered a premium for the encouragement of idleness, and you should not now wonder that it has had its effect in the increase in poverty. Repeal that law, and you will soon see a change in their manners. Saint Monday and Saint Tuesday will soon cease to be holidays. Six days shalt thou labor, thought one on the oldest commandments long treated as out of date, will again be looked upon as a respectable precept; industry will increase, and with it plenty among the lower people; their circumstances will mend, and more will be done for their happiness by inuring them to provide for themselves than could be done by dividing all your estates among them.”

[The Real Benjamin Franklin: Part II: Timeless Treasures from Benjamin Franklin, Prepared by W. Cleon Skousen and M. Richard Maxfield.  National Center for Constitutional Studies, 2008, Pp 453-4.]

Read more: http://godfatherpolitics.com/7619/welfare-cost-746-billion-last-year-more-than-social-security-or-basic-defense/#ixzz2A37hfzsq

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