It is a well known fact that the government "invests" social security tax revenue in treasury bonds, which really means they put treasury bonds into the old age trust fund and put the cash into the general operating fund. Those funds are then used to fund the bloated federal budget.
But that isn't enough to satisfy the ravenous appetite we have for spending beyond our means. Our government then goes on and borrows hundreds of billions of dollars more to continue spending.
That's what this "debt ceiling" debate is all about. I believe that both parties are to blame for the massive debt caused by out of control spending.
The overall federal budget has grown since Obama took office. But let's take a look at the numbers more closely for 2007 vs. 2010. I chose 2007 because it was the last full year before the economy collapsed. I have stripped out some spending (defense, social security, medicare, and stimulus), for reasons described below. Here are the numbers:
2007 (millions of dollars):
Total Budget: 2,863,084
Defense costs (deduct) 625,835
Social Security (deduct) 588,962
Medicare (deduct) 385,008
Income Security (deduct) 368,026
Jobs Bill (deduct) 0.00
Adjusted Budget: 895,253 (895 billion, 253 million dollars)
2010 (millions of dollars)
Total Budget: 3,600,577
Defense costs (deduct) 722,138
Social Security (deduct) 723,504
Medicare (deduct) 462,087
Income Security (deduct) 664,559
Jobs Bill (deduct) 50,000
Adjusted Budget: 978,289 (978 billion, 289 million dollars)
If you take the "adjusted budget" from 2007 and adjust it for 2.28 (roughly 7% total), you get an inflation adjusted total of 957, 895 (957 billion, 895 million). That is only 20 billion less than the 2010 adjusted budget.
So, in reality Obama has only increased the size of the federal government by 2.13%. Keep in mind, this is using "official inflation" which excludes oil price fluctuation. Real inflation has been more than 2.28% per year since 2007. Oil prices alone increased 68% between Jan 2007 and Jan 2010.
Let me explain my reasoning for deducting some of these expenses. Keep in mind that these deductions were done for both 2007 and 2010 to make sure we are comparing apples to apples.
Defense: This really isn't discretionary spending. The fact is, we have two wars going on. We should not place blame on Obama for properly funding our troops. That's why I removed the defense spending.
Social Security: If it were not for the "investment" of social security funds in treasury bonds, the social security system would not be part of the federal budget. It could be, and should be completely separate. These costs are not caused by Obama, but by relentless borrowing over the decades. Not even the increase can be attributed to Obama. That's why I deducted them.
Medicare: For the same reasons as social security.
Income Security: This includes a number of expenses for retirement, unemployment benefits, housing assistance, disability, and nutrition assistance. Most of the increases have been caused by the recession.
Jobs Bill: This was part of the overall stimulus. If you're against stimulus, I urge you to read about Hoover's role in the great depression. Stimulus was necessary to limit the catastrophe, regardless of what political talking heads say.
If you aren't a fan of Obama, that's fine. But keep these numbers in mind when you think about the fiscal outrage coming from the right. If you want low taxes, some of these expenses are going to have to be reduced.
However, it seems that Republicans want to eliminate parts of the national debt (or delay them a good while) by cutting social security and medicare. Since these programs are funded by taxes taken from the paychecks of average workers, and these funds were "borrowed" to keep taxes artificially low, I am absolutely opposed to cutting these programs to continue keeping taxes artificially low. If cuts must be made, they need to be phased in over a decade or more.
If you want a bloated military, fine. If you want massive subsidies to multi-national corporations, fine. If you want to deduct your mortgage interest, fine. If you want a deduction for your children, fine.
But you must be willing to pay the taxes to fund these expenses, deductions, and loopholes. If we continue to have artificially low taxes while we continue our spending binge, we will soon find ourselves insolvent as a nation.
Now let's talk about this debt ceiling debate. Republicans say that Obama isn't willing to compromise on increasing taxes. But the facts show that Obama has "sweetened the pot" for the GOP many times during these negotiations. Obama recently offered $3 in spending cuts for every $1 in additional tax revenue.
Economists agree that the budget cannot be balanced through spending cuts alone. The defense budget and "core" federal budget exceed tax revenues. Tax revenue must be increased, along with significant spending cuts in order to put our country on a sustainable financial course. If we also invest in small businesses, we will see the job market improve significantly.
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