I just read a piece from American Thinker about debating a liberal on spending. You can read it here. Basically it asks 4 questions to illustrate how bad our nation’s spending problem is. I’ve seen this type of expose before and the problem I have with them is the numbers are nearly incomprehensible. It’s Monopoly money. You can’t get your arms around it because it’s so much. I believe this causes it to lose its effect somewhat. You just kind of nod your head and say OK, we owe trillions, whatever.

So I thought I would add a twist to it and try to use numbers we can all relate to. I used an example of a person that makes a $40,000 annual salary and then just inserted the same percentages of spending and debt the Federal government has accrued into the equation. If you’re serious about quizzing somebody on these points, just give them the amounts or you’ll be there all day. The key numbers are the ones they can relate to their own income situation. It should help to show someone the folly in our debt situation and why it must stop right away and not be dealt with later.

FEDERAL SPENDING

2010 TOTAL FEDERAL SPENDING $3.6 TRILLION

2010 FEDERAL TAX REVENUE $2.4 TRILLION

2010 FEDERAL DEFICIT $1.2 TRILLION

CURRENT FEDERAL DEBT $14 TRILLION

2010 FEDERAL DEBT INTEREST $414 BILLION

@6% INTEREST IT WOULD BE $840 BILLION

@10% INTEREST IT WOULD BE  $1.4 TRILLION

@20% INTEREST IT WOULD BE  $2.8 TRILLION

IN 2015 THE PROJECTED FEDERAL DEBT WILL BE $20 TRILLION

THE 2015 FEDERAL DEBT INTEREST PROJECTION IS $600 BILLION

@6% INTEREST IT WOULD BE $1.2 TRILLION

@10% INTEREST IT WOULD BE $2 TRILLION

@20% INTEREST IT WOULD BE  $4 TRILLION

Now let’s make that comparison with some numbers you can better relate to. 

AVERAGE INDIVIDUAL

$40,000 ANNUAL SALARY

$60,000 ANNUAL SPENDING

$20,000 ANNUAL DEFICIT

$233,400 TOTAL DEBT

$7,000 ANNUAL INTEREST AT 3%

$14,000 ANNUAL INTEREST AT 6%

$23,400 ANNUAL INTEREST AT 10%

$46,800 ANNUAL INTEREST AT 20%

2015 PROJECTIONS

$333,400 TOTAL DEBT

$10,000 ANNUAL INTEREST AT 3%

$20,000 ANNUAL INTEREST AT 6%

$33,400 ANNUAL INTEREST AT 10%

$66,800 ANNUAL INTEREST AT 20%

So a guy making 40K is spending 60K a year and has amassed nearly a quarter-million in debt. Even with todays historically low-interest rates, you have to cough up a big, fat check once a year. If you’re only paying a 1% interest rate, you have to write a check for $2,334. Can you do it? Remember, you’ve already accounted for your entire $40k salary plus $20k more. And when inflation forces Bernanke to raise the rates, your interest payments will skyrocket and consume an ever greater portion of your wages.

It’s easy to see this is just nuts. You’re spending 50% more than you make. You have debt equal to nearly 6 years of every penny you earn. The interest payment already eats up a months take-home pay. It’s likely already too late for you to save yourself, bankruptcy is nearly assured.

What’s the last thing on your mind at this point? Could it be spending more money? You wouldn’t even consider it based on your finances. Yet, our government pays no heed to such inconveniences. Those are the benefits of not spending your own money, having access to a printing press and doing it in front of a public with little knowledge of what is really happening.

The only thing more amazing than the amount of our nation’s debt is the fact that we are even considering raising it. Any member of Congress who even considers it is exhibiting the height of irresponsibility. Yes, I know that includes a large amount of Republicans and even Conservatives. The fact is that there is only one reason we would need to raise it and that’s if we voluntarily exceed our budget with more spending. Simple, don’t spend more than you take in and the ceiling doesn’t need to be raised and the threats of impending doom vanish. Yet, many will buy into the scare tactics and vote for it.

This is the first true test for the GOP to see if they are serious about reducing spending. Sure, they’ll take a symbolic vote on repealing health care reform. The House will pass it and it likely won’t even come up for a vote in the Senate. If somehow it did and somehow it passed, Obama would veto it and you’ll never get the two-thirds to over-ride the veto. That’s all fine and dandy. Go ahead and get the members on record so it can be used for the 2012 election. But the fact is we need real reductions in spending just as we need real tax cuts. I will definitely remain a skeptic until proven wrong.

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9 thoughts on “Raise the debt ceiling? Are you nuts?

  1. I share your concerns about spending and raising the debt ceiling. The question I have is this. What will happen if we do not raise the debt ceiling? Will it cause our country to default on it’s obligations? If so, then how do we get around that? Can we cut spending enough to keep it from happening?

    Yeah, that’s more than one question, but it seems there is never an end. This is total mess and I really haven’t a clue where to start cleaning it up.

  2. If we don’t raise the debt ceiling AND our outlays exceed our revenue, then we do indeed default on our debt obligations. Our credit rating tanks, it costs us much more money to service our existing debt and we would have problems selling any more debt thus forcing the Fed to purchase it. The markets would plunge. The dollar would plunge against foreign currencies. Eventually, you would see the dollar replaced as the worlds reserve currency. You would see commodities rise even more as the dollar drops. The Fed would be forced to further monetize the debt and debase the currency and inflation would start to skyrocket. In short, you would see everything that is already happening in slow motion be put into fast-forward which is why the Fed must be stopped.

    Getting around it is simple from a technical perspective. Simply don’t exceed your tax revenue with your spending outlays. The only reason this is an issue is because we are exceeding our budget by 50% annually under Obama.

    You stop it by restricting the Federal government to its constitutionally mandated obligations. We easily have enough tax revenue even today with our poor economy to provide a national defense and the basic infrastructure requirements the government should be providing. It’s all in the discretionary spending that causes us to break the budget. Would it be popular? Good Lord, no! We’re becoming addicts to government spending. But sticking to a Constitutional mandate structure means eliminating entire agencies and departments with the stroke of a pen and thus stopping the spending immediately. Which is what the voters just asked for. It’s what Ron Paul would do if he were elected. It’s what every single member of Congress that takes that oath should do without hesitation.

    “I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.”

    I believe the Tenth Amendment clears it up quite nicely. Enumerated powers. Members of Congress shouldn’t have to wrangle with an ethical question as to whether or not they are imposing hardship by reducing or eliminating Federal agencies. The fact is that spending is UNconstitutional and should be stopped because they took the oath to support and defend the Constitution. Cut and dried.

    Now, I’m a realistic person. I know Congress is not suddenly going to get a conscience and surrender much of their power by dramatically reducing spending. I also know the Constitution doesn’t specifically mandate a balanced budget or any kind of spending restriction. But if we don’t take drastic steps now when the debt is so horribly out of control, then when? Does anyone think we would do it when the economy is humming along? Of course not. That’s why I wrote the post and hope that people will really look at the numbers and imagine themselves in this situation using their own budget. That makes it easy to see that there is no alternative other than to immediately stopping the bleeding. 2015 or even 2020 will be here much too quickly and those more dire debt scenarios are going to play out. It’s not a matter of if, only when. Today we still have a choice to stop the spending. If we wait until the debt crisis escalates, that choice will be gone and so will any control over how it plays out. People must realize the URGENCY of dealing with this.

  3. Cutting spending is the only genuine “solution.” Raising the debt ceiling simply kicks the inevitable default down the road, making it worse. “We the People” need to stop listening to politicians and pundits and realize, right quick, the genuine severity of the economic crisis we face. There’s a freight train coming our way, and we’re standing in the middle of the tracks, like deer, just staring at the headlights.

  4. You and I both know they are guaranteed to raise it. The GOP talks about controlling spending, but they aren’t going to use the best tool they have at the moment to force it.

  5. Yes, raising it is bad, its just giving them more of an allowance, not to mention what is the point in having a “ceiling” if the thought of it actually acting like a stop on spending would destroy the universe? The problem is even if we cut spending to stay below the ceiling, it is the interest on that debt that will kick us over the top, so we need to cut spending and then cut some more…which now that I think about it, isn’t really a problem, but a really damn good thing.

    I will take the first step:

    Dear federal Government,
    Knowing I will never see a penny of my social security, I willfully entrust the money I am owed to help pay down our debt. I will not expect any money if I am lucky enough to reach the age of 60, so have at it, pay down some debt.

    P.S. – Did I mention pay down some debt?

  6. Seems like a pretty straightforward proposition. Those who are feeding at the government trough will reject any notion of spending cuts. Those who aren’t support them. The GOP is in for a real firestorm if they are really serious about cutting spending.

  7. The GOP will be in for a real firestorm if they don’t cut spending. Regardless what the Democrats and press say, the R’s were sent to Congress to cut spending. Period.

  8. Yes sir and I think the deck is stacked against them. With only the House under their control, they can really only do two things. Perform symbolic votes such as the repeal of health care is one. The other thing they can do is stop the bleeding and not allow any further destructive legislation through. Of course, we’ve already seen that Congress is being marginalized by Obama utilizing his agencies and executive orders to sidestep them anyway. But to actually enact constructive legislation and get it through both the Senate and Obama is highly unlikely.

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