We Are All Greeks
NEW YORK (TheStreet) -- When I see the protesters rioting in the streets of Athens in response to austerity measures, it always makes me scratch my head and wonder. I think, "What are you protesting about? You're broke."
At the same time, I'm equally perplexed by the lack of protesting here in the U.S. After all, we still have a chance to do something about the curious way in which we manage our finances, and the outcome this management delivers.
As a first step, I highly recommend all voters (and, sadly, all future voters) check out the "budget" at www.whitehouse.gov/omb/budget. I put it in quotes like that owing to my background, where the word budget, when uttered by my father, was usually used in connection with some familial sacrifice, which I don't see much in evidence in this budget. Here's a few pearls I pulled from it.
Our taxes will increase $1.9 trillion over 10 years.The budget gives us four straight years of trillion-dollar deficits. As my father would say, "You call that a budget?" Our interest payments will reach $1 trillion a year by 2022. With the Chinese such large holders of our debt, we can finance their entire military budget with our interest payments alone. The budget spends $47 trillion over 10 years and assumes receipts of $40.2 trillion, for a net contribution to the deficit of almost $7 trillion, an amount, by the way, that is larger than the economies Italy, France and the U.K. combined. The budget assumes compound annual growth in the U.S. economy of 5%, a rate that has not been achieved over the past 10 years. Using the historical rate of 3.96% that was achieved over the past 10 years for the next 10 years would mean our debt would likely exceed 85% of GDP, not the 76% the budget purports. Whatever the talk was a few months back about deficit reduction, I'm afraid I just don't see it in this budget. While the numbers may lie along the way, they don't lie in the final analysis. With GDP projections calculated at more modest historical rates, another hard truth emerges: We're heading toward debt levels that are more than 85% of GDP. We are becoming a European nation.
I can't prove this scientifically, but my theory is that the rise in spending and deficits is directly correlated with the complexity of new laws and regulations. Before you take in the substance of the graphs below, keep in mind the word count of the U.S. Constitution is just 4,543 words, the length of a long-ish college essay.
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