A Federal Government Whose Only Purpose Is To Write Checks

Posted on January 23, 2013

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The world is an asylum made up of players and payers. The players are few and insane, but have all the power.

The only payers that resist the players are those that cherish their God-given right to live free.

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I love it when smart people make complicated things easy to understand. Veronique de Rugy is one of those smart people. She often writes articles for the Wall Street Journal and her articles have been linked here several times. Thanks to Bruce McCain at Questions and Observations, I came across an article she co-authored with another smart person, Jason J. Fichtner published by the Mercatus Center at George Mason University.

In this very short paper the authors used data from the Office of Management and Budget, the Government Accountability Office, and the Congressional Budget Office to analyze the trend in how our federal government spends the money they are budgeted to spend. They used that data to create three simple pie charts (shown below) that tell an amazing story of the insanity taking place our government players, elected or not, execise their power, Washington D.C. Two of the pie charts are show actual spending by category for the years 1970 and 2012. The third pie chart is what the year 2040 would look like if present trends continue.

The authors broke government spending by percentage of total spending into three broad categories.

One category they named Mandatory and appears in the pie charts in the color green. They include in this category the percentage of government  spending on what are popularly called entitlement programs like Social Security, Medicare, Medicade, and others. The term “mandatory” as well as the term “entitlement” are technically misnomers. The programs on which the money is being spent were created by laws passed by congress. Congress has the right to rescind those laws at any time. But, we use use the terms because the chances of congress rescinding the programs is slim and none.

A second category of spending is Net Interest and appears in Red. This is the interest payment on the debt the government has accumulated. It must be paid or the nation would go into default and would be declared bankrupt.

They named the third spending category Discretionary ans it appears in the charts ad the areas colored Blue. Congress has virtually no choice over the spending on the other two categories. The only things the congress can debate over spending, the only areas of spending where they some discretion are things like National Defense, Foreign Aid, Federal Highways and Bridges, Environmental Protection, and etc.

So, lets look at the pie charts and see what the trends tell us.

So. let’s compare the first two pie charts and see what has changed in the way the federal government spends money from 1970 to 2012. The first thing that jumps out at us that total spending increased from $900 billion to $3.4 trillion.  The percentage on servicing the national debt (Red)  changed very little as a percentage of total spending but total amount of dollars spent increased dramatically.. It went from 7% of $900 billion in 1970 to 6% of $3.4 trillion in 2012. In the same 42 years, Mandatory (Green) spending went from 31% of $900 billion to 58% of $3.4 trillion. That is a huge in crease both as a percentage of total spending and in total dollars spent. As a result, the percentage of total spending on discretionary spending went  from 62% in 1970 to 36% in 2012. But, because of the huge difference in total spending, the were many more dollars spent in 2012 on Discretionary spending than in 1970.

This trend can not continue. However, the authors produced a third oie chart to show us what the spending pattern would look like it the trend were to continue until the year 2040. So, please take a good look at the third pie chart.

If current trends continue, by 2040 the federal government would be spending a total of $12.3 trillion. That should take your breath away. Sadly, the authors don’t tell us what the total national debt would be, bust it must be astronomical because the percentage of spending on Net Interest (Red) would be 35% of all spending. How could that be? Because servicing our debt is the fasting growing segment of federal government spending  That is what will/would happen by continuing borrow over a trillion dollars per year out to 2040. It is insane! How insane is it? Consider this. Once upon a time a pie chart on federal government spending would be totally blue or the spending would be all discretionary in nature. But, if this trend continues, and it can not, the pie chart would be almost entirely Red except for a little Green; that is, Net Interest on our national debt and Mandatory spending on entitlements would be 99.9% of all spending. In other words, our Congress Critters would be reduced to writing checks to pay for entitlements and interest on the debt. The budget would produce it self’.

Our nation was put on this insane path by the insane people who run our government. They refuse to address the biggest problem of all; spending. None is more insane than our current president, Barack Obama. He has no intention of attacking the spending problem. He told Speaker Boehner during the so-called Fiscal Cliff negotiations that there is no spending problem. Obama said much the dame thing in his recent inaugeral address. I didn’t listen to the address, but I did read some excerpts on other blogs, Two sentences he spoke reveal just how insane he is.

We must make the hard choices to reduce the cost of health care and the size of our deficit.

But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.

I call that talking in circles. Insane people like to talk in circles. It makes sense to them.

Well, now you know what I’m thinking. What are your thoughts?

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