On this final day of February, I offer you this graphic depiction of United States revenue and expenses by somewhat controversial financial world figure Henry Blodget. It notes that for 2010 fiscal year, U.S. revenue was approximately $2.2 trillion, against expenses of $3.5 trillion (the article doesn’t say it, but GDP is estimated at around $14.7 trillion). It’s an interesting chart– I for one, thought that interest on the debt was a much larger chunk of the budget; it does explain why the Fed has been so desperate to keep interest rates so low for so long, of course.
Mr. Blodget– correctly– observes that entitlements are a huge problem. However, he insists that these entitlement are the entire problem (because, heavens, we couldn’t possibly increase revenue via taxation). So… his answer– cut entitlements– is correct as far as it goes… but it doesn’t go far enough. The real problem is that the United States insists on running a praetorian state with nearly a trillion dollars in military spending causing most of the deficit (the chart shows $658 billion, and then another $150 billion or so in “one-shots”, which are presumably war funding). Worse, the United States has an effective tax collection rate of barely 16 or 17%, while spending close to 23 or 24%. But social security is a straight transfer program– and as the chart shows, social security revenue still exceeds expenditures. The real problem, along with defense and insufficient revenue collection, is just one of the entitlement programs– medical costs (reflected in Medicare and Medicaid). Of course, in a “jobless recovery”– when the economy is allegedly growing as more and more people face penury– the “correct answer” would be to tax “the haves.” That, of course… is crazy talk. We’ll have no correct answers, thanks. Your betters know better.
Seeing as the rich in general, and pharmaceutical concerns, the financial industry and defense contractors in particular (along with oil companies of course) own Congress (oil companies, or at least the people who control them, in turn, own everything and every one)… just don’t look for anything to change, other than possibly for the worse. And the fact that we’re now effectively in an election year (for the next 22 months!)… will just make things worse on this score.
Oh well.
tdog
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