For years many economists and financial market analysts have warned that government spending will place a burden on future generations.
According to IRS data, 61 percent of adults paid no federal income taxes for 2020. In fact, many of those people received tax credits. The 39 percent of adults who did pay taxes could not fund the operating expenses of the United States. Even if we “taxed the rich” in various ways, there’s not enough wealth to cover what we have spent, what we owe in interest and current spending.
https://www.visualcapitalist.com/timeline-150-years-of-u-s-national-debt/
We spend $8.4 million per minute ($140,000 per second) as of September 1, 2021. Jeff Bezos is worth $190 billion. That’s 377 hours of federal spending. Less than 16 days of federal outlays.
- $8.4 million x 60 minutes = $504 million per hour
- $504 million x 24 hours = $12.1 billion per day
Taking everything from everyone alive in the United States now pays for 280 days of government spending. Not even a year. Everything Bezos has? That would cover two weeks of federal spending.
How bad is the fiscal situation of the United States? Ponder the data.
The Congressional Budget Office projects $6.8 trillion in spending vs. $3.8 trillion in revenue for 2021.
The gross domestic product in 2020 was $19.6 trillion. That’s an impressive number, indicating all economic activity, both private and public.
Unfortunately, the national debt is estimated at $26.7 trillion and is likely closer to $29 trillion. The problem is that federal spending isn’t tracked as precisely as you and I have to track our household budgets. No company could get away with the sloppy accounting of the federal government.
Anyway, by 2034, there will be at least $154.2 trillion in underfunded liabilities for Social Security, Medicare, and other social programs that are considered non-discretionary spending. That’s spending Congress doesn’t “control” — it’s spending on auto-pilot.
The cost of interest on the national debt surpassed military spending in 2020 and could be twice the military budget within a decade. I also like to remind people that defense spending in 2020 was 11 percent of federal outlays, down from 18 percent a decade earlier.
I do get tired of false claims that defense spending is “half the budget” when it is actually a bit more than ten percent. This goes back to “non-discretionary” vs. “discretionary” spending and claims that defense spending is half of the budget Congress can control. That’s a myth: Congress controls all spending.
When federal spending exceeds all potential revenues, governments must employ a mix of solutions. Taxes can be, and likely will be, increased. The money supply can be increased, causing a devaluation of the currency and corresponding inflation. Debt has to be financed, too, so there will be yet more interest on the debt.
I have no idea how my children will suffer as a result of this fiscal cliff. I assume they will pay much higher taxes for far fewer services. They might face higher interest rates, inflation, or other economic consequences. I don’t know what form the pain will take in the future.
I am certain that my children will pay for past generations of political and economic malpractice by the federal government.
