Recently, despite all the partisan bickering, Congress came to an agreement to shave $38 billion off the federal budget. They would have us all believe that they saved the world, that if it were not for their heroic actions, our government would have come to a screeching halt and life as we know it would come to an end. The funny thing is that quite a few people fell for this rubbish.
Hopefully, after reading the following information, you will begin to see how your legislators lied, and manipulated the facts to get you to think that they saved our government, and averted our nation’s financial ruin.
Let me begin by giving you a simple scenario that may help explain some of the terminology used when discussing our nation’s financial situation. Say an individual has a job in which they earn $300 a week. This individual has weekly expenses that total $400 so that they can pay their bills and put food on the table. The $100 shortfall between what they earn, and what they spend is their deficit. Now, to survive, this individual either takes out weekly loans, or charges the additional expenses on their credit card. The debt that they accumulate is just that, debt.
The same principle applies to our government. Currently our government takes in approximately $2.18 trillion in taxes from various sources. However, it spends $3.52 trillion upon all the programs and agencies that receive their funding out of the federal budget. That leaves a shortfall, or deficit, of over $1.34 trillion per year. All this money has to be borrowed to keep our government operating.
Now think about this for just a moment. Congress agreed to shave $38 billion off the federal budget. Seems like a whole lot of money, doesn’t it? Well, if you do the math, $38 billion is only about 1% of the total federal budget. To put that into perspective, that would be like our imaginary individual cutting his expenses by $4 a week.
Well whoop de doo Congress, now that we put it into terms the average citizen can understand, it seems like you didn’t even put a dent in your spending, did you? In fact, if you subtract that $38 billion from the federal budget, you are still running a deficit, which means you are still borrowing money just to keep operating!
Currently our national debt stands at a staggering $14.2 trillion. I just saw on the news this evening that our government is quickly approaching the debt ceiling, the amount of money the government is authorized to borrow. There is already talk of raising the debt ceiling again, to what amount, nobody knows.
These numbers, a million, a billion, a trillion, they are tossed about so routinely that they have seemed to lose their significance. So, once again, let me try to assist you in coming to terms with how huge our national debt truly is.
Say our government did shut down, business as usual came to a screeching halt. Say Congress stopped funding everything from the lowliest janitor to the wars in Iraq and Afghanistan, and everything in between. Now imagine that once this happened, Congress began making daily payments of $100 million in an attempt to pay off the debt. Let me see, there are 365 days in a year, multiplied by $100 million, which comes to $36.5 billion a year. Now divide our national debt of $14.2 trillion by $36.5 billion and you get…389. That is 389 years it would take of daily payments of $100 million to pay off the debt. That is if Congress continued to not spend another penny for the next 4 centuries.
A couple more statistics ought to help put everything in perspective for you. I’m sure everyone has heard of the GDP, or Gross Domestic Product. The GDP refers to the market value of all goods and services produced within a country over the course of a given period. It is a marker of the country’s wealth, or its standard of living. For the calendar year of 2010, the US GDP was $14.66 trillion. Remember now, our national debt is $14.2 trillion. That means we owe roughly 97% of our entire countries worth to creditors.
So, the next time you hear some legislator say that due to their efforts they shaved a few paltry billion off the federal budget remember that they are still spending more than they take in. Remember that ultimately, you, your children, your grandchildren, and your posterity for the next few centuries, are in hock up to your ears because our federal government cannot live within its means.
If anything at all occupies your mind when you go to vote in the upcoming elections, keep these facts in mind, would you?