Thursday, March 16, 2006

Social Spending on path to Bankrupt America - Democrats answer? Don't let Bush do anything that might fix it

Yesterday thes Federal Budget debt ceiling was raised to $9 Trillion. We've seen the National Debt grow by $2.3 Trillion since Bush took office. Democrats are foaming at the mouth at the ammunition the ceiling increase gives them against Bush, and they are continuing their unrelenting criticism of the administration's efforts to reign in out of control spending of this Republican-controlled Congress.

So how about some facts? Here is some history on Federal Spending.

Now take a look at the Pink curve in the graph above. That curve represents the growth of Social Spending in America since 1988. Socail spending includes Social Security, Medicare, Welfare, Disability Insurance, Veterans benefits, Education and other social services.

In 1998, this social spending accounted for 50 cents of every dollar of federal spending in a $1.06 tillion dollar budget. National Defense accounted for 27 cents of every dollar. In 2001, social spending had already ballooned to 64 cents of every dollar in a $1.86 trillion dollar budget, while national defense had dropped to just 16 cents out of each dollar.

After 5 years under George W. Bush, social spending has continued on its pre-Bush pace in a $2.7 trillion dollar budget, and is forecasted to reach nearly 70 cents of every federal dollar spent by 2011. Interestingly, though, for every dollar increase in defense under Bush, there has been a $2.15 increase in socail spending. And if you look at the graph, the rate of growth of that social spending was already established before Bush even took office.

While social spending is forecasted to continue its growth rate into the next decade, national defense spending has plateaued and should actually drop from this point forward.

So with these facts in hand, what has the administration done to address this domestic crisis? First, a relatively small tax cut helped get out out of the Clinton recession that started in early 2000. Unemployment is down, and the growth rate in America is healthy. But what about the out of control social spending? The data above represents actual outlays, so what happens when revenues no longer can sustain those outlays? Democrats argue that federal trust funds, now holding in excess of $3.4 trillion in Treasury securities, will come to the rescue to provide the difference between revenues and outlays. But there is the problem, and the lie. Those trust funds don't have any actual money in them. Since they were not invested in the private sector, the Treasury simply borrowed the money and it was spent on other government outlays.

In fact, all the surplus revenues to the government for decades have been spent to artificially reduce defecits and create a huge lie that there is savings to keep the social spending funded. The truth is that there is no savings, and in less than 10 years the government will not have the revenue to make its payments.

Recognizing this looming crisis, the Bush administration has attempted to reform programs like Social Security to invest its surpluses outside the Treasury so the money will be there when it needs it. As usual, though, Democrats have put politics above Americans and continue to push the lie that investing surpluses in the private sector is dangerous.

Understand that every penny of every surplus to date has been spent and is gone. When Social Security or any other trust fund program starts to cash in their Treasury securities, where is the Treasury going to get the money to repay them? The government has borrowed the surpluses from itself and spent them. There's nothing in the trust funds but a number that represents how much money the government has stolen and spent.

It's the largest financial scandal in the history of the planet, and it is continuing to be perpetrated today. $2 trillion dollars worth of Social Security and Medicare surpluses have already been stolen and spent, with trillions of dollars in surpluses yet to be collected before outlays exceed revenues. Every day that the government spends those surpluses makes things worse.

Now maybe Democrats are so selfish that they don't care what happens 10-20 years from now? Maybe retaining power today is all that matters to them, so they fignt reforms that might reduce or put off the crisis a couple more decades. Regardless of their motivations, though, what they are doing is despicable. I want my children to live in a better world than the world I live in today, but for some incredible reason, Democrats seem hell-bent on preventing any of our problems from getting solved for pure political reasons. I fear for the future.

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