In this blog I have joined my cohort politicians in devising many ways to spend the government’s money. An astute reader may ask; “How are we going to pay for all this?” There is no simple answer.
At this point most politicians drop back to the two favorite phrases when addressing the economy: 1) we are going to tax the rich, and 2) we are going to cut government spending. Of course neither of these is the entire answer. Firstly taxing the rich has limits. If you make the tax burden too high on the rich, they will simply move to another country…they can do that. Secondly, we all agree that there is unwise government spending, but it is much harder to get Congressmen to agree on whose pet project should be scrapped.
But first let’s look at the problem in some detail. The national debt is currently about 9 Trillion dollars. That’s a nasty number. Let’s try to make these numbers more understandable, and personal, by looking at the per-person value. With about 300 million people currently in the US, your share of the national debt is about $30,000 (and of course an equal share for your spouse and each of your children). To add insult to injury, we are adding about another $1500 per person to this each year.
Think that’s bad? That doesn’t include the unfunded ‘entitlements’ for Social Security, Medicaid, etc. This currently totals about $50 trillion (or another $170,000 for each family member), and is rising at about $3 trillion (~$10,000 each) per year. So you can see why no one want’s to talk about how to fix Social Security, it seems pretty hopeless.
OK, relative to the entitlement programs, suffice to say that something drastic has to be done. It will probably be some combination of increasing the retirement age, increasing the FICA deductions in your pay check, and increasing the per-year maximum (the cap) that people have to pay. I hope that it also includes finding ways of eliminating waste in the Medicaid system.
In general I’m against privatizing Social Security (although some privatization of Medicaid may be beneficial). The problem with Social Security funding is not government waste, it’s government mismanagement. The government has stolen the money set aside for Social Security. In the private sector people would go to prison for that, and I believe that the same should happen in the government sector. Congress must pass strict laws which isolate Social Security funds and pay a reasonable dividend each year.
Well, let’s look for some positive news. How about getting the rich people to pay it off? Bill Gates, the world’s wealthiest man, is worth about $56 Billion, so it would take about 187 Bill Gates to pay off the National Debt, if they donated all their wealth…best look somewhere else. How about tapping the top companies in America? They have a lot of money. The total of the profit from the top 50 companies was $370 Billion in 2006. So if we took all their profits, it wouldn’t even cover the deficit each year.
Economists like to compare the National Debt to the Gross National Product (or GNP, the sum of all goods and services produced). The GNP in 2006 was about $11Trillion. It’s not clear to me what this proves; except that if we totaled everything we produced for a year it would almost be equal to what we owe. I guess that’s kinda like a credit card balance equal to your annual income.
For some further discussion of how we might deal with this problem visit: http://chucksee.wordpress.com/?page_id=12&preview=true