Monthly Archives: October 2014

America’s Federal Spending Future In Pictures

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CBO Projected Spending: The Budget and Economic Outlook

CBO Projected Spending Feb 2014: The Budget and Economic Outlook

The series of slides in this blog are modified from the Congressional Budget Office’s (CBO) February 2014 report “The Budget and Economic Outlook: 2014 to 2024”. The above slide shows federal spending broken out by major spending category. Note the vertical red dotted line showing where we are today.

CBO Projected Spending Net Interest

Explosive Interest Growth – American Taxpayers On The Hook

The above slide highlights the growth in Net Interest, an increase of 1.9% of our GDP vs current spending levels. This is the largest area of growth projected in the budget, and is like the interest you pay on you credit card. America’s interest payments are just starting to accelerate, having been masked the last few years by historically low interest rates. If the actual interest rates exceed what CBO projects, roughly 5%, the costs of Net Interest will grow.

CBO Projected Spending Other Mandatory

Other Mandatory Spending – Only “Mandatory” Spending Projected To Decrease

Other Mandatory Spending decreases relative to GDP by -0.3%, and is the only Mandatory Spending category that isn’t protected to consume even greater portions of the GDP.

CBO Projected Spending Non Defense Discretionary

Nondefense Discretionary Shrinks Relative To GDP

Non-defense discretionary decreases by nearly 1% relative to GDP. This category, minus the Defense Department, includes most of the federal government’s agencies such as the Department of Homeland Security, NASA, National Science Foundation, Environmental Protection Agency, Departments of Justice, Labor, Agriculture, State, Transportation, Interior, HUD, Commerce…

Slide1

Defense Shrinks Dramatically vs GDP To Levels Not Seen Since The Interwar Years Of The 1930’s

Defense Discretionary, partly due to reductions instituted by Secretary Gates, and partly due to Sequestration, is projected to continue it’s decline relative to GDP. It is projected to drop to levels not seen since the 1930s, and as shown by the red circle and arrow, is projected to drop below interest spending by 2021. Interest spending is projected to begin dwarfing defense spending there on out. The increased cost of interest, along with health care and social security will dominate federal spending.

CBO Projected Spending SS

Social Security If Projected To Continue Eating Ever More Of The Federal Budget – And Cause Ever More Borrowing

Social Security, now that the baby boomer retirements are well underway, continues to swell. Reforming it, in order to save the program from pending collapse, is essential. Despite it’s growth of 0.7% relative to GDP, that increase comes in third behind Interest and Health Care spending.

CBO Projected Spending Maj Health Care

Major Health Care Programs Constitute The Largest Part Of The Federal Budget, Eclipsing Social Security In 2014.

Major Health Care Spending, thanks to the passing of Obama Care, or the “Affordable Care Act” is now the largest part of the federal budget, and is projected to eat an additional 1.3% of America’s GDP by 2024. Combined with Social Security, Interest and Other Mandatory Spending, they are projected to eat 17.2% of GDP. The rest of the federal budget gets the scraps.

Caveat Emptor America!

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Washington Monument, Washington D.C.

Washington Monument, Washington D.C.

Let the buyers beware! What would America look like if the Democrat Party were unchecked to enact every policy that it fights so hard to institute? The first places to look for answers are in the American cities that democrat politicians owned lock, stock, and barrel for decades.

According to the 2010 census, the top 10 poorest cities with greater than 250,000 people,

and the last year that they had a Republican mayor are:

  1. Detroit, MI. 32.5% below poverty level. (1961)
  2. Buffalo, NY. 29.9% below poverty level. (1954)
  3. Cincinnati, OH. 27.8% below poverty level. (1984)
  4. Cleveland, OH. 27.0% below poverty level. (1989)
  5. Miami, FL. 26.9% below poverty level. Never.
  6. St. Louis, MO. 26.8% below poverty level. (1949)
  7. El Paso, TX. 26.4% below poverty level. Never.
  8. Milwaukee, WI. 26.2% below poverty level. (1908)
  9. Philadelphia, PA. 25.1% below poverty level. (1952)
  10. Newark, NJ. 24.2% below poverty level. (1907)

Source: www.examiner.com

All of these cities owe their poverty to Democrats. Pictures of Detroit, for example, show the totality of the betrayal to both the citizens of these cities, and the rest of America, for their decay weakens us all.

Now that the Detroit visual is clear in your mind, what other “wonderful” Democrat Party, America transforming policies would we suffer from?

  • America’s borders would remain wide open to anybody, from any country, with any intent who wished to enter.
  • Democratic politicians would continue to welcome illegal immigrants onto America’s welfare rolls, enabling them to illegally vote (6.4 percent of non-citizens voted in 2008 and 2.2 percent of non-citizens voted in 2010), and eventually grant them citizenship. America is, after all, responsible for stealing the rest of the world’s wealth, Democrat political ideologues say.
  • America’s energy wealth would be locked up in favor of expensive imported energy, and anemic renewables.
  • American wealth would be sent to other countries as carbon tax penalties.
  • In order to become more efficient, Americans would be crowded into major urban centers, as most of our land would be turned over to mother nature. These desires are engrained under the name Agenda 21.
  • Government intrusion into every facet of life would go unchecked. So many are already here (from government salt bans to mandating your light bulbs and how much your toilet can use).
  • Obama care would quickly give way to socialized medicine. Quality medical care would be a thing of the past, in favor of equally poor, VA style medical treatment for all.
  • Christianity would be relegated to a back room religion, in favor of statism, along the lines of every communist country on earth.

These are just the beginning, unfortunately. At it’s fullest, and completely unchecked level, progressive Democrat policies would create an America that looked like Cuba, Venezuela, or any other communist country. This may sound extreme to some, but that doesn’t change the facts. Look at who controls the money flowing into the Democrat Party, and you’ll see the ones calling the shots, and setting their agenda.

Trevor Loudon’s nearly 700-page book, The Enemies Within, details the growing Marxist, communist and progressive influences in the Democrat Party. View videos of Mr. Loudon making the case agains the Democrat Party. Elections in America are no longer a question of policies; they are a question of liberty vs. statism. We now see Sen Bernie Sanders, Socialist, running for the Democratic presidential nomination. The fact that he can even run shows how dramatically the Democrat Party moved to the left!

Eight CBO Forecasts On America’s Future

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Liberty loving Americans standing against reckless government spending.

Liberty loving Americans standing against reckless government spending.

In July, 2014 the Congressional Budget Office released its latest annual forecast on America’s economic future, “The 2014 Long Term Budget Outlook“.

Some key assumptions foretelling how high future interest rates will be on money the federal government, really the American tax payers, must pay are less than inspiring, in fact they are all bad news. These assumptions add to previous depressing CBO assumptions.

Per the CBO, four factors that will REDUCE future interest rates on $ borrowed by the Federal Government (the lower the better):

– The labor force is projected to grow much more slowly than in the past (1990-2007). (Slow labor growth means America’s ability to grow its tax base is weakened).
– The share of total income going to high income households will remain higher in the future (i.e. Fewer will share in the “American Dream”).
– Total factor productivity will grow slightly more slowly than in the past. (Less productive workers means less products and services).
– The risk-premium will probably remain higher than in the last few decades (i.e. Investors will find US Treasuries more attractive since they will be afraid of higher risk investments).

Per the CBO, four factors that will INCREASE future interest rates on $ borrowed by the Federal Government:

– Federal debt, unless things change, will be much larger relative to GDP than it was in the past. Click here for chart of America’s projected federal debt.
– Net inflows of capital will be less (i.e. There will be less foreign investment in the United States, which means less growth in businesses).
– The capital share of income will remain higher than historic averages (i.e. Those that have money to invest will keep more of the resulting income).
– The working population will get older, and have fewer people in their prime savings age (i.e. Less $ will be saved, and less $ will be available for investment).

This future isn’t set in stone, fixing it requires real leadership, a long-term commitment to smaller, less intrusive, and more effective government that stops excessive taxation of Americans. Upcoming posts will look at the details within CBO’s numbers.

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