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MISSION IMPOSSIBLE: If You Had All Power & Authority, What Would You Do To Balance ...

• By Bill Sardi

I'm going to put you at the "steering wheel" of the U.S economy.  You will have opportunity to fix the financial mess the U.S. economy is in.

Imagine for a moment you are the US Secretary of the Treasury or some all- powerful overseer of US federal government taxation and spending.

Which problem should you fix first: (a) national debt; (b) unemployment; (c) taxation; (d) expansion of government benefits to equalize income; (e) provide equal access to medical care for everybody?

For reference, you have ~$3.2 trillion in collected taxes to play with and you must make a $523 billion interest payment on ~$16 trillion in loans the U.S. has made (the national debt) and also by law cut $1 trillion of checks for Social Security and another ~$1 trillion for Medicare/Medicaid and then come up with $673 billion for the military, leaving you just ~$4 billion to fund all the other branches of government plus provide food stamps for 37 million people. 

The U.S. budget is $4.193 trillion and the federal government says it borrows $864 billion to come up with the difference between what it collects in taxes ($3.2 trillion) and its budgetary spending list ($4.193 trillion) – but the U.S. actually spends $6.048 trillion annually (see bottom left corner of the U.S. Debt Clock presented below) and actually just "prints" another ~$2 trillion of electronic money into existence to make up the difference and support the lifestyle Americans have grown accustomed to.

Today the public hears various calls for "Medicare for all," or "" or "tax the rich." Can a modern society just create endless money into existence, in essence, to give itself a pay increase?

The answer is YES, but not without adverse financial consequences:

Medicare for all: +$2.5 trillion

Minimum income: $290 billion for $500/month support for workers making less than $50,000/year or +$3.9 trillion/year for $1000/month income support, which is more than the federal government now collects in taxes;

Tax the rich: wealthy Americans with over $10-50 million accumulated wealth would pay 2-3% extra tax that would generate $2.75 trillion over a decade, which wouldn't even come close to balancing the present federal budget. Overtaxing wealthy Americans is already the rule of the day – the top 5% of income earners pay almost 60% of federal taxes; the top 50% pay ~97% of federal income taxes.

More worrisome is that public opinion polls show a majority of Americans want these reforms.  One pundit cites the fact the U.S. had a 91-92% tax rate on the richest Americans from 1951 to 1963 and the country didn't go to hell.  However, the Baby Boomers were only beginning to graduate from high school then.  Medicare was enacted in 1965 and covered 19 million retired citizens, versus 59 million today and another 75 million covered by Medicaid.  Retirees received Social Security checks amounting to $14.2 billion (1963) compared to $1 trillion covering 43 million Americans in 2018.  Forward projections estimate Social Security will have to cut checks for 79 million Americans by the year 2035.

In the early years of Social Security there were surpluses that should have been invested to yield a return when Baby Boomers retired.  But those surplus funds were "loaned" to the federal government to finance increased deficit spending.

Then there is the reality, that in the midst of a financial mess created by loose lending practices, that the Federal Reserve Bank literally gave "free money" to lenders in the 2008 banking crisis, increasing the money supply by $4 trillion and essentially redistributed wealth in society to the financial classes.  We might call it welfare for bankers.

So, the government does hand out endless free money, just to a limited group in society.  The people at the top and bottom income levels are being propped and a group of 122 million tax payers bear the burden for the remaining 206 million citizens that are stuck in the middle. 

I'm going to use the U.S. Debt Clock for evaluation purposes as it presents many different economic factors on a single printed page or screen view.  You should study the U.S. Debt Clock and become familiar with it.

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