Too many of our citizens fail to understand the importance of percentage. A few percentage points can make a huge difference in our payments for a car or a home. I have noticed that when arranging a payment schedule many people only look at the bottom figure to see if their paycheck will cover the amount. We all should be looking at what rate of interest we will be paying and be looking for the best rate we can get. On a personal level some people do what I have suggested, but sadly on a government level they seem to show little interest in the percentages. We all need to take the numbers of our federal government more serious because it will play an ever increasing role in our lives.
Just last month our federal government acknowledged debt exceeded the 20 trillion dollar mark. The debt is roughly 107% of our entire GDP; most conservative economists make the claim that when a nation exceeds 50% it is on shaky ground. We all hear the politicians and their talking heads talk about reducing the yearly deficit, but the actual doing will be harder done than said. Year after year after year the US government spends far more money than it collects in tax revenue. According to the Treasury Department’s own figures, the government’s budget deficit for the first 10 months of this fiscal year (i.e. October 2016 through July 2017) was $566 billion. When you look at the top four line items in the US government’s budget: Social Security, Medicare, Military, and, sadly, interest on the debt, those four line items alone account for nearly NINETY PERCENT of all US government spending.
Even the thought of cutting Social Security or Medicare entitlements is political suicide, and to compound the problem 10,000 Baby Boomers join the ranks of Social Security recipients every single day. Military spending cannot be cut because of all of the constant threats and warfare. The current White House proposal, in fact, is a 10% increase in military spending for the next fiscal year. The last big item is interest on the debt, if our nation refused to pay the interest it would cause the most severe global financial meltdown ever seen in modern history.
While some claim that we can grow ourselves out of the problem there are some percentages that we need to take a hard look at. Here’s the problem: the national debt is growing MUCH faster than the US economy. In Fiscal Year 2016, for example, the debt grew by 7.84%. Yet even when including the ‘benefits’ of inflation, the US economy only grew by 2.4% over the same period. It doesn’t take a genius to see that our debt is growing three times faster than our income; this is in a time of the lowest interest rates in history. What will that number do when interest rates start to climb?
For those of us who watch the percentages we are becoming increasingly alarmed at the trend. Too many people have the misguided idea that deficit spending can go on forever, but there will reach a point sometime in the near future where the lenders will stop supplying the money because they know they will never be paid. Time is overdue for us Americans to take the percentages serious.
Comments
Post a Comment