America’s Disintegrating Financial Condition
Posted by Steve Markowitz on October 29, 2013
Only those who believe in alchemy can come to the conclusion that America’s financial trajectory is sustainable. Both political parties have been responsible for the exploding US debt and deficits. While the constituents who they pay off with the printed (borrowed) money have been different, this is agnostic to the damage deficit spending has caused to the Country’s economic health.
No matter who has been in office, presidents and their allies in Congress make excuses for the reckless spending. Often Republicans will justify this action based on national security. Democrats, on the other hand, feed their pets entitlement programs. Both are but excuses to redistribute wealth in favor of the constituents who will keep the politicians in power.
As shown in the graph below we are in a death spiral of deficit spending. Each president’s deficit spending creates a greater need for future spending. This reality has led to Barack Obama to become the largest deficit creator in US history. While Republicans rail at the current deficits, there was not a peep out of them when they controlled both houses of Congress and were led by President George W. Bush and his reckless spending habits. Those now calling for controlling America’s debt spending do not discuss the pain such a process would cause in the short to midterm. This omission is so grotesque as to be disingenuous.
American politicians in both parties have a vested interest in continuing the deficit spending. By borrowing from future generations they have the ability to hand out “gifts” to their constituents, the key to their remaining in power. The only answer to this political reality is a balanced budget amendment. Only then can scarce resources be distributed in a democracy without robbing from future citizens.
Jon Gabriel’s recent article titled The Reality of America’s Finances is posted below to further this discussion.
The Reality of America’s Finances, By Jon Gabriel
When Washington raised the debt ceiling this week, the Beltway media breathlessly reported that the fiscal crisis had ended. Lawyers danced in hallways, bureaucrats twerked on the Metro, congressional aides kissed strangers in the streets – the Tea Party has been defeated! It was like VJ day for wonks.
As our political class exchanged high fives and reporters praised a return to “sanity,” I wondered how these odd creatures defined insanity.
America’s fiscal crisis is not that our debt ceiling was too low, the fiscal crisis is that our debt is too high. When I mentioned this to left-leaning folks, they seemed indifferent. “Obama lowered the deficit.” “I think Bush spent more.“ “It’s Reagan’s fault!”
So I made this infographic:
Since most graphs look like this, I focused on just three big numbers: Deficit, revenue and debt.
The analogy is imperfect, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your Visa statement. Then imagine your spouse runs into the room and shouts, “great news honey, our fiscal crisis is over. We just got approved for a new MasterCard!” Your first call would be to a marriage counselor or a shrink.
The chart is brutally bipartisan. Debt increased under Republican presidents and Democrat presidents. It increased under Democrat congresses and Republican congresses. In war and in peace, in boom times and in busts, after tax hikes and tax cuts, the Potomac filled with red ink.
Washington likes to talk about sustainability. Forget sustainable – how is this sane?
Yet when a conservative hesitates before raising the debt ceiling, he’s portrayed as a madman. When Paul Ryan offers a thoughtful plan to reduce the debt over decades, he’s pushing grannies into the Grand Canyon and pantsing park rangers on the way out.
Since posting this chart to Twitter, the reaction has been intense. Some on the right think I’m too tough on the GOP while those on the left say it doesn’t matter or it’s all a big lie. Others tell me that I should have weighted for this variable or added lines for that trend. They are free to create their own charts to better fit their narrative and I’m sure they will. But the numbers shown above can’t be spun by either side.
Math doesn’t care about fairness or good intentions. Spending vastly more than you have isn’t good when done by a Republican or a Democrat. Two plus two doesn’t equal 33.2317 after you factor in a secret “Social Justice” multiplier. And if our current president accumulates debt at the rate of his first four-plus years, the national debt will be $22 trillion by the time leaves office.
So post this chart to Facebook, Pinterest or on your local grocery store’s bulletin board. If enough people see it, maybe – just maybe – those who want to increase the debt will be viewed as the “crazy” ones.