Debt and Deficits

Unless We Change Some Things, America Will Eventually Go Broke

The first step toward a solution is just being honest about the deep hole we're in.


Europe's struggles prove that "austerity" fails!

So say the Big Spenders.

With a condescending sigh, they explain that Europe made deep cuts in government spending, and the result was today's high unemployment. "With erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far," writes Paul Krugman in The New York Times.

One problem with this conclusion: European governments didn't cut! If workers pick through garbage, cuts can't be a reason, since they didn't happen.

That doesn't stop leftists from complaining about cuts or stop Europeans from protesting announced austerity plans. But if austerity means spending less, that hasn't happened.

Some European countries tried to reduce deficits by raising taxes. England slapped a 25 percent tax increase on the wealthy, but it didn't bring in the revenues hoped for. Rich people move their assets elsewhere, or just stop working as much.

If politicians honestly want to boost their nation's economies, they should look to what happened in countries that bounced back from economic slumps.

Iceland was hit by bank collapses—but government ignored street protests and cut real spending. Iceland's budget deficit fell from 13 percent of gross domestic product to 3. Iceland's economy is now growing.

Canada slashed spending 20 years ago and now outranks the U.S. on many economic indicators.

Around the same time, Japan went the other way, investing heavily in the public sector in an attempt to jump-start its economy, much as the U.S. did with "stimulus" under President Obama. The result? Japan's economy stagnated.

The left now claims Japan didn't stimulate "enough."

In the U.S., politicians imply spending limits would be "cruel" because vital programs are "cut to the bone." But we are nowhere near bone.

Consider this family budget:

Annual Income —- $24,500

Annual Spending —- $35,370

New Credit Card Debt —- $10,870

Existing Debt —- $167,600

When I show that to people, they laugh and say the family is "irresponsible." They are dismayed when I point out that those are really America's budget numbers, with eight zeros removed:

Revenue —- $2,450,000,000,000

Spending —- $3,537,000,000,000

Deficit —- $1,087,000,000,000

Debt —- $16,760,000,000,000

Then people say: "That's terrible! We have to balance the budget."

Actually, we don't need to "balance" it. We just need to slow spending growth to about 2 percent a year, so the economy can gain on our debt. But politicians won't do even that.

I understand why. I ask people who say they are horrified by America's debt, "What would you cut?" Most have no clue. They just stare. Some say things like, "Don't cut education!"

C'mon. Federal bureaucrats spend $3.7 trillion! But most people can't think of anything to cut?

When businesses face budget shortfalls, they can't just give speeches about how much they care about fiscal responsibility—at least not for long. They must make real cuts. When they do, they often prosper. Years back, IBM and GE each laid off 100,000 workers. People were furious. But thanks to those cuts, the companies survived.

If the politicians don't know what to cut, they should just accept Sen. Rand Paul's proposed budget. Among other things, he would cut four Cabinet-level agencies: Commerce, Housing and Urban Development, Energy and Education. Why not? We don't need a Commerce Department. Commerce just … happens. Education is funded by the states. The Energy Department gives money to politicians' cronies.

I'd go further than Paul. Why do we need an Agriculture Department? Agriculture is done by farmers, not bureaucrats. Why do we need a Labor Department? And so on. All those things are better handled by a free market. I wish we had a real free market in America.

Government recently revised its dire forecasts about America's coming bankruptcy. The numbers are a little better than once thought.

But make no mistake: As people my age retire and demand Medicare, America will eventually go broke.

The first step toward a solution is just being honest about the deep hole we're in—giving up on the lie that governments elsewhere failed with "austere" budgets. They haven't.

NEXT: Denver City Council Takes Straw Poll, Decides Not to Opt-Out of Marijuana Legalization

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  1. This is so last week.

    1. Start working at home with Google! It’s by-far the best job Ive had. Last Monday I got a new Alfa Romeo from bringing in $7778. I started this 9 months ago and practically straight away started making more than $83 per hour. I work through this link,

      1. That must be a pretty cheesy new Alpha Romeo

  2. I think the problem is people don’t have any real idea of what these agencies do.

    The left loves to play off the idea too.

    When politicians talk of cutting the Department of Education or getting rid of it altogether Joe Taxpayer assumes that public education will immediately cease to exist, or it will be degraded. When in reality eliminating the DoE will do more to help public education than hurt it.

    1. Seriously, if the DoE totally disappeared, what affect would it have on my children’s education?

      1. Their indoctrination will be replaced with learning things that are useful in the real world?

      2. well for primary education pretty much none.

        However poor kids would get less head start and Student Loans would get more expensive and have tighter restrictions on them (like say only being available in fields which give you a reasonable chance to repay them and possibly having academic requirements as well)

        Now we all probably recognize those as good things since Head Start is an utter waste of taxpayer money for no benefit and overly generous student loan policies merely serve to inflate the cost of a college degree but it is not hard to sell those as huge losses to the average low information voter.

      3. UNPOSSIBLE!

        Doncha know that no one got educated before the DoE was implemented in 1979?

        Where’s that Bastiat quote when we need it?

      4. Seriously, if the DoE totally disappeared, what affect would it have on my children’s education?

        It would be cheaper!

  3. The economy is the heart that pumps the blood of any nation. Not the government. The government is a parasite that weakens the heart at best and causes it to stop altogether at the worst.

    I’m sorry, but if you believe that government drives or should drive the economy, you’re a socialist. Let’s just get that straight right now. And socialism works less and less the more of it a government has.

    1. I’m sorry, but if you believe that government drives or should drive the economy, you’re a socialist idiot.


      No wait…. you were actually saying the same thing, never mind.

      1. we just didn’t do it right the first time dummy


    2. But, but, but doesn’t money come from the government? That means that government creates value! There would be nothing if there wasn’t money to pay for it! Everything you have you bought with money, didn’t you? Without government you would have nothing!


      1. Yes! Just print more! We’ll all be rich!

        I actually heard a variation of this argument from a retired corporate executive who made a living sucking off the government teat. He’s now a big believer of modern monetary theory. Don’t get me started…

        1. “modern monetary theory” – MMT is such a crackpot theory. In a nut shell it just say the government should print as much money as it needs and not worry about taxes.

          It’s the economic equivalent of the Alfred E. Neuman quote, “What, me worry?”

    3. “if you believe that government drives or should drive the economy, you’re a socialist”

      Not really, as Fascists and Mercantilists also believe that government drives (or at least should drive) the economy.

      Course both of those economic philosophies are equally stupid

      1. I don’t see much practical difference between fascist economics and socialist economics.

        1. Fascists are snappier dressers.

          1. I must reluctantly concede this. I’m frankly surprised that fascism isn’t more openly espoused by clothing designers.

            1. The key word is “openly”.

              1. That’s true. Did you know that the German clothing designer Hugo Boss ( still a huge brand) designed the uniforms of the SS? You have to admit their uniforms were menacingly stylish, in an almost Empire from Star Wars kind of way.

      2. I miss the physiocrats

    4. Without government the “economy” is a collection of bartering and plundering, the legitimacy of transactions determined by whoever has the most ability and willingness to commit the most violence. There is no community swimming pool without rules. What makes you think an economy can work without them?

      And if you want to claim I’m erecting a straw man, then are you going to modify the claim that economies are only hindered by government? And if government is necessary for certain purposes in order for an economy to function at all, then don’t we merely disagree about what those functions should be, not about the moral nature of government per se?

      1. Wow, you really don’t understand libertarianism AT ALL.

      2. What makes you think an economy can work without them?

        What makes you think an economy can only work with government direction?

        1. The fact that none ever has, for one. Especially not to modern standards of economic stability and prosperity.

          1. Huge difference between people erecting a framework of laws and customs to facilitate orderly human interaction and a giant nameless, faceless bureaucracy taking from A and giving to B, picking winners and losers, rewarding cronies, and suffocating ingenuity through suffocating regulation.

            One is the preservation of freedom by enforcing an individual’s inherent right to life and property. The other is forced subversion of those rights. They are both called government. They are two completely different things.

  4. I understand why. I ask people who say they are horrified by America’s debt, “What would you cut?” Most have no clue. They just stare. Some say things like, “Don’t cut education!”

    Why not? It’s not like Horace Mann’s little Prussian/Unitarian project in centralized education is threatening to turn America into a nation of geniuses.

  5. Otherwise, we’re all in for a world of trouble

    We’re in for a world of trouble.

    Let’s face it. Democrats will never stop increasing spending, and Republicans will never cut any of the spending increases done by Democrats.

    There are two possible scenarios: Economic collapse and ensuring anarchy. Or Libertarians take over the GOP and the GOP subsequently grows a pair.

    Guess which of those 2 is going to happen first?

    1. You’ve actually got it backwards. Elephants increase the spending then Donkeys lock it in for life. They’re both the same anyways, just different packaging.

  6. What’s Stossel talking about? I thought we were headed into fiscal paradise! A place where Episiarch, Pro L and Tony will pay for my daughter’s education.

    1. More like a world where you, Episiarch, Pro L, and your daughter will pay for Tony’s intermittent internet connection in his mommies basement.

      Your daughters share will be due just as soon as she starts paying taxes.

      1. Tony doesn’t live in his mother’s basement. He lives in a gated community. He admitted it publicly. Once that fact came forward, I began to understand why Tony thinks the way he does.

        1. Insane asylums are gated.

        2. He was referring to the kiddie/pet gate at the top of the basement stairs.

        3. Yep–it’s easy to be magnanimous about socialism and cultural marxism when you’re ensconced away from the lumpenproles every day.

          Put progressives in a hood or barrio for 3-5 years, I guarantee about half would come out with more cultural prejudices than a klansman.

          1. I assume you are referring to the half that survived.

      2. Your daughters share will be due just as soon as she starts paying taxes.

        Interest will start accruing at birth, of course. But hey, free birth control!

    2. I don’t think “paradise” is the right word for a world that contains Episiarch.

      1. If Episiarch is buying, I will not look a gift horse in the mouth.

        1. That’s what the Trojans used to say.

      2. Utopia? Is that the word you were looking for?

        1. No, no, it’ll come back to me. Some Scottish guy wrote about it once.

          1. Was Milton Scottish?

  7. “But make no mistake: As people my age retire and demand Medicare, America will eventually go broke.”

    Hmm, solution:

    1. They don’t call it ObamaCarousel for nothing.

      1. Hehhehheh

      2. Are you referencing Logan’s Run?

        1. Me too. Although Carousel was in the movie but not the book.

          1. And the book had everyone dying at 21, not 30, right?

            1. Yep. The problem I had with Carousel was the (false) promise held out by authorities that some might survive. In the book, you were dead at 21 and everyone knew it.

              And, of course, society was not overthrown in the book. Logan & the girl got out, but society remained the same.

            2. Of course, the movie had Jenny Agutter’s legs…

  8. When businesses face budget shortfalls, they can’t just give speeches about how much they care about fiscal responsibility — at least not for long. They must make real cuts.

    That’s because businesses are too busy raping the world with their industrial poisons and slave labor to make speeches.

    1. Apropos of this, Apple is in the hot seat again.

      My open letter to Apple still stands:

      Dear Apple:

      Steve Jobs is no longer at the helm– you’re just another profitable corporation to be shaken down by lawmakers.

    2. When businesses face budget shortfalls, they can’t just give speeches about how much they care about fiscal responsibility

      Sure they can, as long as they donate campaign funds to the current administration. There’s still plenty of our money left to bail them out.

      1. “Sure they can, as long as they donate campaign funds to the current administration.”
        Helps if they’re going bust because of union benes, too.

  9. ‘This is my hell. If I make it through this, I go to heaven’: Agony of parents who turned their mentally-ill son into police to prevent Aurora-style massacre – after finding receipt for assault rifle in his pocket…..rifle.html

    1. That’s an all-around shitty deal. I feel terrible for those parents. Thank God that guy is apparently just evil and no genius.

      1. As urban areas become more dense and the media becomes more sensationalistic, expect more incidents like this to pop up.

        John B. Calhoun’s rat experiments are basically being played out on a human scale these days.

    2. Last year, Tricia Lammers found a receipt for an $865 shotgun in her mentally-ill son’s pocket.

      So which was it, a shotgun, or double plus scary “assault rifle?”

  10. Sorry, John, but I’m so tired of this old argument. The example of the “family” with numbers that are simply the government’s with 8 zeros removed doesn’t wash, because the rules don’t apply to government. One thing is clear: they consider themselves above the law (and they ARE, in any practical sense).

    Besides that, the family in question, if they were real, probably would not be printing counterfeit money in their basement, or would be quickly arrested if they dared to try. Government has no such qualms about simply printing more money.

    Finally, it ignores the fact that people have been fully brainwashed. Dismantle the federal department of education, and they will be convinced there will be mass illiteracy (never mind that there already is with the DOE fully funded), undo the EPA, and they will picture radioactive sewer sludge flowing down their street, cut back on defense any further, and they’ll start reading the Quaran in preparation for the imminent invasion and takeover. They can’t conceive of the notion that the actual changes would probably escape notice, just like happened with the doom-and-gloom news of the sequester.

  11. I gotta question the premise of this piece; there is absolutely zero evidence to show that other than a few people, most of whom are mocked by colleagues, the commentariat, and the public alike, no one in DC wants to change a damn thing.

    1. Of course the Beltway insiders don’t want to change a damn thing.

      That won’t happen until the rioters are breaking down the doors of Congress.

  12. 16 trillion, but we’re not broke yet?

    1. A mere scratch of money.

      1. A few trillions here, a few trillions there, and soon we’re talking about real money.

    2. Can’t be overdrawn, they still have checks left.

  13. The answer is to learn from the private sector that *incentives matter*. Politicians hand out favors to special interest groups and the public at large to get votes, there is no system of “checks and balances” to discourage it. There needs to be some incentive for them to cut spending, even if they idea seems silly to reward these people, it’d be with $billions in bonuses to save $trillions in spending.

    In every entity, private or public, managers would prefer to empire build and grow their budgets. They’d prefer to be liked by handing out perks and raises to their staffs. The difference is in the private sector there is a culture that values efficiency, in part driven by monetary and status rewards for it. That balance doesn’t exist in the public sector, but it can be added. There are obviously some complications to the idea, this page addresses some of them:…..l-spending

    1. Simple solution… your federal votes (Senate, House and President) get multiplied by the amount of federal taxes you’ve paid since the last election.

      Taxation = Representation.

  14. The United States government is already broke. They have promises to pay over 14 trillion dollars on bonds they have issued, and close to 100 trillion dollars on Social Security and Medicare payments. Yet they have no legitimate source of income, and their only hope is to continue stealing it from the residents and businesses of the gang territory they claim.

    1. Just keep printing. The rubes won’t realize why the dollars in their wallets are depreciating.

  15. America Will Eventually Go Broke

    Too late. America IS broke.


  16. Read the memo. Since the deficit is rapidly shrinking, it’s time to move on to Benghazi.

    1. How’s the debt going? Oh yeah, it’s still growing. So the family is still spending more than they make, but that’s ok?

  17. College Republican National Committee Report Has Grim Findings for GOP


    The truth is, the Republican Party today doesn’t have an economic agenda that goes beyond tax cuts and spending cuts.


    As millennials, we’re not stupid, cynical, or naive.


    1. As millennials, we’re not stupid, cynical, or naive.

      All I have to do is go to any college campus to refute this notion.

      1. And there you’ll be.

        1. Yep, pointing out the existence of brainwashed simpletons similar to you.

  18. Sabato actually had a decent proposal for a balanced budget amendment that would set a baseline balanced budget and then limit the growth in government spending to the growth in population + inflation, which could be suspended for one year with a certain majority vote in Congress. I may be throwing in some Milton Friedman proposal, too (can’t quite remember). Setting the baseline low enough would be difficult but still it seemed like a good idea to me.

  19. set a baseline balanced budget and then limit the growth in government spending to the growth in population + inflation

    The problem is that the government has only taken in about 17.5% in revenues, on average since 1948. It’s gone over 19% just five times in that period, and never over 21%.

    A better strategy is to peg spending to average revenue to GDP ratios.

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  21. Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and (mis)applying the wrong remedies.
    – Groucho Marx

  22. There are generally well written, intelligent articles on this website, but this one is not among them. Yes, there are cuts that need to be made, but that is not the issue I want to address. Instead, let’s address your repeated use of straw men in your article. Commerce just happens, farmers do agriculture not bureaucrats, etc. You vastly misrepresent and over simplify the functions of these departments. While they probably have issues that need to be addressed and fixed, misrepresenting them in order to advance your position is fallacious and irresponsible journalism. Obviously the Dept. of Agriculture doesn’t DO agriculture. But it does attempt to ensure we have a safe food supply, among other things. The Dept. of Energy may, in fact, be filled with cronyism, but we need someone to handle our nuclear weapons program. Not to mention regulate the handling of nuclear materials. No Dept. of Interior? What happens to the National Park System? I would argue that most, if not all, of these departments have valid roles. If they were disbanded, those essential roles would necessarily need to be absorbed by someone. So your proposal, if anything, is a shifting of expense and bureaucracy, and not a reduction of it, as you have suggested.

    1. The Dept. of Energy may, in fact, be filled with cronyism, but we need someone to handle our nuclear weapons program.

      Sure–it’s called the Department of Defense.

      1. which should still be called the Department of War

  23. Perhaps, along with universal health care, we should adopt another German concept: a balanced budget amendment. But what we can’t have is German-style spending without German-style draconian budget discipline.

  24. Social Security and Medicare are a human right.

    Stossel is clearly one of those people who pushes old people off cliffs and spends his days at war with women whilst whipping slaves on his tobacco plantation.

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