Issues & Insights is a blog that was started by the team that for decades had produced IBD Editorials at Investor’s Business Daily. They are one of the most reliable sites on the web for financial and political information.
On Monday, Issues & Insights posted an article about the debt ceiling ‘crisis.’ The article pointed out a lot of basic facts that are being overlooked in the debate.
The article notes:
At the heart of all fearmongering over the debt ceiling “crisis” is the claim that if the federal government can’t borrow more money it won’t be able to pay interest on its existing debt, leading to a default.
But that’s poppycock. The government will collect more than a trillion dollars over the next three months. (It collected $638 billion in taxes in April alone.) That will be more than enough to pay interest on the debt. And it will be enough to pay all Social Security benefits, Medicare and Medicaid bills, welfare checks, food stamps. There will even be enough money to pay for Joe Biden’s new electric car subsidies.
There just won’t be any money left for anything else. Nothing for the military, infrastructure, education, the environment, law enforcement, or any other program the federal government currently operates.
That’s because, as it stands today, every penny collected in taxes goes to pay interest on the debt and a category described as “payments for individuals.” Everything else is paid for with borrowed money.
…This year, the federal government will collect $4.8 trillion in taxes, according to the Office of Management and Budget.
It will spend $4.2 trillion on “payments for individuals,” and $661 billion in interest on the national debt.
Everyone knows about interest payments. But what are these “payments for individuals”?
As the budget document explains, payments for individuals:
Are federal government spending programs designed to transfer income (in cash or in-kind) to individuals or families. To the extent feasible, this category does not include reimbursements for current services rendered to the Government (e.g., salaries and interest).
In 1946, “payments for individuals” accounted for less than 11% of federal spending. By 1991, they reached 50%. In 2014, they topped 70% for the first time and have been bouncing around that level ever since.
The article also notes:
The vast bulk of these “payments for individuals” involve middle-class entitlements such as Social Security and Medicare, which are paid for in volume by … the middle class. Only a fraction of the money (26%) targets the poor and needy for programs such as Medicaid, welfare payments, food stamps, earned income tax credits.
Worse, some programs, Medicare, for instance, are regressive. A paper published by the National Bureau of Economic Research concluded that “Medicare has led to net transfers from the poor to the wealthy, as a result of relatively regressive financing mechanisms and the higher expenditures and longer survival times of wealthier beneficiaries.”
This is all by design. The left desperately wants to increase dependency on government, and there’s no better way to do that than through income redistribution. Take as much money away from people as possible, then give it back to them in the form of a “benefit.”
Please follow the link to read the entire article. We don’t just need to cut spending–we need to overhaul the entire federal budget and follow the lawful budget process.