The National Debt Is Complicated. This Guy Explains How It Works.
Jump to 2:28 to find out why running the country like a business is actually NOT a terrible idea and skip to 5:40 to hear why neither candidate's economic plan is really worth crying over.
Clinton Left Office With a Surplus.
Reagan came along slashing tax revenues and discovered it was a lot harder to cut spending. And the deficit gap widened. Despite the Reagan myth, he never balanced a budget.
In recent times, only Clinton created a SURPLUS ($230 Billion) mainly by getting revenue back up to 21% of GDP. That was squandered in the Bush years when revenue dropped to 15% of GDP and spending soared to 25%. Remember, GDP is currently about $15 Trillion, so each 1% is a whopping $150 Billion — a huge difference. In 2011, the deficit was about $1.3 Trillion — $4,200 for every man, woman and child.
The Republican plan of "Cut, Cap, Balance" at 18% of GDP is woefully inadequate if you don't cut military spending back to Clinton levels. And if you actually wanted to balance the budget, you would still have to raise revenue from 15% to 18% of GDP — even more if you planned on paying down the credit card debt. Instead, the Ryan Budget slashes revenue further with more tax cuts for the rich. No wonder even slash & burn Paul Ryan can't get to a balanced budget for at least 30 years. Ryan is no deficit hawk, and there's nothing serious about his plan.
Illustration and commentary courtesy of Connect the Dots USA
In recent times, only Clinton created a SURPLUS ($230 Billion) mainly by getting revenue back up to 21% of GDP. That was squandered in the Bush years when revenue dropped to 15% of GDP and spending soared to 25%. Remember, GDP is currently about $15 Trillion, so each 1% is a whopping $150 Billion — a huge difference. In 2011, the deficit was about $1.3 Trillion — $4,200 for every man, woman and child.
The Republican plan of "Cut, Cap, Balance" at 18% of GDP is woefully inadequate if you don't cut military spending back to Clinton levels. And if you actually wanted to balance the budget, you would still have to raise revenue from 15% to 18% of GDP — even more if you planned on paying down the credit card debt. Instead, the Ryan Budget slashes revenue further with more tax cuts for the rich. No wonder even slash & burn Paul Ryan can't get to a balanced budget for at least 30 years. Ryan is no deficit hawk, and there's nothing serious about his plan.
Illustration and commentary courtesy of Connect the Dots USA
Here’s the 2011 Federal budget all in one beautiful pie chart. If you master this, you’ll understand way more than most. The budget year actually started Oct 1, 2010. We kept the government open for half the fiscal year with a series of Continuing Resolutions (aka CRs). And we’re off to the same start using CRs instead of passing a 2012 budget.
Total spending in 2011 was approximately $3.64 Trillion, so each 1% sliver equals about $36 Billion or $36,000 Million. So if someone is suggesting cutting a $3 Million program, they are talking about less than 1/10,000 of 1% of the budget. Not really a serious place to start the conversation. You should be suspicious of their real agenda. Everything in red is Mandatory spending, meaning it is dictated by existing law and very difficult to change without a Battle Royale. This makes up about 2/3 of the entire budget and includes Social Security 20%, Medicare 13%, Medicaid 8%, other Safety Net programs 10 (unemployment insurance, disability, housing assistance, earned income and child tax credits, etc), and Interest on the long-term debt 7%. Note that Social Security and Medicare have their own dedicated revenue stream through the payroll tax. Social Security’s dedicated tax more than covers its costs so it does not add a dime to the deficit. Everything in yellow is Discretionary spending, which is what is hammered out each year between Congress and the President. What I found most surprising is that almost all Military spending ($728 Billion), including the two wars, is negotiated each year. And it makes up more than half of our Discretionary spending. That leaves only about 14% of the entire budget -- these little bitty 1% and 2% slivers over here — that make up the “non-defense discretionary” spending often targeted for cuts. It includes vital and stimulative things like Education, Energy, Environment & Science, Veterans Affairs and Transportation. And that’s exactly where the Republicans got $38 billion slashed out of about $255 Billion in the 6-month budget left. That cut is little more than 1% of the entire budget, but it’s a gigantic chunk out of these little slivers. Note that Foreign Aid (part of the International Affairs sliver) is only about 1% of the budget. In a recent poll, most people mistakenly believe it is a whopping 27% and that just eliminating foreign aid will solve our budget problems. Illustration and commentary courtesy of Connect the Dots USA If The Bush Tax Cuts Did Not Create Jobs, What Happened?Don't be fooled into thinking that any savings from the Medicare cost shift to seniors will go towards lowering the deficit or paying down the debt. Oh no! Romney-Ryan will use the Medicare cuts to give even bigger tax cuts to millionaires and billionaires (on average $250,000 more in tax cuts). Let's remember that despite the media being quick to label Ryan as a "serious, courageous, fiscal conservative, deficit hawk," he is actually none of these things based on his voting record:
During the Bush years, Ryan voted for the completely UNFUNDED... 1) Wars in Iraq and Afghanistan = Approx $1.4 Trillion cost to date, not including spending for our injured Veterans. 2) The Medicare Part D drug benefit — a brand new spending program in which taxpayers must pay top dollar to Big Pharma = Approx $268 Billion cost since Part D began in 2006, and projected to be $1 Trillion in the next decade. 3) The Bush Tax Cuts, which added $2.5 Trillion to the debt in the last decade. Ryan's proposed "Bush Tax Cuts On Steroids" would cost nearly $10 Trillion in the next decade. His sketchy proposal for "loophole closing" does not pass the smell test to recoup the lost revenue: http://www.cbpp.org/cms/?fa=view&id=3722 4) For Tea Partiers who hated the $800 Billion bank bailout (TARP), Ryan voted FOR it. 5) For those who believe the economic recession (a big deficit driver!) was largely caused by deregulation of the financial sector, in particular the repeal of the 1933 Glass-Steagall Act — which had established a firewall between regular commercial banks, investment banks and insurance companies — Ryan voted FOR repeal of that long-standing protection. That enabled investment banks like Goldman Sachs to gamble with our mortgages, as well as allowing mergers of "too-big-to-fail" proportions. Illustration and commentary courtesy of Connect the Dots USA |
So how does our Military spending compare to other countries? We are off the charts. The U.S. alone spends 42% of the entire world’s military spending. In 2009, that was $660 Billion. The next closest was China at only $80 Billion. And they have 4 times as many people as we do! Look at what else we could have done with that money (or at least some of that money)? Now, I think security is an important priority, but it is not the only priority at the expense of all else. Similarly, a home alarm system is a reasonable precaution, but round-the-clock security guards and an alligator-infested moat are excessive. Preemptive wars and nation-building are perhaps beyond the scope of reasonable security efforts. And certainly beyond our means.
Illustration and commentary courtesy of Connect the Dots USA A few months ago Mitt Romney said "We don't need more cops, firefighters, or teachers!" I'm the son of a 5th grade teacher in Southern Utah. She rarely has under 30 kids in her class, buys much of the tools she needs herself, and is severely underpaid for what she does. Romney's proposal would increase military spending and cut funding for teachers, cops, and firefighters. All the people who make our communities better. Where are your priorities? Who Are The Real Fiscal Conservatives?The Obama spending binge never happened. Did the Tea Party not catch this either?
Yes, You Did Build Most of ItSo, let me get this straight. Wars and tax cuts for the wealthy are OK, but economic initiatives to create jobs and social programs to help people in need are out of the question.
Illustration and commentary courtesy of Connect the Dots USA
Why didn’t the Republicans care that the two-year extension of the tax cuts for the wealthy will add $150 billion to the deficit? Because of a thing called the Republican Deficit Loophole. When it comes to the super-rich, to quote Dick Cheney, “Deficits don’t matter.” Remember, leave no CEO behind. The Republicans only scream about deficits when they want to stick it to We The Other 99% and take away things we want and need. Indeed, we saw many of the 2010 crop of new GOP governors handing out tax breaks to their wealthy buddies on day 1 and then turning right around and demanding spending cuts to education and public workers — suspiciously almost by the exact same amount of the tax cuts they just gave to the rich and powerful. Connect the dots, folks — this one is a short, straight line.
Illustration and commentary courtesy of Connect the Dots USA |
Since When Are Pro-Greed And Pro-War Considered Christian Values?
Illustration and commentary courtesy of Connect the Dots USA