Saturday, August 6, 2011

Broke - Part 2: The Crime of the Century

Beck starts off by telling "The Truth." The truth is, is we are in a mess. Social Security, Medicare, and Medicaid eat up enormous parts of our federal budget. In fact, those three programs, along with interest on the national debt are the ONLY things the Federal Government actually pays for. EVERYTHING else is covered by borrowed money. He states, "In the backward way that Washington doles our out money, they first give large agribusinesses their full farm-subsidy entitlements, and the wealthiest seniors their full Medicare drug entitlements -- and then use whatever scraps are left for discretionary items like body armor for our troops."

Here is a chart showing the breakdown of our Federal budget. Social Security and National Defense are tied, but close behind is "Income Security," which is all welfare related programs including Medicaid, followed by Medicare. Health and interest on the debt come next. We can see that everything else is a much smaller part of the budget. To see where the money goes and what needs to be cut, look at those four things. To cut anything other than the top 4 is to only nibble at the edges.

We should also remember that of these 4, only National Defense is Constitutional! The other 3 have been added by our previously mentioned progressive presidents who wanted to fundamentally change the relationship between the government and the governed. Well, as predicted, they made slaves of us all.

This chart shows how are spending priorities have and continue to shift. Social Security and Medicare will eat up 36% of the budget by 2025. Interest alone will consume 18%. We are rapidly getting into ludicrous land here.

We will never make any kind of dent in our deficit or debt if we don't tackle entitlements. Social Security is NOT an insurance program. It is a welfare program. It was set up as a tax and spend behemoth. From the very beginning, this was known to be true by politicians.

The first recipient of Social Security was Ida May Fuller. She sent in $22.54 in contributions and collected $22,888.92 - a 92000% increase! Today seniors feel they are entitled to Social Security because they paid into it. It's true that they paid taxes, it's true also that those taxes were spent on people like Ida May. Like any ponzi scheme, it's the people that get there first that benefit the most. Today, the money that we are all paying into the Social Security trust fund simply isn't there. It has been replaced by IOUs from the government who spent it and promises to pay it back when we demand it. The problem, with what exactly are they going to pay it back with? They have NO money! We are already in deficit spending. How can they possibly make good on these promises? They will have to borrow more money to pay back the money that they borrowed. That's like paying off a credit card with another credit card.

Another budget buster is Medicare. It's welfare pure and simple. Sure we pay a pittance into it, but that only goes toward Part A (hospital insurance). The other parts, B and D are funded through premiums from seniors (25%) and taxpayer money (75%). This program is scheduled to skyrocket in costs as well.

The CBO estimates that by 2050, the big 3 welfare programs will eat up 19% of GDP. Now consider that historically, the US has never been able to collect more than 20% of GDP in revenue and usually collects 18%. No matter what the tax rate, Americans will only paya maximum of 20% GDP in taxes... period. That's a real wall. You cannot spend more than 20% GDP without going into debt. So if the big 3 eat up 19% of that 20% we are in BIG trouble! Even worse, they'll hit 26% of GDP by 2082! It's simply not possible to pay for the programs at that point!

Social Security was supposed to begin at 65, which just coincidentally happened to be the average life expectancy. In 1935 only 6% of the population was 65 or older. That percent has more than doubled and will double again when we get to 2040. We MUST deal with this disaster in the making, and we MUST do it quickly!

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