Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

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"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

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22 July 2010

Federal Spending and Revenue

Brian M. Riedl of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation has put out a very useful report called Federal Spending by the Numbers 2010.  It is chock full of graphs of the spending and revenues of the recent past and projections to 2020.  For example:

It is interesting to note that the long term rate of federal revenues has been about 18.0% of GDP, but the federal spending rate has exceeded that level by 2.3% of GDP on average year after year.  It is clear we have long been politically unwilling to live within our means and that if we allow the Obama plan to stay in place, we will either have to tax ourselves at a much higher rate than we have historically or we will be spending at rates of about 8.3% of GDP higher than federal revenues.  Such rates of spending are unsustainable.  If taxes are increased that much, the economy will stumble and future growth in the economy and standard of living will suffer terribly.  If taxes are not increased drastically, the accumulated deficits will leave America bankrupt.  It is impossible not to see the critical necessity of drastically reigning in the Obama spending plans.

Here are two more fascinating plots from this Heritage Foundation report showing the effects of future spending on the three major entitlements:

Medicare in particular is an overwhelming spending problem.  By 2050, Medicare, Medicaid, and Social Security will require the complete historical average of federal revenues just to fund them.  Medicare was already going to be a major problem before ObamaCare was passed to make it an even worse problem.  Note that in today's dollars, the average extra tax burden of these three entitlement programs alone will be $12,636 per household!  Do you have that much money available to give to the federal government?  Think about it.

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