Debt ceiling: Why it is making me bat shit crazy.

Recently, there has been all this hullabaloo over increasing the debt ceiling in the US. I have honestly been trying to avoid this like an infectious disease. However, the debt ceiling sickness has spread to pandemic levels thus it has become impossible to avoid.

Everywhere you turn, no matter what news outlets you read/watch, everyone, everywhere is talking about the debt limit pseudo-crisis in the U.S. So I figure the best defense to this sickness, is falling victim to it (or in my case talking about it), in the hopes I will build up immunity and never catch it again.

I do understand the concern over increasing or not increasing the debt limit, this concern is natural. However, what bothers me the most over the debt ceiling debate is the propaganda and scare tactics used not only by the media but by our own leaders. When I say by our own leaders, democrats are not the only culprits!

Let me start by saying first and foremost, America has a spending problem, not a revenue problem. Currently, gross domestic product in the US is around $14.55 trillion. Not too shabby considering the GDP of the U.S. is the highest of ANY single sovereign nation. If you wish to lump together the European Union's combined GDP, then U.S. would be the second highest. As of today, July 30th, 2011, the national debt stood roughly at $14.66 trillion. This means U.S. national debt is 99.25% of GDP. Though honestly, many estimates have concluded that debt in actual terms is well over 100% of GDP.

Currently in fiscal year 2011, total annual revenue is project as roughly $4.5 trillion. For this same year, total government spending amounts to about $6.2 trillion, This would mean the annual budget deficit for 2011 is some where in the neighborhood of $1.7 trillion. Wow, expensive stuff that can add to our nations debt quickly. With debt like this left to it's own devices, would absolutely require an increase to the debt ceiling.

Boehner and Reid have both proposed bills to help with the nation's debt and debt ceiling dilemmas. Both Boehner and Reid's bills suck. In my opinion they are hardly a drop in the bucket. Honestly, both bills are practically identical. To me voting on either would be like voting, would rather contract Syphilis or Herpes? They both are equally awful, both are STDs but are different diseases. Here is what I mean:

[1] When excluding spending on both wars, both bills roughly cut spending by $900 billion. Boehner's cuts- $917 billion, Reid's cuts- $927 billion.

[2] To break this down further, Boehner's bill would cut discretionary spending by $756 billion and save $156 billion in interest on the debt. Reid's bill are $752 billion and $153 billion. Not much of a difference here either.

[3] Both Reid and Boehner are supporting similar increases in the debt ceiling. Boehner's bill would increase the ceiling by $2.5 trillion with a total of $2.7 trillion in cuts. Reid's bill would raise the debt ceiling by $2.4 trillion, with $2.2 trillion in debt reduction. Again, not one is not too far off from the other.

Okay, now for what makes Syphilis different from Herpes:

Boehner's bill would only raise the debt ceiling twice. A first debt limit increase would be $900 billion. The second debt limit increase, and the real doozy, would only occur after congress enacts a balanced budget amendment.

Reid's bill would immediately raise the debt ceiling by $416 billion. Then the debt ceiling would be raised two more times after this both at $1 trillion each.

Solution? Yes, I have one and it does not even require a debt limit increase at all. My annual budget would be as follows:

• Social Security- $0.7 trillion
• Medicare- $0.6 trillion
• Education- $0.7 trillion
• Defense-  $0.5 trillion
• Welfare-  $0.3 trillion
• Miscellaneous- $1.1 trillion 
• Total government spending for the year- $3.9 trillion

I can hear the moans and groans now. "This is peanuts, in which one could almost equate this to an austerity budget." Austerity budget you say? Wow, I wasn't informed of these austerity measures back in 2003 when this was our actual government spending. :-D Government spending in which was FUNDING 2 WARS, just as we are today.

 I mentioned earlier that direct government revenues are currently at $4.5 trillion for 2011 without any tax increases. If we applied the spending levels I mentioned, which were the same levels from 2003, we would have a budget surplus of roughly $600 billion dollars for the year. If we managed to maintain this surplus for 24 years, and if we stopped borrowing which would keep our national debt the same, we could completely pay off the whole $14.66 trillion national debt, without doing a anything additional.

Also, to speed up the process of paying off the national debt, the government has tons of assets it could sell. For starters, the Strategic Petroleum Reserve has almost 727 million barrels of crude oil. The current price of crude oil as of today is $95.86 a barrel. If these barrels were to be sold today, the sale would total around $70 billion.

Also, the Outer Continental Shelf has an estimated 59 billion barrels of crude oil. I know obtaining this oil would be very costly and would require a lot of effort. However, the government could sell this land for a substantial amount to companies who would love to drill for this oil. This should surely produce a lot of revenue.

Another thing, the U.S. government has a ton of property and buildings. I read a report in Reason that the federal government owns 14,000 buildings and structures that were simply considered excess. There are even 55,000 that were underutilized, or simply not utilized at all! Those can also go. ;o)

Debt ceiling debate, so many common sense solutions, yet, so little common sense to implement them.

America: The unsustainable.

With all of the recent fuss over raising the debt ceiling, Americans are divided. Recently I have read on Mises.org that only 48% of Americans polled, are not in favor of raising the debt ceiling. Which means only 48% percent of us actually have at least some basic math skills.

Another poll I have also read recently, is that most Americans agree we need to cut debt, yet want no cuts to entitlements or other social programs. I guess the old expression of "waiting to have your cake and eat it too" applies to this. Entitlement spending, when combined, consumes more money than even our defense budget, which is our largest individual expense in the US. Sorry, but we can not have it both ways, it is simply not reasonable.

Here is something to chew on:

In 2012 over 100 million Americans will be over 50 years old. Considering the US population is around 310 million, that means just shy of 1 out of every 3 of our citizens will be rapidly approaching retirement age. Which means they will be drawing on Social Security and using medicare in as little as 12-15 years, if they are not already.

Also, every year another 3.5 million Americans reach the gold age of 50.

When Franklin D. Roosevelt, signed the Social Security Act in 1935, I am sure he had the best of intentions. However, with life expectancies being for men 59.9 and for women 63.9, the age to recieve benefits was (and still is) 65. So with a program that collects money from individuals while they work, then these people die before seeing this money, this program sounds extremely sustainable... :-D

We have come a long way since then with all these medical advances, health lifestyles, etc, people are living to be much older now days. According to the recent census, current life expectancy is at 78.2. In another report on US life expectancy from The Congressional Research Center, A person who reached age 60 in 2003 was expected to live an additional 22.2 years, on average, and would die at age 82.2. This means people are now spending 20-25% of their life time in retirement drawing on Social Security and Medicare!

Okay, so I don't seem like I am attacking our nations elderly, let me also mention another unsustainable bug-a-boo, welfare programs.


According to a report from The USDA, as of May 27, 2011 44,587,328 Americans are now receiving food stamps. This number is a new all time high for the program. Hell, this number is 13.1% higher than it was just one year ago! Remember, this means 1 out of every 6.9 Americans are receiving food stamps.

Mixed into this number is the fact that now 1 out of every 4 of American children are receiving food stamps. Also 1 out of every 3 African American receives food stamps. I don't mean this on any racist grounds. I mean it on the grounds that African American's make up 13% of the population. So if a third of them are receiving food benefits, that alone is around 4.3% of the population!

Let us now look at Medicaid, our government run health insurance for poor Americans. Medicaid was first created in 1965. During this time only about 1 out of every 50 Americans received Medicaid. Today over 51 million Americans recieve Medicaid. That is 1 out of every 6 Americans. This number is higher than the amount of Americans who receive food stamps. To me, this is worse, as we all know medical procedures are generally more costly than providing food like in the food stamp program.

Still not scary enough?

For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. Government transfers of income to households started to overtake personal taxes in 2008, and it is growing. In 2010, households received $2.3 trillion in income support from unemployment benefits, Social Security, disability insurance, Medicare, Medicaid, veterans’ benefits, education assistance and other cash transfers of government funds to individuals. In this same year, households paid $2.2 trillion in income, payroll, and other taxes.


What all of this means is that our debt is simply unsustainable! A start would be to not raise the debt ceiling, so we can not borrow more to spend more. The bad thing is with this kind of spending, a vote to raise the debt limit will only come up again later if we don't raise the limit now and we cut some spending. The only real cure in my opinion, is to eventually phase out most, if not all entitlements. We must stop the unsustainable programs and spending now, so that we stop pawning off the debt on the next generation.