As many people have observed, the $20 trillion of federal debt is unsustainable but for the artificially low-interest rates the Federal Reserve forces on the markets. At “historic” rates for US Treasuries (5+ percent), nearly the entire US budget would be absorbed into debt servicing. That has been the beauty of the Obama-McConnell-Boehner-Ryan Continuing Resolution system of government spending versus the Constitutionally required budgeting process, nobody knows or cares how much the government is spending.
It’s time to care. First off, let me state the obvious, individuals, families, and businesses can spend more than they earn for a limited period of time, we all know that. But eventually, either you increase income, reduce spending, or go bankrupt. Governments are not any different. Several cities have filed for bankruptcy and there is debate as to whether states and territories, like Puerto Rico, can file bankruptcy.
Now, for all of you statistical wonks (always wanted to use that word), let me throw some statistics at you in the “lightning round.”
Claiming 93 million Americans are not in the workforce is a true statement, but it is not an accurate statement. According to the Bureau of Labor Statistics, Some … 93.8 million Americans age 16 and older are deemed “not in the labor force,” 9.7 million of them are between 16 and 19 years of age. Another 5.7 million are between 20 and 24. And 37.8 million are age 65 and over. In fact, 17.5 million are over 75 years old.
BLS reports the employment-to-population ratio of 60 percent is a macroeconomic statistic that indicates the ratio of the labor force currently employed to the total working-age population of a region, municipality or country. It is calculated by dividing the number of people employed by the total number of people of working age.
According to the Social Security Administration 66 million people (not necessarily Americans) receive benefits, 45 million are 65 or older, 14 million are less than 65 and receive disability benefits.
Mitt Romney was famously correct in claiming 47 percent or more of workers do not pay federal taxes and the top one percent pay 87 percent of income taxes collected.
Furthermore, FAIR.com estimates the annual costs of illegal immigration at the federal, state and local level to be about $113 billion per year; nearly $29 billion at the federal level and $84 billion at the state and local levels. This does not account for the life-long commitment of billions paid to support refugees from Cuba and the Middle East.
So, like other enterprises, the US must increase revenues or reduce spending, or preferably, both. By controlling our borders we can begin to cut into that $113B per year devoted to illegal immigrants. My colleague, Kimberly Dvorak, has long proposed that all of those Sanctuary Cities and open border people volunteer to take in a few illegal immigrant families in a show of solidarity with them. So, open your doors to support open borders. It is easy to not pay any taxes and march in favor of spending $113B for open borders when you do not have any direct costs. But watch out for the indirect costs!
As an aside, can you appreciate all the Bernie students protesting against their student debt but marching for open borders? What are they teaching at universities?
Nevertheless, LEGAL immigration is important as our death rate exceeded our birth rate in 2015. The difference with LEGAL immigration is that legal immigrants contract not to go on the dole for five years, demonstrate financial worth, pass health and civics tests, and pledge an oath of allegiance to the USA.
By chipping away at the $113B, we will see an almost immediate return on investment.
Now another big-ticket item is the defense budget. My problem with defense spending is that the US has not defined our national interests (red lines in the sand over which we would go to war) in any meaningful way. We have a reactionary foreign policy and a commitment to nothing.
First, a little geography, our country is nearly surrounded by great moats, the Atlantic, Pacific, and Arctic Oceans and the Caribbean Sea. We have a mere 2,000 miles of land border with Mexico and 5.5 million with Canada.
The Canadians have been pretty good at controlling their sea and air ports of entry and pose little to no threat to the US (despite PM Trudeau’s commitment to “open borders’). Mexico, on the other hand, is a problem as the border has not been enforced to the extent Mexico enforces its own southern border, and, millions of undocumented and unvetted persons enter the US each year. Enough said.
By controlling our southern border and ports of entry we can greatly reduce the risk of land invasion. If the Chinese were to invade us, we would see them coming. They would have to come by ship or plane and those avenues of approach are easily defended.
By focusing our defense in space, cyber, and EMP we could build a secure defense against most vulnerabilities at a much more manageable rate than huge armies and navies. By maintaining strike forces capable of quick and lethal attacks, we could deal with threats without the necessity of seizing and occupying foreign territories. The psychological effect on those who would do us harm would be considerable as they would learn “here today, gone tomorrow” applies to threats against America.
Peace through strength is a good motto and effective tool, but the temptation to intercede in other nations’ business is great. It is true we are safer when everyone is at peace but politics and scarcity drive war and the world’s military-industrial complex has proven war makes money. We must control the temptation to “nation-build” or “export democracy” or “search-out WMDs”.
The military-industrial complex has been addressed ad nauseum in this column so it will not be repeated. But reversing those defense industries (as we did in World War II – “The Arsenal of Democracy”) into infrastructure behemoths would retain jobs and produce a return on investment by improving roads, ports of entry, bridges, dams, power grids and engineering and technology. We should not have to invest in killing to the degree our economy is dependent on it!
Now let’s turn to taxes. Despite the hype about the rich not paying their fair share the facts tell a different story. The top 1 percent pays 87 percent of US income taxes, the next tier pay the rest. At least 45 percent pay no federal income taxes. That is not a fair system by any means. It is understood we all pay sales taxes, but those go to states and local governments (except excise taxes).
So the idea of capitalism is that we vote with our pocketbooks. By exempting almost half of the society from paying taxes we are eliminating an important check and balance against government excess. When LBJ increased US war making in Vietnam the Congress passed a 5 percent surcharge on existing income taxes to pay for the war. The effect of the draft and the surcharge caused people to take notice of what the government was doing. People must be interested in the workings of government to maintain a strong democracy and paying a “fair share” is a major step in forcing the taxpayers to take note.
My warped thinking suggests that controlling spending, increasing the number of taxpayers, and investing tax revenues in the US, not on perpetual war, the US can reduce taxes overall, reduce spending overall, eliminate deficits, and begin a systematic pay-down of the $20 trillion in debt. The result will build a more vibrant economy, stable infrastructure, promote political awareness, and leave a better world to our children.
Semper fi, Colonel sends