Sunday, September 6, 2009

Have you checked “your” checkbook lately???


It has been quite a slide for “your” checkbook over the past 70 years, especially in the non-discretionary spending department. Beginning with the enactment of the Social Security Act in 1935, the groundwork was laid for a transition from personal reliance to dependence on the government. It was all done with the best of intentions of course, dressed in the language of compassion and caring. Yet, for the great grandchildren of the people who enacted this policy, it is bringing stark poverty at an alarming rate.

President Johnson’s “war on poverty” was next in line in 1963. Once again, with the language of compassion and caring, the workers of America have seen vast amounts of their wealth seized and transferred to those “less fortunate”. Trillions have been taken and distributed. Rather than being able to grow their nest egg, the “needs” of the present unfortunate souls removed the opportunity for real savings. Of course, the government will take care of everyone, so what is the harm?

Once the dam broke, new programs showing Americans’ compassion have abounded. Medicare, Medicaid, lunch programs, breakfast programs, student aid – the list is so long that the government even has a website dedicated just to searching for benefit programs you may qualify for: They proudly claim over 1000 programs to give away money seized from the American tax payer to be doled out at their whim.

The past 12 months have proven to be a dizzying plunge into the realm of government largess. It began with the bank bail-outs in the summer of 2008. With the election imminent, it was much better to look like Congress was doing something rather than just watching our economy circle the drain – so they spent our money at a stunning rate.

Hundreds of billions for AIG, Wells Fargo, BoA – it was a long list. Of course there was TARP in September. With but three pages of documentation – that magically ballooned to nearly 1,000 pages, the Congress funded nearly $800 BILLION in troubled asset relief – mainly for defaulted home loans that should have not been made to begin with. Then, within weeks, they were informed that the money was used in an entirely different way – that remains unaccounted for today.

Yet another dam had burst. This was followed with a $485 BILLION emergency budget after the Obama inauguration, a $723 Billion stimulus bill, and deficit budgets now projected a decade into the future. Deficits coming to $1 TRILLION per year!

And, finally, the specter of a government controlled healthcare system that, given its track record in fiscal responsibility, will certainly cost trillions more than current estimates would indicate.

But, of course, it’s government money – so what’s the harm?? The government can afford it! Well – not so much.

This brings us back to the family checkbook. If the men reading this are honest, I suspect many will admit the feminine soul in the family runs the finances. It has been so with our family for our 37 years together. My lovely wife does not tolerate “red ink”. Family needs, desires, toys and trips are carefully budgeted. And, in the event of pending “red ink” – spending stops. Period.

How is our federal checkbook doing? Well, the information is easily available – but hard to believe or comprehend. Here is a quick rundown of our checkbook balance:

Current National debt: $12.2 TRILLION

Non-Discretionary spending for the next 30 years: $100 TRILLION

(this includes S/S, Medicare, required government


Estimated Obama federal shortfall over next 10 years: $10 TRILLION

This is money that is spent. Period. You, the taxpayer, are obligated to pay these debts. They are not negotiable. They can not be ignored. You, the taxpayer, have NOT chosen wisely as how you have spent your money and you are now severely in “the red”. So what amount does each citizen owe? Well, let’s do the math. $122.2 TRILLION Dollars divided between the 300 million citizens comes to: $407,000 for each and every man, woman and child living today. $407,000. A family of four owes $1.2 MILLION. The average annual income for a family of four is $67,000.

To pay off their debt of $1.2 MILLION dollars, if their entire earnings are seized by the government, it will take 18 years to work off their current debt. Of course, they have to eat and survive. Let’s say we take the European model and the government seizes 50% of their wages - $33,500. This time is then slashed to only 35 years. However, there is a bit of a fly in the ointment. That will not cover annual government costs. What will they be??

Excluding the non-discretionary spending we have already chatted about (about $2 Trillion per year), the annual cost of government is about $ 1.4 TRILLION per year or nearly $5,000 for each citizen or $20,000 for a family of four. This leaves our family of four with approximately $13,500 for food, shelter and their remaining expenses.

So, for all the efforts of a family of four to earn their $67,000, they will only be allowed to keep $13,500.

Perhaps, rather than taking on health care, our elected officials should address their spending habits and get them under control first.