We have had many, many people ask us over the past year what it would take to balance these budgets and get this ‘long national nightmare’ over and done with.
‘Give us the bad news, doc, and we’ll take it like a man!’ they all seem to be saying. ‘Just make it fair and equitable and we’ll go along with it!’ as if it is some sort of cancer diagnosis or something.
How about if we said to you: ‘You don’t have to even quit smoking cigarettes altogether. You just have to reduce your intake from 3 packs a day to only 1 pack per day…and remarkably, you will be healed completely in no time flat!’
There is this completely misguided and untrue notion that any time you start talking about ‘spending cuts’, it is going to be ‘draconian’ and ‘devastating’ and any other nasty adjective politicians can come up with.
All they are doing is trying to get you to not vote for their opponent who might reduce funding the incumbent’s favorite programs and send him/her home packing after the next election.
Even if the incumbent knows that ever-increasing spending and deficits and debt accumulation will ultimately suffocate our economy and future.
They all know it is true. They want to get elected ‘just one more time’ before they have to tell you the truth.
Repeat after me:
There are no real absolute cuts in spending in the federal government! There are only ‘reductions from projected ‘future’ baseline estimates of growth in each program’!
Congress makes it complicated so the voting public really doesn’t know what the truth really is anymore.
Anyway, what would you guess the growth rate would have had to have been since 1970 in order to balance the budget 90% of the time since then? 1% overall annual growth? 3%?
The expected rate of annual inflation going forward is 3% so if we just keep pace with the rate of growth in population, federal spending growth at 3% per year would make eminent sense.
Guess what the overall annual rate of growth in federal spending on average has been for the past 40 years?
Just under 8% per year. 8 bloody %!
Take a look at this Budget Data and download it as an Excel spreadsheet to your computer so you can play with it all day long if you want. (Think of it as riding on one of the wildest and scariest roller coasters you have ever seen. “The Hurler’ has nothing on this ride.)
Any person reading this article would be insane not to accept a steady 8% annual increase in income from their employer or business. If you were making a healthy $12,000/year income in 1970 and were ‘guaranteed’ an annual 8% increase in income for each of the past 40 years, you would be making over $280,000 in income in 2010.
Well over the amounts President Obama considers ‘rich’ and subject to all kinds of new taxes to pay for the new programs he and the Democratic Congress have passed in the past 18 months.