Ross Perot became a footnote in history with his quirky demeanor and illustrated charts. His amusing presentation of a presidential campaign, however, tried to celebritize the most important domestic issue that needs to be addressed next year: deficit spending.
In an homage to Perot, who returned this year with PerotCharts.com, I will give a quick tutorial on our government’s budgeting terms.
Outlay: A wonkish way to say “money spent.”
Receipt: A wonkish way to say “tax revenue,” or any other way the government gets money.
Deficit: The national government creates a budget. Not in so many steps, of course, but there you have it. If the outlay total is more than receipt total, you get a deficit. Basically, if your paycheck is $90 and your bill is $100, you come out with a deficit. If the receipts exceed outlays, you get a budget surplus. In 2007, the deficit was $162 BILLION.
National Debt: This is the total obligation on every “dollar” the U.S. owes. Our government can owe money on various types of bonds sold to investors. This gives us a quick injection of money to cover each year’s deficit, but we eventually have to pay this back plus interest. You’ll often hear about how our economy is owned byforiegn governments, and this is it. The National Debt now stands at $10.53 TRILLION and counting.
Debt Interest: This is the constant obligation of paying off the interest accrued on the bonds. In 2007, it accounted for almost 10 percent of the national budget, or about $237 BILLION.
There are dozens of other terms that are important in understanding the impending budget crisis, but as my blog says, I’m not an expert. One more that I should mention, though, is the Social Security Trust Fund. Typically, the benefactors of a trust fund regularly add money into it and withdraw it later. That’s what make the term “Trust Fund” so hilarious in this context. When you get a paycheck, a portion goes to Social Security. You may think that money is being sent to a special account that you can access when you turn 65, but nope, it’s going directly to someone who’s already retired.
Baby Boomers will be eligible to receive their Social Security pension in 2011.
Current workers are financing current retirees. Unfortunately by 2017, the receipts from future workers won’t be able to cover outlays to future retirees. To cover the obligation to senior citizens, the government -are you ready? – will begin borrowing from itself. lolz. This “intragovernmental debt” doesn’t show up in our traditional national debt. The only way to correct this problem without borrowing exhorbitantly would be to increase the payroll tax or reduce Social Security benefits.
Because it is so hard for politicians to reduce benefits or increase taxes, they’ve had to come up with a less politically-painful way to cover costs: borrow it. They treat it like a business, but we have borrowed so much that I’m afraid we will soon reach our limit. What if the economic crisis extends to the U.S. Treasury notes and bonds, which are currently shielded from trouble, and China or Japan decide to stop borrowing because the investment isn’t as safe? We’ll have hit a brick wall and long-running government services like Medicare and Medicade (together 21 percent of the budget) will dry up like a short well.
This doesn’t ring alarm bells like a terrorist attack or the stock market plunging, but the failure of deficit spending scares me enough to keep a close eye on it. It is my single issue, above all else, but it’s not the only issue. I don’t support Bob Barr, even though his plan would treat this problem better. I don’t support John McCain even though he proposes an 18 percent cut in discretionary spending.
[Oh, and about "pork barrel earmarks," they only represent about $16.5 billion of the total federal budget, or less than 1 percent]
