Why Romney / Ryan is NOT the answer …
…. and why MY PLAN is the only plan that will save America.
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That’s a pretty bold statement, isn’t it? Especially considering I’m a nobody.
Well, if you’re serious about the future of our country, I challenge anyone who reads the following to tell me how it can be otherwise than the plan I put to you here. I am open to spending cuts, tax decreases, tax increases, etc.
Whatever you want to throw out there I’m open to it. HOWEVER, you better be able to show – in real dollars – how your plan (or your favorite politician’s plan) will offset the actual numbers I have used below.
Here’s the situation, and the plan:
1) When you get some time, read (or reread) this article several times so that you fully understand it.
2) Keep in mind the federal government currently receives roughly $2 trillion per year in tax revenue and borrows an additional $1.5 trillion per year.
3) Then, take a look at this chart to see what the federal government spends $3.5 trillion per year on.
4) In dollars, these percentages are:
- Social Security – $700 billion
- Defense – $665 billion
- Welfare – $560 billion
- Medicare – $455 billion
- Medicaid – $280 billion
- Interest – $175 billion
- ————————————
- All Other Items – $840 billion
5) Keep in mind the things everyone – people as well as politicians – like to rail on as “wasteful spending” fall into the 24% that is “All Other Items.” Look again at the list to the right of the chart. “All Other Items” includes everything below the sixth line item (Interest on National Debt) where I inserted a red line. Now, if we cut out 100% of all the items in “All Other Items” we would STILL have a annual deficit of $660 billion year after year after year.
6) That means, in order to reduce the annual deficit – not the debt, just the annual shortfall – to zero (meaning the government only spends what it receives in taxes), we would have to cut one or more of the following by $660 billion PER YEAR:
- Social Security – $700 billion
- Defense – $665 billion
- Welfare – $560 billion
- Medicare – $455 billion
- Medicaid – $280 billion
7) Now, let’s assume we want to be fair and spread the cuts across the board. So what percentage would we have to cut from each of the above programs just to balance our yearly deficit? A whopping 25%!!!!! From EACH of these programs which everyone on one side or another says we simply cannot cut.
8) Okay, so let’s say we get Americans to swallow that (yeah, right). Now, even if we borrow zero dollars each year we have still have to worry about the debt because the debt will still go up. Why? Interest due on the existing debt, along with new interest on the interest that continues to build.
9) Now, we all know in order to lower the debt there is only one thing we can do – spend less than we make and apply that to the debt. Which means the government would have to spend less than it takes in (remember all we’ve done so far above is to quit borrowing; we’re still spending 100% of what the government receives in taxes). So, to begin to pay down the debt, we have to cut even MORE from Social Security, Defense, Welfare, Medicare, and Medicaid. Remember we already cut everything else to zero. So again, to be fair, let’s say we cut each of these programs equally to cover the $175 billion in interest payments each year. That’s another 7% we have to cut.
10) Which all means that just to start to get our country going in the right direction – that being a zero deficit and positive debt payments – we have to cut each of the programs in the budget by:
- Social Security – 32%
- Defense – 32%
- Welfare – 32%Medicare – 32%
- Medicaid – 32%
- All Other – 100%
But guess what?? There’s more !!
11) All of these cuts will put people out of work and take money out of people’s pockets. Which means the amount of taxes the government will collect be less than the $2 trillion they currently receive each year. So if we do everything above and the $2 trillion drops (which it will), then the math above will fall short. Which means we have to demand even further cuts, which then leads to further reductions in taxes, and more cuts, and so on. This is commonly called the ‘death spiral’ when in actuality it is THE CURE for what ails us.
12) So how can putting people out work and starving the government of tax revenue be the cure? Because, if we allow capitalism to work as it should, this necessary pain will force the debt out of the system either through repayment or default. And, default, backed by bankruptcy, is a necessary part of capitalism. Let me say that again, bankruptcy is a necessary part of capitalism. A capitalist, free market economy simply cannot and will not function properly without bankruptcy, and in fact, ultimately it will collapse.
13) Now, at this point we have addressed the annual deficit, the national debt, and interest payments. But there is one thing we haven’t discussed. The interest rate on the interest payments. Notice that in the pie chart above, the US government spent $175 billion on interest alone in FY2010. Keep in mind that the interest rates are at historical lows, basically being at 0%. But realize that eventually they will (in fact, they must) go up. By some estimates, if the interest rate the US government had to pay on its national debt rose to just 5%, the interest payments alone would consume the ENTIRE federal budget. In that case, it is truly “GAME OVER”.
14) The alternatives to the above are quite simple. We can continue to borrow right up to the point that our lenders refuse to lend us any more money. At which point we will face the same pain as above but with a bigger debt pile and more pain. Or, we can print more money to pay off the debt and ‘stimulate’ the economy up to the point that our money becomes worthless. At which point our currency will collapse and we again face the same pain as above but in a much worse way.
15) Lastly, there is one other thing that MUST be done. That is to kill fractional reserve banking on unsecured loans. In other words, if there is no physical collateral backing a loan (i.e. – a house, a car, etc) then the lender MUST HAVE one dollar on hand for every dollar they lend. Currently the banks are legally able to create unsecured credit out of thin air, which is mathematically the exact same thing as counterfeiting (for which you or I would go to prison for), and which is the basis for the boom/bust cycle and the debt slavery we are chained to today.
16) So, in the end, we have three plans before us (Mine, and the two the US government are currently doing) to “get back on the right track”:
– Voluntarily accept 33% cuts across the board to the ‘sacred cows’ (Social Security, Medicare, Medicaid, Defense, and Welfare) along with cutting everything the federal government does to zero, while accepting this will cause a massive (though short-lived) depression.
– Borrow ourselves into oblivion while pretending that ANY current politicians’ plan addresses the truth, and end up involuntarily cutting everything to zero.
– Printing money and eventually creating a complete collapse our currency, government, and society, a la Weimar Germany, Zimbabwe, or Argentina.
So, when considering that we (as conservatives) are being told we have to vote for Romney, and that Ryan is the man to help us go in the right direction, and knowing that Obama is the worst president in US history, tell me of ANY politician who or any other plan that has honestly addressed any of this from the standpoint of a) making Americans understand just how grave our situation is, and more importantly, b) what to do about it.
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