Most sane people get the above statement, we dutifully bring in income and thoughtfully spend on what we can. Housing, health, food and if we have a little extra, we buy things that we would call discretionary items. We borrow only what we feel we can pay back in a short period of time, and we try to be responsible. If we spend a little extra one month, we cut back the next. Unfortunately, our government is run by lifelong politicians who in general have never worked a day of their lives in the private sector, and do not understand the idea for being fiscally responsible. They are neither sane nor are they responsible.
We have all seen it, at best, spending millions on TV ads, billboards and social media to sway a few voters. At worst, illegally forgiving debt of a few to influence a generation. It's an age-old problem that 30 years of lower interest rates slightly covered up. But we know its insanity. And it's got to stop.
Clearly, I am discussing the spending issue prevalent in Washington. While many of us have heard about it and may have some awareness, the true impact and scale of the problem remain unknown to most. The common question that arises is, does it really make a difference?
With the end of the fiscal year for the US federal government approaching in approximately a week, I believe it is an appropriate time, especially with the upcoming election, to assess the financial health of our nation. It is crucial to determine whether those entrusted with our tax dollars are handling them poorly, adequately, or exceptionally.
Simply put, it is significant, and they have let us down.
Today, the budget deficit for the US federal government is about $1.9 trillion dollars. I am a visual guy, so a quick search of the internet led me to understand the magnitude of what a trillion dollars is:
A billion dollar bills laid end to end would stretch 96,900 miles, winding around the Earth nearly four times. A trillion dollars laid in the same manner would stretch for 96,906,656 miles, a distance farther than the sun. If you laid one billion dollars side by side like tile, they would cover about four square miles. A trillion dollars laid out the same way would cover approximately 3,992 miles, or 1,000 square miles larger than the states of Rhode Island and Delaware combined. Finally, how long would it take to spend each amount? If you spent $40 per second, around the clock, it would take you 289 days to exhaust a billion dollars. If you did the same thing with a trillion dollars, it would take you 792.5 years to go broke.
That means those $1.9 trillion debt dollars would line up and go to and around the sun then back again to the good ole US. Amazingly, that $1.9 trillion also represents 6.7% of our GDP. The last 4 years, our government has spent money like they are drunk. In percentages: this is 30% higher than it was in 2019 right before COVID. Yep, drunk and irresponsible.
Before anyone tries to attribute the issue to COVID, let me clarify. The comparison being made is between the peak business cycles of 2019 and the current period of 2019 to 2024. COVID is no longer a factor, except for the interest we are still paying on COVID-related debts. In 2019, the economy was at its peak before the pandemic, and so far, 2024 is also shaping up to be a peak year in terms of business cycles. Over the past five years, revenue as a percentage of GDP has increased from 16.3% to 17.2%. In 2019, revenue was $3.5 trillion, while this year it stands at $4.9 trillion, marking a $1.4 trillion increase. Despite this growth, we still have a deficit to address.
This isn't a revenue or income problem...WE HAVE A SPENDING PROBLEM.
Our government has spent $1.9 trillion more than it has brought in, and we have a pretty darn good revenue stream (in 2014 revenues were $2.02 trillion...meaning this administration has overspent by roughly what the total receipts for our country were just 10 years ago...). Again, drunk and irresponsible.
Thankfully our friends at First Trust have broken the numbers down (so I didn't have to) and Brian Wesbury has written a well-timed tome. Check it out here:
No matter who you favor in the upcoming election it behooves you to understand that the spending, the insanity, needs to be reined in. It is illogical to use over 3% of our GDP to pay our debt. We are saddling the next generation with a ridiculous bill. I believe it's time to say enough is enough.
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