Federal Expenditures

Last year, the federal tax receipts were $2.1 trillion.  Now look at the expenditures for 2010 according to the US Treasury site.

                             Billions
Defense                 895
Social Security       722
Welfare                  557
Senior Health         457
Welfare Health       335
Interest                  188
Federal Retirement 121
All Other                446

Total                    3721

This year, we will add $1.6 trillion to the money owed by the federal government.  Note that the federal government can't get through the first three line items without exceeding the tax receipts.  Our expenditures are huge.  The only way to get back to fiscal sanity is to address all of the line items.

Defense:

Defense is at 43% of tax receipts.  We can no longer be the world's policeman.  That means pulling out of Iraq and Afghanistan.  It means that we reduce our military presence in Europe, Japan, Korea and the Middle East.  It means that we reduce or eliminate the contracts for the military hardware that are in place where it is practical to do so.

Social Security, Senior Health and Federal Retirement:

Senior spending is at 62% of the tax receipts.  Living longer means working longer.  To do otherwise means relying on younger workers to pick up the slack or violating the rule that to consume you must produce.  Being 65 or older cannot be a ticket to stop working.  If you look at the mean life age in 1932 when social security started, it was 60 and the social security age was 65.  Apply that to today when the mean life age is 78 then the social security age would be 83. 

Welfare:

Welfare is at 26% of tax receipts.  The vast majority of welfare is dedicated to people who are unemployed.  If the US has to give out welfare, then it should be to the underemployed, not the unemployed.  It should not include enough to pay for cell phones for cable television or anything other than the basic necessities.

Interest:

If you could believe the projection, interest payments are at 9% of tax receipts.  Realistically, it is probably twice that level or 18%.  Interest rates are what the market says they are. 

The only way to keep the governments interest rates down is to stop printing and borrowing money.  Otherwise, when the 3 year treasuries come due there will be nobody at the window just as there was nobody at the window for our longer term treasuries recently.  This means that we have to execute on a reduced spending plan or it will all go to pieces when the interest rates are jacked up to the point where instead of being 1.5% as projected for the 2010 budget they will completely consume the tax receipts.  This would happen if the interest rates were 17%. 

Fiscal responsibility means pain.  It is time for people in the US and our political leadership to grow up and face it.