The federal government stands on the brink of financial collapse. Unless something magical happens, we face a federal shutdown on Friday, April 8. At the current rate of spending, our total national debt will be about 108 percent of our GDP by the end of the current fiscal year in September 2011. In three short years, we will be where Greece is now. In the simplest terms, the federal government is spending $3 for every $2 it collects and is borrowing the rest. The budget deficit passed the $1.5 trillion dollar mark this year. This is equal to the entire 1996 federal budget.
By any measure, our nation is on an unsustainable course that is more perilous the longer it goes unaddressed. Not surprisingly, Washington is so paralyzed that no one – neither the President not the Congress, will take the political risk to propose the spending cuts and new tax initiatives so obviously necessary to bring the government’s finances into balance. Cities and states have to live within their means. What a novel idea for the federal government – pass a balanced budget amendment. Our National debt continues to rise as the result of annual federal budgets that have huge deficits forecasted as part of the budget. It is like a family with revenue of $2,000 per month, forecasting their monthly spending at $3,000 per month.
The Treasury Department earlier this month forecast that the U.S. would reach the $14,294 trillion dollar debt limit between April 15th and May 31st. However, lawmakers remain divided on funding levels through the remaining six months of the fiscal year. The current fiscal situation is also unique in that calendar year 2010 marked the first year since 1974 that the House failed to pass a budget for the coming fiscal year. Thus, Congress finds itself in the unique position of currently debating Fiscal Year 2011 appropriation spending levels at a time when it is in the beginning stages of outlining its Fiscal Year 2012 budget resolution. Maybe Congress should start considering possible 2013 budget resolutions as well?
Maybe a federal shutdown is what we need? There just doesn’t seem to be a sense of urgency in Washington today. Congress is operating in so much red ink that they tend to forget that their “master card” has been maxed out. There is no new “Visa” coming in the mail. For instance, the Iraq war has cost more than $750 billion dollars. Predictions are that the escalation in Afghanistan is creating the same sort of unfunded obligations. The interest on the National Debt over the coming decade is predicted to hit $931 billion dollars. This figure alone is more than Medicare, Medicaid or the Pentagon budget is today. ObamaCare will only exacerbate the existing debt entitlement problems. Yet politicians prefer to focus on domestic discretionary spending, but this is not where the big savings will ever occur!
Virtually no one wants to talk about the burgeoning programs like Social Security, Medicare and Medicaid that threaten America’s financial future. The military is another big hurdle with outlays that are double those of a decade ago. Getting federal spending under control won’t be easy. How about a legislative pledge not to add any new programs without the elimination of at least two in exchange? Instead of talking about freezing outlays, legislators need to talk about the outright cancellation of many federal programs.