September 14, 2019

Yes, Dorothy, the Cyclone is Heading Our Way

Every politician elected to Congress should be required to take a mandatory course in macroeconomics before he or she can even run for office. The second mandatory change I would propose would be a balanced budget by Congress and the President before any additional bills or spending authorizations could be even considered much less passed. Our government is a three ring circus that has degenerated into a fiscal mockery. The President proposes a budget; it is hopelessly out of balance; the Republicans and Democrats debate the budget; they cannot agree; no budget is ever passed but the government must keep running so spending bills are proposed and debated and eventually passed with no relation to incoming taxes or revenue and the process of running another major annual deficit continues. Our National Debt goes up along with interest on the escalating debt.

Congress throws money at every conceivable issue from aircraft carriers to the Zika virus. We distribute money for foreign aid, foreign wars, and operate military bases for which we no longer know why they are still in existence, let alone having a basic awareness of whether we can afford the expense. The President proposes the Affordable Care Act and Congress passes it knowing that it is hopelessly underfunded. The fraud in Medicare is staggering but the attempts to control this fraud are so miniscule that they are even comical. Social Security is going broke; Congress has appropriated the money paid into the Social Security Trust Fund so that all that is really in the Fund are government IOUs and now our President wants to expand the benefits. Approximately two workers now are paying into Social Security for every one person drawing from it. Congress passed the North American Free Trade Act and more work went overseas. With a record 94.7 million Americans not in the labor force, it appears that fewer Americans will be paying any Social Security or for that matter any U.S. taxes.

What makes things really unbelievable is that now just THREE entitlement programs comprise 62% of the Federal Budget. Our government is now living on the difference plus the half-trillion dollar deficits that keep piling up. For every $6.80 that the government collected in taxes, it spent $10.00. Consequently, $3.20 out of every $10.00 was borrowed. Food stamps and other nutritional programs have more than doubled in the past 10 years. The number of participants has grown from 19 million to over 46 million. The cost is staggering as it now tops $114,975,000,000. Yes, that’s billions of dollars! Debt will surge to 90% of GDP by 2022. Think of a married couple making $100,000 annually but owing $90,000!

The saying “too big to fail” comes to mind maybe for banks but not the Federal Government. I honestly feel that even the politicians are unable to get their hands around the debt situation in Washington. If we had a budget amount each year in which to contrast our spending, we might have a fighting chance but operating without a balanced budget is insane. What is also scary is that Kansas, Illinois, and Puerto Rico are just the tip of the iceberg. Uncle Sam has maxed out the Federal Government Master Card and is now unable to help the States by giving out money and grants that years ago deferred and masked their fiscal emergencies. Yes, Dorothy, the debt cyclone is not far away.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer
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