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Why spending must be slowed
 

Why spending must be slowed

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I believe this is an important message on a critical and timely Petition to our Congressmen. The Petition cites reduced Spending as the most critical ingredient to resolve the growing National Debt ...

I believe this is an important message on a critical and timely Petition to our Congressmen. The Petition cites reduced Spending as the most critical ingredient to resolve the growing National Debt crisis. The Petition has been posted and I will send a fax soon to the key Committee Members of the House and Senate. More details will be found at the CAUSES website, which also has a LINK to my full Powerpoint analysis exploring the key issues.

• SIGN THE “CAUSES” PETITION; I WILL FAX IT TO THE KEY HOUSE & SENATE COMMITTEE CHAIRMEN WHO DEAL WITH BUDGETARY MATTERS
o GO HERE: www.causes.com/causes/797505-re-establish-federal-state-constitutions-as-the-basis-of-all-governance?ctm=home
o SIGN IN AND SIGN PETITION
• ALTERNATIVELY, SEND FAX OR EMAIL TO YOUR OWN LEGISLATOR (USUALLY VIA A “CONTACT” FORM) THAT IS AT YOUR REPRSENTATIVE’S WEBSITE
o AN EASY WAY TO DO THIS: useTHIS SITE: www.congressmerge.com
o YOU CAN THEN INPUT YOUR OWN STATE AND YOUR ZIP CODE AND IT WILL GIVE YOU CONTACT INFO FOR YOUR SENATORS AND REPRESENTATIVE
o Then call/fax or send message via Congressional website
• IF YOU’D LIKE TO STAY ABREAST OF A NEW FB SITE FOR THIS GROUP, PLEASE GO TO
https://www.facebook.com/WethepeopleofWA
• THEN CLICK ON THE “LIKE” ICON - - THAT WILL ENABLE EASY FUTURE 2-way CONTACT WITH ME FOR FUTURE ACTIONS SUCH AS THIS PRESENT PETITION.

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    Why spending must be slowed   Why spending must be slowed Presentation Transcript

    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDIn recent weeks, the Administration and Congress have been at loggerheads with the issueof doing something constructive regarding the economy. The reason is not “petty politics”(as spouted continually by the Mainstream Media) but profoundly different beliefs in whatis good for America. The Liberals/Democrats/Progressives believe government must helplower income segments, largely by augmenting government “social justice” programs.This tends, in practice, to be realized by wealth transfer from higher income Groups.Those leaning toward Conservative/Libertarian/GOP beliefs (pls see next chart) view thatapproach as both ineffective and counter-productive to the OPPORTUNITY that Americahas offered its Citizens since its founding. Moreover, wealth transfer simply adds growingdependency on government to the recipients of the aid. That doesn’t mean that the center-right does not believe in helping the truly needy. But it reflects studies and analysis thatour National “safety net” has become, for many, a too-comfortable “hammock”. Theissue erupts in the debate over excessive government deficits, which have becomeprevalent for 2 - 3 decades with a steeply accelerating trend since 2009.Economists indicate 3 primary methods to address the Debt issue: (1) Increase revenuesinto the gov’t (taxes); (2) Reduce money outflow from the gov’t (cut spending); (3) Grow theeconomy and reap additional taxes at current rates plus set aside funds to pay down theDebt. Most Citizens can probably agree with the intent of solution (3) - - but the questionis: does option (1) OR option (2) facilitate that best? Some analysis and data areprovided in this set of charts. The charts draw freely, and acknowledgement happily given,to the half dozen very fine and quantitative references cited. It is my intent to circulatethese thoughts to various colleagues and social network friends. Hope you find it useful.Mark Sussman, 425-643-8961
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDSince about 1975, the SPENDING vs REVENUES - - WHERE THE PROBLEM ISNation’s Spending hasbeen exceeding theRevenues it takes in.But since about 2009,the gap has enlarged Spendingsignificantly. RevenuesMoreover,authoritativeprojections of futuregap growth show thisto be anunsustainablesituation.Analyses show that itis the spending sideof the ledger that ismostly at fault.Ref. 2
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDAmerica’s year after Accumulated Debt across our economy has skyrocketed in the pastyear of unbalanced 30 years.Deficits areaccumulating and therate of accumulationis generally on theincrease (chart). DebtThis accumulation isan albatross of Debtupon the Nation andan obligation owed toothers that ifuncorrected will be alegacy that webequeath to ourchildren.Totally irresponsibleon our part !AND DANGEROUS !Ref. 2.
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDThe Debt is increasing at a DEBT, NORMALIZED TO ECONOMIC STRENGTH, STILL GROWSfaster rate than our totaleconomy as measured byour Gross National product Debt / GDP(chart).Moreover, except for aperiod tied to World War II,our Debt Level as a per centof our National economy ,has been enteringuncharted waters.Why is this particularlyalarming? See next chart.See Ref . 1.
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDRespected Economists DEBT IS NOT A GOOD ALLYRogoff and Reinharthave publishedmultiple papers (thelatest, Ref 3) warning ofthe results of Nationstreading into waters ofDebt levels approaching90% of GDP.As this chart notes, theEconomists see “badthings” such as:inflation, bankinstability, joblessness,and destruction ofpersonal wealth frommultiple Nationalhistorical examples.Is this the future intowhich our gov’t ishaplessly taking us?IRRESPONSIBLE !Ref 3.
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDThis is another view 60 YEAR HISTORY: TOTAL DEBT AND NATIONAL GDPof similar data,whereby theNation’s TOTALDebt ( includingHousehold Debt,Corporate Debt andGovernment Debt Debtat both State/Local GDPand Federal Levels)is shown.Household andGovernment Debtare of similaramounts withFederal Debt about4 times that ofState/Local Debt.Corporate Debt isabout 2/3 of theothers. But allspread the samedisease.Ref. 2.
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDSo what’s the solution ? Relative Change in Expenditures by Government Function. Note the most obvious growth offender.Studies show that most ofthe solution must be foundon the Spending side, as thatis the part that has beengrowing well beyondhistorical norms.This data shows wheremoney has been and iscurrently being Spent.Human Resources (includingSocial Security, Medicare,Medicaid, and other moniesto Citizens is the largest andfastest growing component.Defense spending, often atarget of some, has beensystematically reduced fordecades. Other componentshave been steady and are atsmall levels. So a truepolicy must address theHuman resources element.Ref . 1.
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDIn concluding thissection, this chartrepeats the years uptill 2012, which we’veseen before. But nowis added the importantprojection for thefuture 3 decades.This projection is basedon the Federalgovernment’s owndata from OMB andGAO Sources, asannotated in the chart.Clearly, the Nationmust not let thisdisasterous annualgrowth occur.Ref. 4.
    • “EUROPE HAS APPLIED AUSTERITY WITH POOR SUCCESS”“Austerity is destroying Europe”,we are told. In fact, this “anti-austerity” slogan was a big reasonfor the victory of newly electedsocialist François Hollande to thePresidency of France.BUT …look at the data:• These countries still spend morethan pre-recession levels .• France and the U.K. did not cutspending.• In Greece, and Spain, whenspending was actually reduced —between 2009–2011 — the cuts DOESN’T SEEM LIKE A LOT OFhave been relatively smallcompared to what is needed.• Italy reduced spending between2009 and 2010 but the data shows DOESN’T LOOK LIKE A LOT OFan uptick in 2011. The increase inspending represents more than the AUSTERITY (ie “SPENDING RESTRAINT” HERE !previous reduction. So … challenge those who say “reducing spending doesn’t work”.Source: “Show Me the ‘Savage’ Spending Cuts in Europe, Please”, Veronique de Rugy, May 7, 2012NATIONAL REVIEW ONLINE / THE CORNER.
    • FAITH THAT GOV’T WILL SOLVE THE PROBLEM IS USUALLY NOT BORNE OUT IN PRACTICEPUTTING THE GOV’T INCHARGE OF VERY COMPLEXISSUES, IS SOMEWHAT AKIN THE ANTSTO ASSIGNING ,TO A COLONYOF ANTS , THE TASK OFBUILDING A MODERN CITY.BUSY-NESS, COMMUNICATINGWITH ARCANE PHEROMONESAND RUNNING AROUND INMULTIPLE DIRECTIONS IS NOTTHE RECIPE.IT TAKES MORE BRAINPOWERTHAN CAN BE ASSEMBLEDEVEN IN THE VAST OFFICECORRIDORS OF WASH DC. ITTAKES MORE DECENTRALIZEDRESPONSIBILITY
    • STILL THINK BIG GOVERNMENT KNOWS BEST? CHECK THIS:
    • CUTTING SPENDING VS REVENUE GROWTH - - THE WAR OF WORDSPolicymakers are divided as to whethergovernment expansion helps or hurtseconomic growth. Advocates of biggergovernment argue that government programsprovide valuable "public goods" such aseducation and infrastructure. They also claimthat increased gov’t. spending bolsterseconomic growth by putting money intopeoples pockets.Small-government proponents explain thathigher spending undermines economicgrowth by transferring additional resourcesfrom the productive (i.e. private) sector of theeconomy to government, which uses themless efficiently. They also warn that anexpanding public sector stymies pro-growthpolicies - - such as fundamental tax reformand personal retirement accounts - -because critics then use the existence ofbudget deficits as a reason to oppose policiesof their opponents.Source: Daniel Mitchell
    • DATA from 2003-04 COMPARING BIG-SPENDING EUROPE vs THEN SMALLER-SPENDING U.S.A. TODAY, 2012-13, SOME EUROPEAN NATIONS AREPer capita economic output in the U.S. STEPPING BACK FROM THEIR PRIOR HIGH RATESin 2003 was $37,600 - -more than 40 OF GOV’T SPENDING AND DEBT. UNFORTUNATELY,percent higher than the $26,600 AMERICA IS REGRESSING TO THE ECONOMICALLY-average for EU - 15 nations.[3] RETARDED WAYS OF THE 2003-04 EUROPEAN STATESReal economic growth in the U.S. overthe prior 10 years (3.2 % averageannual growth) has been more than 50percent faster than EU-15 growth forthe same period (2.1 %).[4]The U.S. unemployment rate issignificantly lower than for the EU-15,and there is a large gap in the % ofunemployed who have been without ajob for more than 12 months - - 11.8%U.S., vs 41.9 % EU-15. [5] Livingstandards in the EU were aboutequivalent to living standards in thepoorest American states-roughly equalto Arkansas and Montana and onlyslightly ahead of West Virginia andMississippi, the two poorest states.[6]
    • SOME NUMBERS TO THINK ABOUT
    • SOME NUMBERS TO THINK ABOUT
    • RATIONALE SUPPORTING SPENDING AS THE PROBLEMEXTRACTION COST. The federal A TAX LESSON (NOT !)government cannot spend money FROM CALIFORNIAwithout first taking that money fromsomeone. All of the “taking options”used to finance gov’t spending haveadverse consequences:TAXES discourage productive behavior,particularly in the current U.S. taxsystem, which imposes high tax ratesonBORROWING and,in extreme cases, may lead to higherinterest rates.INFLATION debases a nationscurrency,
    • RATIONALE SUPPORTING SPENDING AS THE PROBLEMDISPLACEMENT COST. Gov’t spending displacesprivate-sector activity. Every dollar spent by gov’tnecessarily means one less dollar in the productivesector of the economy. Some government spending, such asmaintaining a well-functioning legal system, can have ahigh "rate-of-return." In general, however, governmentsdo not use resources efficiently, resulting in lesseconomic output.BEHAVIORAL SUBSIDY COST. Many gov’t.programs subsidize economically undesirable Citizenor Business actions. Theseare all examples of reducing economic growth anddiminishing national output because they promoteineffective utilization of resources.
    • RATIONALE SUPPORTING SPENDING AS THE PROBLEMINEFFICIENCY COST. Governmentdirectly provides many services such aseducation, airports, and postal operations.But often the private sector could providethese services at a higher quality and lowercost.STAGNATION COST. Governmentspending inhibits innovation. Economic growth is greatlyenhanced by this discovery process.
    • This analysis, drawn from multiple references, assesses the more foundational political issueunderneath the near-term “Fiscal Cliff” aspect. From the more fundamental view, the issue isabout the financial responsibility of our Nation, which has amassed a significant debt relativeto our Productivity. It is currently at a proportion where respected economic studies saymutliple bad things will go awry in our economy unless we reverse our course. Moreover,future projections, based on expenditures which some regard as iron-clad promises (ie,Entitlements) to the needier segments of our population, show growth to a much worsecondition.The debt growth must likely be solved by increasing gov’t intake (Taxes) or decreasing Gov’toutflow ( Spending). And opponents are lined up strongly on each side … to the extent ofnear gridlock. Arguments were presented here that the most effective course is to reduceGov’t outflow of monies. This was shown by a catalog of why gov’t spending hurts ourprivate sector economy in multiple ways:
    • Additionally, data were presented from our own economy and other Nations that showempirically , from various practices, that excessive spending is a poor choice. The sameconclusion is arrived at by various academic studies, also drawn from National andinternational experience.If you agree, it is important to let our elected representatives know that many if not, mostAmericans stand by our Heritage and support limited gov’t, individual merit , equalopportunity and private enterprise. That doesn’t mean there is zero role for government. Butit does mean that too much gov’t is both ineffective and harmful to our Rights as Citizens. Ihope you’ll take a look here and then agree that Citizens must be assertive to their electedLeaders in behalf of America. Some simple techniques for accomplishing this are givenbelow:  SIGN THE “CAUSES” PETITION; I WILL FAX IT TO THE KEY HOUSE & SENATE COMMITTEE CHAIRMEN WHO DEAL WITH BUDGETARY MATTERS o GO HERE: www.causes.com/causes/797505-re-establish-federal-state-constitutions-as- the-basis-of-all-governance?ctm=home o SIGN IN AND SIGN PETITION  ALTERNATIVELY, SEND FAX OR EMAIL TO YOUR OWN LEGISLATOR (USUALLY VIA A “CONTACT” FORM) THAT IS AT YOUR REPRSENTATIVE’S WEBSITE o AN EASY WAY TO DO THIS: useTHIS SITE: www.congressmerge.com o YOU CAN THEN INPUT YOUR OWN STATE AND YOUR ZIP CODE AND IT WILL GIVE YOU CONTACT INFO FOR YOUR SENATORS AND REPRESENTATIVE o Then call/fax or send message via Congressional website  IF YOU’D LIKE TO STAY ABREAST OF A NEW FB SITE FOR THIS GROUP, PLEASE GO TO https://www.facebook.com/WethepeopleofWA  THEN CLICK ON THE “LIKE” ICON - - THAT WILL ENABLE EASY FUTURE 2-way CONTACT WITH ME FOR FUTURE ACTIONS SUCH AS THIS PRESENT PETITION.
    • FINALLY, FROM THE MOUTHS OF BABES:
    • AN ANALYSIS OF AMERICA’S DEBT - - WHY SPENDING MUST BE SLOWEDREF REFERENCES / BIBLIOGRAPHY # 1 “Deep Dive Into The Federal Governments Budget And The History Of US National Debt”, Jim Boswell of Quanta Analytics , Business Insider, Jan. 11, 2011, 7:30 PM 2 “Okay, Folks, Lets Put Aside Politics And Look At The Facts...”, Henry Blodget, Business Insider, Jun. 21, 2012, 12:29 PM 3 “Public Debt Overhangs: Advanced-Economy Episodes Since 1800” , Carmen M. Reinhart; Kenneth S. Rogoff is Professor of Economics and Thomas D. Cabot Professor of Economics, Harvard University, Cambridge, Massachusetts, Journal of Economic Perspectives—Volume 26, Number 3—Summer 2012 4 “The State of the Union’s Finances”, Peter G. Peterson & David M. Walker, Peter G. Peterson Foundation, March 2009 5 “The Impact of Government Spending on Economic Growth”, Daniel J. Mitchell, March 15, 2005, Heritage Foundation 6 “Show Me the ‘Savage’ Spending Cuts in Europe, Please”, Veronique de Rugy, May 7, 2012, NATIONAL REVIEW ONLINE / THE CORNER 7 “10 Facts on the Fiscal Cliff, Debt, and Spending”, Romina Boccia, December 27, 2012 , HERITAGE FOUNDATION/MORNING BELL THE END - - THANKS FOR YOUR INTEREST