What about the Deficit?

5 Dec

The election is over and the candidates covered a multitude of topics, both serious and nonsensical. But one thing they didn’t discuss was our current deficit.

In 2016, we spent nearly $4 trillion. The bulk of it falls into five categories.

First is health care, which accounts for $1.1 trillion. Of that, Medicare, Medicaid, and the Children’s Health Insurance Plan total $955 billion. The rest is the Affordable Care Act – aka Obamacare.

Social Security is next at $944 billion. Combine that with health care and it comprises half of the overall budget!

Defending our nation costs $615 billion. About 40 percent of that is for ongoing operations and new equipment.

“Entitlement” Programs that help protect seniors and the poor total $508 billion, with nearly 80 percent of it dedicated to seniors.

And lastly, there’s interest on our debt. The budget called for $283 billion towards debt. But we actually spent $432 billion on interest payments!

And make no mistake – these numbers will be larger in 2017.

They almost always grow. How can they not? We have $20 trillion in debt on the books and it’s growing.

All in all, it’s not a pretty picture. By the 2021 inauguration we could be near $30 trillion in national debt!

To me, it doesn’t seem to be a sustainable model. Eventually these debt payments will come due. Plus, interest rates have to go up, don’t they?

U.S. Nearing NIRP?

28 Nov

Historically speaking, an average economic expansion lasts 50 months, while an average recession lasts 10 months. The Great Recession ended in June 2009, putting us in the 90th month of expansion. History would suggest we’re nearing the end of this cycle and will see a recession soon, perhaps within the next two years. This is [...]

Real U.S. Tax Rates Near Highest in World

21 Nov

Donald Trump says the U.S. is one of the highest-taxed countries in the world. Hillary Clinton says the rich don’t pay enough. Who’s right? The top American rate is 39.6 percent. Those who disagree with the U.S. being a high-rate country point to Sweden, where taxes can reach as high as 59.7 percent of income. [...]

A Path to Repatriation?

14 Nov

U.S. firms are holding $2.5 trillion in profits outside the country (“offshore”) and saving themselves from billions of dollars in taxes. And they refuse to bring the money home, also known as “repatriation,” because of our 35 percent corporate income tax rate. In other words, firms don’t want to pay a high tax rate at [...]

Obamacare’s Design Flaw

7 Nov

It’s open enrollment season, the time when many Americans choose their health care plans for the upcoming year. Regardless of what happens in the 2016 election, one thing is certain – Barrack Obama will no longer be in charge. But that’s not true when it comes to health care. See, he’ll never be too far, [...]

Data Defies Returns

24 Oct

I’ve said it before – twice actually – but I must ask again. Why is the market going up and up when the hard economic data indicates that the economy should be in or near a recession? Considering the following, the returns become even more unbelievable. For instance, private sector GDP is up a shade [...]

Start-Up Fizzle

17 Oct

There’s been a dramatic decline in U.S. new business creation – in fact, it’s at a 40-year low! A big reason we should all care is that startups create half of all new jobs annually. If these job-creating enterprises don’t materialize regularly, the logical result is fewer and fewer new jobs. Slightly fewer than 453,000 [...]

Men Leaving Labor Force in Droves

10 Oct

Here’s a surprising and disheartening statistic – men aged 25 to 54 currently have the lowest labor force participation rate than at any time since 1940. That’s when the Great Depression was ending! That runs counter to what we hear – that unemployment is under 5 percent and we’re nearing full employment. But the truth is altogether [...]

Running Out of Room

3 Oct

Imagine that a politician came up to you, shook your hand and said the income from your retirement plan was subject to a 50 percent tax, due immediately. Among other things, you’d question his or her sanity! Well, you guessed it, that chop in half is exactly what the Federal Reserve did by effectively gutting [...]

Obama Striking Out on Growth, Jobs

26 Sep

Over the course of modern American economic history, every president has presided over a year’s worth of 3 percent GDP growth while in office. That means even the worst presidents in the modern era had at least one year of 3 percent growth. But not President Obama. Barring a large and unexpected growth upswing, President Obama [...]