On the Road to Greece

by Richard H. Frank

It is ten days until the Congressional “super committee” punches this nation’s ticket on the express train to becoming Greece.  The latest double talk coming out of Washington is evidence of the disdain our elected Representatives hold for the very constituents that voted to place them in office.  They  must think the American public is stupid and will accept the conclusion that since there cannot be any bi-partisan agreement on budget cuts, that they will set new spending targets and return their recommendations to each congressional committee to finalize the reductions.  Here we go again, “Ring around the Rosie,” right back to where we started with the national debt exploding at an unsustainable rate and reaching $15 trillion on November 16, 2011, equalling the gross domestic product of the country.

As for the mandatory cuts of $600 billion in defense spending accompanied by an equal amount in domestic programs, don’t hold your breath.  One  must put the size and scope of the problem in perspective.  The current forecasted spending for this fiscal year is approximately $3.6 trillion with anticipated revenues of approximately $2.1 trillion for a projected deficit of $1.5 trillion.  If every federal agency was mandated to cut their expenditures by 15% annually, the projected reduction would amount to $540 billion creating an annual deficit of about $960 billion in addition to interest being paid on the debt of $454 billion for a net loss in cash flow in excess of $1.4 trillion annually.

When Congress speaks of a grand scheme to cut $4.5 trillion over ten years, it is a joke when viewed in light of the continuing $1.4 trillion short fall in revenue each year.  The expectation that every government agency will cut spending by 15% is likewise a “fairytale.”  The balance sheet of the Federal Government can only be brought into equilibrium by a combination of spending cuts and revenue increases equal to 51% of our current spending levels.

Assuming the 51%, or $1.8 trillion is achieved through bi-partisan congressional actions, coupled with increased revenues from economic recovery, it would take 30+ years to totally eliminate the national debt.  So much for the future of our children and grandchildren.  Keep in mind the scenario above assumes we never exceed a federal spending level of $3.6 trillion annually.  Considering the unfunded future entitlements amount to $60 trillion plus are not accounted for in the spending assumptions it is apparent that sooner or later the Republic will face the same fate that has arisen in the European Union.  Greece is the first to fall, closedly followed by Italy and Spain.

The size and scope of the overhaul needed by or Federal Government is mind-boggling.   Unfortunately, Congress does not possess the cojones to take action to correct these problems created by government over the past 70 years and many liberal elites and their followers on the left will not support the necessary overhaul.  Hence, we find ourselves on the road to Greece with our nation in decline and the standard of living eroding for every American.

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