How come we are so far in the red? Where’s all our money going?

Taxation Without Cessation

How come we are so far in the red? Where’s all our money going?

Redacted from an editorial by Jeffrey H. Anderson

The Weekly Standard Editorial
January 21, 2013

While the press was distracted by the misnamed “fiscal cliff” we began the New Year with a 13-figure deficit and a 14-figure national debt-the result of today’s Americans borrowing vast sums of money and putting it on future Americans tab. The two parties offer rather different explanations for the cause of this unsustainable transfer of wealth from the young and the unborn to the old, which the “fiscal cliff deal — at least on paper— only made worse.

President Obama and the Democrats suggest that federal tax revenues have fallen, while federal spending has generally proceeded at reasonable levels. Republicans suggest that tax revenues have more or less flatlined, while spending has skyrocketed. Neither explanation is fully accurate. In truth, taxes have risen substantially. Yet these substantial increases in federal taxation have been dwarfed by an explosion in federal spending.

According to White House, Congressional Budget Office (CBO), and U.S. Census tallies, when John F. Kennedy was in the White House in 1962, federal tax revenues were $534 per capita or $4,178 in today’s dollars. Last year, according to those same sources, federal tax revenues were $7793 per capita. So, from 1962 to 2012, taxes rose 87 percent even after accounting for inflation and population growth. In other words, across the past 50 years, real (inflation-adiusted) per-capita taxes have nearly doubled.

Of course, this 87 percent increase in per-capita taxation hasn’t remotely kept the federal government from racking up higher deficit spending. With JFK in the White House in 1962, the federal government spent 7 percent more than it had available to spend-$1.07 going out for every $1 coming in. With Obama in the White House, it has spent $1.56 for every $1 available.

…What are we spending such colossal sums of borrowed money on? Well, we’re clearly not spending them on defense. According to official White House and CBO tallies, from 1962 to 2012, the share of total federal spending that went to national defense fell from nearly half (49 percent) to less than a fifth (19 percent). Where, then, is all of the borrowed money going? Here’s a hint: Medicare and Medicaid—and now Obamacare—didn’t exist in 1962.

… Over the past 50 years, defense spending has essentially flatlined, taxation has nearly doubled, total federal spending has far more than doubled, and nondefense spending has quadrupled. In that light, only the most stubborn ideologue could blame our mind-boggling deficits on insufficient taxation or excessive defense spending.

… Just days after the 40th-anniversary celebration of the Declaration of Independence, Thomas Jefferson wrote that “private fortunes are destroyed by public as well as private extravagance.” He warned that “public debt” is the “fore horse” of the “frightful team” of public mismanagement that leads to the “misery,” “suffering,” “wretchedness,” and “oppression” of private citizens.

As we begin 2013, we would do well to start heeding Jefferson’s warning. The only way to escape our worsening fiscal calamity is by substantially reforming Medicare and Medicaid to make them affordable, replacing Obamacare (which will require having a 2016 Republican presidential candidate who can persuasively advance a replacement), enacting pro-growth policies, and—most simply—cutting federal spending almost across the board. A half-century during which we’ve nearly doubled our taxes and quadrupled our non defense spending is a sufficiently lengthy experiment in gross fiscal mismanagement. It’s time for overdue leadership and meaningful reform.

You’re damn right it’s a Ponzi Scheme

Ponzi! Ponzi! Ponzi! – The Truth About Medicare and Social Security

Posted by Conservative Byte, September 14, 2011

Ponzi! Ponzi! Ponzi! There, I said it. To the extent people believe there are trust funds with their names on them, Social Security is absolutely a Ponzi scheme. So is Medicare. People need to hear it.

Many people think that when the government takes payroll tax from their paychecks, it goes to something like a savings account. Seniors who collect Social Security think they’re just getting back money that they put into their “account.” Or they think it’s like an insurance policy — you win if you live long enough to get more than you paid in. Neither is true. Nothing is invested. The money taken from you was spent by government that year. Right away. There’s no trust fund. The plan is unsustainable. Medicare is worse.

Mitt Romney and other Republicans who scoff at Rick Perry shamelessly pander to older voters. They should tell people the truth. Still, I’m not convinced Perry has more than a sound bite. In his USA Today op-ed this week, the most he says is, “We must consider reforms to make Social Security financially viable.”. He doesn’t say what kind of reforms.

Viewer Responses to Ponzi! Ponzi! Ponzi! – The Truth About Medicare and Social Security

Ronnie says: 


Social Security and Medicare was originally set up as a trust fund. The money kept on accumulating until there was billions of dollars in the fund. One day one of our Presidents (I won’t say which one} that since that money was just setting there accumulating, we should put it in the general fund. Social Security and Medicare have been on a downward spiral ever since. Don’t listen to their lies, that money was supposed to be USED ONLY for people on Social Security and Medicare and not for political needs and bonuses.



Paul McDonald says:


Perry is right, S/S and Medicare is a Ponzi scheme. In fact our whole federal government is a Ponzi scheme. Look at how it works . We give them tax money , they give us some money and benefits back. They give a lot of money to organization. Those organization give a lot back to there campaign coffers. The government gives a lot of our money to foreign countries we get nothing back.
 Now they are crying about going broke and need more money to give away , or they are going bankrupt ! They need more taxpayers to pay into the funds so they can give and receive.

Robert Thomson says:


I do not agree with the “Ponzi” call. 
The working people have paid 15 percent of everything they earned in their lifetime. The government told them (and if we go back a few decades, people believed what the government said) the money would go into a trust fund, where it would accumulate to pay for retirement when the worker got too old to work. 
Then the government STOLE the money. 
That isn’t a Ponzi scheme. It is a criminal act.


Red says:
Of course it is, but we are not supposed to say so. The SS system never had a prayer as time marched on. However, no one knew what to do about it and all those who have tried, like GW Bush, have been vilified by people who don’t have a clue about SS. It is an unworkable system dreamed up and put into action, in Germany, in the 19th century.



Ron Johnson says:


Both of these programs are worse than Ponzi schemes because it is mandatory that money is withdrawn from your paycheck. All those who die prior to their sixty-second birthday get a grand total death gratuity of $250.00 even if they paid in for more than forty years. Such a deal for the government! This might pay for some of the flowers. The same goes for Medicare. If one dies prior to their sixty-fifth birthday they get zero Medicare dollars. Just check the obituary pages and see just how many people die prior to getting their first dollar from a system 
that they paid into all of their working life.