Following up on my Excise Tax post, I've done a little reading on the subject of taxes and how the money is spent. Specifically, I took a little time to read the GAO report from December 15, 2005. (Special thanks to my good friend Anton for finding this and posting the URL as part of a follow-up comment to my original post.)Although my last post promised a new tone, some things are simply too interesting to pass up. (That didn't last long, eh?) As I read the information from the GAO, I found myself having a harder and harder time containing my rage at the ignorance of the Bush Administration, and to a certain extent, the general population.
If you have a strong stomach, I strongly encourage you to read this report. One part I found particularly interesting, if not infuriating, reads:
"...the federal government's fiscal exposures now total more than $46 trillion, up from about $20 trillion in 2000. This translates into a burden of about $156,000 per American or approximately $375,000 per full-time worker, up from $72,000 and $165,000 respectively, in 2000. These amounts do not include future costs resulting from Hurricane Katrina or the conflicts in Iraq and Afghanistan. Continuing on this unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. " (emphasis added)Let's put that into perspective. Assuming that someone earns $45,000 per year, if he were to pay 100% of his paycheck towards repaying the debt, it would take him 12 years to pay off his portion. Twelve years! Do you believe that?
Those with calculators are probably already wondering how I came up with that number. Regular taxes to the tune of at least 30% will still have to be paid just to keep the government running. That being the case, the number I used for a $45,000 annual salary was $31,500, which represents 70% of $45K. Furthermore, the 12-year prediction assumes that no additional interest will accrue on the debt, and that is certainly not the reality. A more reasonable number is probably more like 20 or 30 years, and without any money to eat, I don't think our poor protagonist will last that long.
Maybe I should consider offshore investment opportunities for retirement?
5 comments:
Ouch! Time I opened that swiss account.
Ed,
There are definitely things in the GAO report that should outrage you, don’t get too hung up on debt. First of all, your calculation is somewhat naïve. Consider the following: some of the debt is held by US citizens already. Those citizens do not have to pay more money, rather they could just forgive the debt they already hold. Secondly, some debt is held by other countries that will eventually forgive the debt. Thirdly, some of the debt will be repaid by Iraqi oil at some future time and require none of our money. Finally, paying of the debt is not a good goal. What ends are you trying to achieve by paying off the debt?
Here are my observations on debt:
Our debt comes from everyday citizens buying government bonds in some form or another. If you have a savings bond, T-bill, savings account, or some mutual funds you are directly empowering our government to waste money. Our government loves to spend money. Weather its legitimate spending, pork-barrel politics, or fraud/waste/abuse the government just can’t help itself. Every time you buy a bond you are giving them money to waste. Every time your state uses federal dollars to build that new bridge next to the old one, you are giving the government more reason to go into debt. Most people don’t hold their local politicians accountable enough. This is a systemic problem. People put public servants on a pedestal. He is a mayor/governor/senator etc. He is still accountable to every one of us. If we don’t remind them of that every once in a while and ask them what have they done to better their constituency they tend to lose focus and put themselves on a pedestal.
In conclusion, outrage and anger are good. However, a resolution and a plan are better. Come up with some ways you will make a change and encourage your readers to do something too. I, for one, am working from the inside (IRS) to improve our government.
Anton - I absolutely agree with your assessment. That said, I also don't think it will change. George W. Bush has made it painfully clear that even if he understands the implications of deficit spending, he doesn't care because *most* Americans are too stupid to understand.
Sounds like the perfect time to prove him wrong. I think this is a perfect chance to use your blog for something other than collecting news tidbits from around the web.
Here is an idea I had some time ago. One of the problems in US government is how money is allocated. Pretend I am a department of some large government agency. I have a budget of $20 million this year. I know, pretty low by government standards. Now assume, I start up some projects with poor management and no documentation that run over budget. Next year I write in my proposal that I need MORE money to finish these. My budget increases and I am happy. Now assume, I finished or cancelled those projects. If I don't prolong them, I will get less money next year. This is bad for me because my prestige is measured by my pay grade. If I have less people reporting to me (due to lower budget) I become less important and lose some pay. This encourages me to waste and equal or greater amount of money every year. The more I spend the better I look and the more power I have.
Let us consider for one moment how this situation could be improved. What if we only gave higher budgets to those government agencies that are good stewards of the CITIZENS' money? If you run a few projects well and show to the PEOPLE that you can plan effectively and manage a budget we will give you the amount of money you need next year. If you don't, not only will we not increase your budget but we will take you out of a management position.
A fundamental problem I have encountered in both government and private sectors is the idea of government money. There is no such thing. Our government is only there to serve us. They use our money to finance things for us. If there is any waste or abuse in government, they do not use more government money to fix it. They take more of our money.
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