While the U.S.’ designated imbecile was confusing the US Constitution, she was also babbling about how we don’t have a spending problem, as well.
On Sunday, House Minority Leader Nancy Pelosi (D-CA) took to Fox News Sunday to explain that America does not have a spending problem. “It is almost a false argument to say that we have a spending problem. We have a budget deficit problem,” Pelosi insisted.
Pelosi’s motion was seconded by Sen. Dick Durbin (D-IL) on NBC’s Meet the Press, where Durbin laughably explained that the sequester was “designed as a budget threat, not as a budget strategy” – and stated that the only approach to solving the budget problem was to raise taxes again.
Well, that’s the rub, isn’t it. We just raised taxes just a few weeks ago, and now they’re coming back for more. The problem one runs into is that our spending is independent of our revenues. It always has been…… well for our lifetimes anyway. Let’s look at the last few years…….
Here we see the US spending increases near lineally. It would be an almost perfect line except for the stimulus and bank bailouts. And, we should note that our revenues took a horrible drop, because of the recession. US spending increases independently of our revenues. So, this begs two questions. The first one, how much revenue (wealth extraction) is reasonable to run our government? I mean, how much is enough and how much is too much? How much taxes is too much? I would submit that we are at that point now. But, reasonable people can disagree. In spite of some people arguing the Laffer curve doesn’t exist, it exists and is live and well. We see it in Greece, we’re seeing it in Egypt. We see it all over the world. We’re exceeding the capacitance of wealth extraction. At some point, the American people will simply lay down and they won’t work. I think we’re seeing a lot of that today. It will only get worse as the entitlements increase alongside the taxes. As they lay down, the revenue base shrinks. That’s just human nature.
But, what is the consequence of all of this? So, we’re spending a bit more than we’re taking in. So what? Well, unless your name is Krugman or the Fairy Godmother, we all know there’s no such thing as “free“. There is a cost to everything. In deficit spending, there’s a cost. Each annual deficit contributes to the accumulated debt. We have to pay interest on the debt. And how much is it?
We should note, both graphs assume an improving economy. We need an improving economy, but we can’t afford the escalating interest payments for such. WE HAVE TO REDUCE OUR SPENDING!!!