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What is going on with our Economy?

by Lee Smith

I feel a little sadness today. I need to vent.

Our country is being torn apart from within. The acts of terrorism aren’t doing this, other countries are not involved and there are not catastrophic acts of god involved in this event – it is our federal programs, our political process and greed.

After two weeks everyone is feeling the effects

  1. First the National Parks, being one of the first signs by seeing closed signs. Although some are reopening with the each State’s paying the costs, without a guarantee of getting those funds back.
  2. The Government offices closing
  3. The issues with our military – paying their salaries and benefits. The reports of the death benefits causing impact to those families of those fallen in the line of duty.
  4. Welfare related programs are affected – Meals on Wheels, Snap, and all the other federal aid programs that feed the poor and hungry.
  5. Now more of the federal programs are sending shock waves across each state.
  6. We are staring into a dark cloud – not paying our debt by freezing this governments’ ability to pay for its bills already rendered.
  7. The faith and credit of this country is on the line.

The problem stems from agreement on a budget. This country has grown unusually dependent on many of these federal programs that have taken years to develop and to fund.  Without getting into the political quagmire over whom is right and who is wrong. Using this country’s budget and debt ceiling is not an effective way to deal with this accounting and budgeting process. Civilized people would look at each program and adjust it to pay for it and the deficit based on the estimated income. If that income is not enough – then revenue must be increased.

  1. This is not a game, after spending the money on two wars without making efforts to pay for them causes financial problems for everyone.  An article written March 28, 2013 – Washington Post  Iraq, Afghan wars will cost to $4 trillion to $6 trillion, Harvard study says”“The U.S. wars in Afghanistan and Iraq will cost taxpayers $4 trillion to $6 trillion, taking into account the medical care of wounded veterans and expensive repairs to a force depleted by more than a decade of fighting, according to a new study by a Harvard researcher”

    Article source:
  2. The trickle-down effect for the Bush tax cuts did not work and need to be reversed. The economists agree on this.  “Using CTJ’s numbers, if one assumes that 20 percent of the tax cuts paid for themselves (overall), the non-interest cost would be approximately $1.7 trillion. If one assumes that half of the tax cuts paid for themselves (which we would consider to be a pretty extreme assumption), then the tax cuts would have cost around $1 trillion over the past 10 years.”Article Source:
  3. The Medicare Part D prescription drug program – a program to subsidize the cost of prescription drugs for the elderly from President Bush, in 2006. From DailyKosThe Bush White House lied to Congress about the cost. Within two months of signing the Medicare Modernization Act (MMA) into law, President Bush quietly informed Congress that the true cost of the program would be $550 billion, not $395 billion, over the next decade. When Medicare actuary Richard Foster sought to present the true price tag to Congress in late 2003, then agency Chief Thomas Scully threatened to fire him. By the time the program was launched in 2006, the estimated 10 year price tag for the Medicare prescription plan had increased to $720 billion.”Article Source:
  4. Social Security is another issue, but where did those funds go?Social Security has a trust fund, and that trust fund is supposed to have $2.6 trillion and Social Security benefits are entirely self-financing. The problem is that our federal government has borrowed all of that trust fund money and spent it.The money is in the General fund. The federal government draws it from general revenues or borrows the money – hence problems with the debt ceiling – they can’t borrow money to pay the debt to the trust fund!Forbes has a good article about this:
  5. The Economic Stimulus Package
    “Updated September 10, 2013 – The $787 billion economic stimulus package was approved by Congress in February, 2009. The package was designed to quickly jumpstart economic growth, and save between 900,000 to 2.3 million jobs.”
    $288 billion in tax cuts.
    $224 billion in extended unemployment benefits, education and health care.
    $275 billion for job creation using federal contracts, grants and loans.Source:
  6. National Defense – “The Department of Defense (DoD), which accounts for about 96 percent of defense spending, received $580 billion in funding for 2013
  7. The Interest payments on the current outstanding debt
    The fiscal year represents the total interest expense on the Debt Outstanding for a given fiscal year. This includes the months of October through September – $416 Billion
  8. What is Fiscal Policy?
    “Fiscal policy is how the government manages its budget. It collects revenue via taxation that it then spends on various programs. Elected officials guide fiscal policy, redirecting funds from one sector of the population to another. The purpose of fiscal policy is to create healthy economic growth and increase the public good for the long-term benefit of all.”A well-documented definition of Fiscal Policy – Source:

What Are the Four Causes of Deficit? 

  1. The biggest cause: Reduced tax payments
  2. Automatic increases in unemployment insurance and food stamps, and people starting social security early because they can’t find jobs.
  3. Military spending also increased, but is now fading.
  4. Bush’s TARP and Obama’s Jobs Stimulus (top layer) account for little of the deficit, and they are temporary.

Note: The deficit is from the safety-net helping the poor and the unemployed in a terrible recession, and helping all of us (including businesses!) with lower taxes.

When you start looking at the cumulative effects of each of these issues, acts and wars – you can see the costs escalate and trying to continually fund them becomes more difficult creating more hardships.  Our government seems so complex – that the mere effort of trying to decide what is good for this country and what is not –  is costing our citizens in both money and services.   We cannot continue down this path, we cannot afford our government with our current tax rates, when our politicians start cutting programs, many will react and feel the pain of each change.

We use to be the greatest country on this planet, but we are stumbling over things that will ruin us.

Now is the time to join together to reason things out, keep the country moving forward and start addressing our short falls. We cannot reduce spending without increasing revenues. Both must be done to pay for the past and to insure a future.

You can look up key terms for understanding our National Debt

This is just my humble opinion and just venting.