COMMENTARY | Earlier this week the Congressional Budget Office said that the nation’s fiscal 2012 budget deficit would rise to $1.079 trillion. This would mark the fourth consecutive year in which the annual deficit was over one trillion dollars. In fiscal years 2011 and 2010, the deficit was $1.3 trillion for both years and was $1.4 trillion in the red in fiscal 2009.
As a country, how can we say the health of our economy is improving if our national debt is growing by more than one trillion dollars per year? What solutions are needed to overcome these monstrous debts?
Putting the Numbers in Perspective
Once numbers reach the ‘trillion’ level, it can be difficult to even comprehend what a trillion dollars means or looks like. To help get your head around the situation:
* Only 15 of the 226 recognized countries in the world have a gross domestic product that is above one trillion dollars per year.
* One trillion dollars divided across the entire U.S. population — every man, woman and child — would come out to a little over $3,000 per person.
* One trillion dollars would purchase roughly 39 million pounds of gold or roughly twice the amount of gold that is in the entire US depository.
The Budget Breakdown
The budget for the 2012 fiscal year comes out to about $3.7 trillion, give or take a few billion here and there. But where does most of the money go?
The top 5 line items in the budget are:
Social Security – $761 billion
Unemployment/Welfare – $612 billion
Department of Defense – $553 billion
Medicare – $485 billion
Medicaid – $269 billion
Collectively, these 5 items total $2.68 trillion dollars or roughly 72 percent of the budget. Of the five, the Department of Defense is the only item that is listed as discretionary spending. All of the rest qualify under mandatory spending.
Solutions
Fixing the mess we are currently in is no easy task. With unemployment flirting with double digits and an economy that is shaky at best, it is difficult to determine where to make cuts. But for the long-term prosperity of this country to continue, drastic changes are needed.
The goal of the government should be to get this trillion dollar a year budget deficit down to a more manageable 300 to 400 billion dollar deficit per year. To do this, three steps should be made:
1. A 10 percent across the board cut to the Department of Defense budget. Our military is the strongest in the world by a long shot and a 10 percent cut to their budget would not change that fact in the slightest. Potential savings: $55 billion
2. Raise the age eligibility requirements for Social Security, Medicare and Medicaid enough to lower these expenses 20 percent. Let’s face it: people are living longer and healthier lives. There is no reason for people to be on full retirement and receiving government healthcare at age 62. Potential savings: $303 billion
3. Slash the funding for unemployment and welfare in half. Benjamin Franklin said it best when he said:
“Repeal that [welfare] law, and you will soon see a change in their manners. … Six days shalt thou labor, though one of the old commandments long treated as out of date, will again be looked upon as a respectable precept; industry will increase, and with it plenty among the lower people; their circumstances will mend, and more will be done for their happiness by inuring them to provide for themselves, than could be done by dividing all your estates among them.” Potential savings: $306 billion
Total Potential Savings from the three steps: $664 billion and the long term prosperity of a nation.