How Steep is The Fiscal Cliff?
Guest Post by Michael Chambers
The report from Credit Suisse on December 7, 2012, one month ago, reflects the amplitude of the Fiscal Cliff that the government has been discussing for the past year. As is commonly said, their numbers are too large to comprehend. It isn’t real money, or is it? Let’s take a look at these numbers, try to understand the enormity of the problem, and then ask ourselves if the Administration and Congress are doing enough to drag our economy away from the brink of the Fiscal Cliff.
The U.S. Government spends $7,264,020 per minute (including borrowing costs). I thought my wife was dangerous when let loose in Ross Dress for Less or TJ Maxx; but the people we elect to represent us and Captain our Ship of State make even the most die-hard shopper look miserly. Such spending comes to almost a ½ billion dollars per hour or 10.5 billion dollars per day. Does this still look like funny money??
Does this make one sit up and take notice? The U. S. Government borrows $3,129,756 each minute. It looks like the government borrows half of its spending power. What person in their right mind would continue to spend outrageous sums of money if he/she would have to borrow half? I know it isn’t that simple but let’s try looking at the numbers without making up anecdotal stories about how borrowing strengthens our economy. So the daily governmental expenditure is about $10.46B, including borrowing about $4.5B.
In 2012 U.S. Government expenses are expected to equal 153% of tax revenues. So for every $100 it takes in, it spends $153; the $53 must come from borrowing from banks, foreign nations, but not from the corner usurer who gets more than 100% interest weekly. Doesn’t any country owe the U.S. any money that we can call in the marker? No, that would ruin one or more of our markets! So, in order to have people buying our products and services, we must continually practice fiscal irresponsibility. I understand this kind of desperation.
The 2012 U. S. Government Budget is estimated at $3,796B. The Fiscal Cliff measures will cut only about $207B. That’s $3,589 short of solvency. How does the government make up that difference? Tax the rich? Tax the Middle Class? Reduce entitlements? Cut or reduce government programs? Put people to work on this country’s crumbling infrastructure? Keep spending like a drunken sailor? This is some legacy to leave to our grandchildren and countless future generations.
I don’t know how close to reality the Credit Suisse report comes. However, how close to the actual numbers does the report have to come before we demand economic reform? Economic redistribution is not the answer, is it? Based on these numbers, it doesn’t matter where the money comes from, it is nowhere near enough. Maybe the answer lies on the other side of the equation, not the level of income but the level of spending.