March 16, 2011

"The modern day soup line is a check in the mail."

I just got back from the supermarket where everything seemed more expensive so I am not at all surprised the cost of producing finished foods jumped 3.9% last month!, highest jump in 36 years.

But that pales compared to this: Mandatory spending to exceed all federal revenues - 50 years ahead of schedule!


The White House Office of Management and Budget projects that in the current fiscal year (2011), mandatory spending alone will exceed all federal receipts. So even if we didn’t spend a single cent on discretionary programs, we still wouldn’t be able to balance our budget this year — let alone pay off any of the $14 trillion in debt that we have already accumulated.
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Through the years, mandatory spending has steadily increased (with some fluctuation from year to year) in relation to revenues.  Here is mandatory spending as a percentage of total federal receipts, by year, according to published White House figures:


1970:  roughly 33 percent
2000:  47 percent
2005:  61 percent
2010:  90 percent
2011: 101 percent.

Dick Morris takes a different perspective.  He says the core spending on the bureaucracy itself is driving the deficit

this deficit has been caused by a rapid run-up in discretionary, non-defense spending and in welfare entitlements like Medicaid and food stamps. The key to cutting spending and slashing the deficit is not to focus on Social Security or Medicare, but on the real culprits – discretionary spending and welfare entitlements.
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In the past two years, we have added 80,000 federal workers, 11 million food stamp recipients and $50 billion in Medicaid costs under Obama.

His chart

INCREASES IN SPENDING UNDER OBAMA

Category       2008     2010       % Increase

Welfare       $260     $400         54%

Domestic       $485     $682         41%

Medicare       $456     $528         16%

Social
Security
      $612     $700         14%

Defense       $612     $690         11%

Source: US Government

As Mort Zuckerman says Our anemic recovery continues because American consumers are planning for the worst rather than hoping for the best, and they continue to pay down household debt instead of spending cash.

Who could blame people for holding back when we see roughly 50 million Americans on one or more taxpayer-supported programs, be it food stamps or unemployment benefits? This downturn may not have the 1930s feel of despair, but in large part that is because, as the economist David Rosenberg of the wealth-management firm Gluskin Sheff put it, "The modern day soup line is a check in the mail."

Posted by Jill Fallon at March 16, 2011 11:20 PM | Permalink