The Three Scariest Government Charts

| October 8 2012
Christopher Cook

In three concise charts and brief but instructive prose, Lou Basenese shows why America’s economic situation is more dire than more realize. The situation, unfortunately, goes beyond the more short-term considerations of the election upon which we are currently focused with such rapt attention. If Mitt Romney wins, he will have to slam on the brakes and turn the wheel very hard if he wants to avoid the cliff we’re heading for. If Obama wins, he will slam on the gas.

Chart 1:


(Click to enlarge)

There are a number of takeways from this chart.

First, look at the skyrocketing line for “Payments to Individuals.” Did many more Americans suddenly start breaking their backs and going on disability? Was there a plague that swept through America in the 1970s that rendered a huge swath of the population unable to work? In an era of unprecedented growth in the economy (and the period from 1982 through 2007 was the biggest quarter-century of economic expansion in human history), why would so many more people need transfer payments? (The answer is that they do not, but government is giving them to them anyway.)

Second, defense is NOT the driver of our debt. People who know the budget pie know that “entitlements” are by far our biggest expenditure, and within a couple of decades, they will consume the entire economy. Defense spending, contrary to what many of the left (and some on the libertarian right, unfortunately*) believe, does not come close to our entitlement outlays, and has been falling as a share of what we spend for many years.

Third, do you see that little uptick in interest payments recently? That is the result of increased interest payments due to increased debt, but it is happening in the context of very low interest rates. When those rates rise, as they almost surely will, watch for that line to get steeper. A lot steeper.

 

Chart 2:


(Click to enlarge)

The takeaway from this chart is something we have discussed a great deal here at Western Free Press. Simply put, when you increase the number of people who are paying nothing, or actually getting money back, but you do not decrease government spending, that means that the burden for paying for government’s functions falls on an ever-smaller segment of the population.

When coupled with the chart above (the rise in transfer payments to individuals), we get a dangerous situation: more takers and fewer makers. The number of people being supported going up, and the number of people providing that support going down, as the Morandotti illustrations depict:

Drawing by Silvia Morandotti

Drawing by Silvia Morandotti

 

What’s even more dangerous is that those being supported have the ability to vote for even more support, and as the numbers of people providing that support dwindle, there is nothing they can do about it at the ballot box.

Eventually, this situation will change or cause collapse. It cannot continue indefinitely.

 

Chart 3:


(Click to enlarge)

Like the previous charts, this chart depicts a situation that cannot continue indefinitely. We’ve already seen our credit rating downgraded twice. Soon, our creditors will tell us to pound sand, and then there will be no more borrowing possible. But we will still have to pay off our debts. Well, no, we won’t—our children and grandchildren will, and their lives will be diminished for it.

In each of these three cases, Barack Obama will make the situation worse if he wins another term. He has demonstrated that he would prefer it to be so, with his unprecedented spending, his discussion of increasing taxes on the people who are already bearing most of the burden, and his historic deficit- and debt-spending.

 

America has a serious choice to make in less than a month.

 

*To my libertarian colleagues, we really need to talk about this at some point. National defense is a basic social contract function. As such, it is—along with neutral internal security (police) and 3rd-party justice and adjudication of disputes (courts)—one of the few things that is entirely consonant with nearly all schools of libertarian thinking. It is the FIRST reasonable duty of government, and, according to libertarian thought, one of the few that is actually appropriate. So all we should be talking about in terms of national defense expenditure is how dangerous the world is and HOW MCH defense is needed to meet the danger. Yes, we also can talk about preemption doctrine and surveillance issues, but those are separate from the overall expenditure question. And in terms of expenditures, we are, as the chart demonstrates, not spending more, we’re spending a lot less (as a proportion of what we spend, of coruse), and we have been for a long time.

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