“Everyone who reads the paper knows that the United States has a very serious long-term fiscal problem,” Fitch said in his downgrade of the US debt.
Government expenditure and income notes
- The Bureau of Economic Analysis (BEA) numbers are incomplete for the second quarter, so these numbers are up to the first quarter of 2023.
- Expenditures are $6.443 trillion, while revenues add up to just $4.779 trillion. That’s a $1.664 trillion gap.
- Transfer payments include Social Security, Medicare, Medicaid, and food stamps. The latter is now called the Supplemental Nutrition Assistance Program (SNAP).
- Mandatory government spending includes Social Security, Medicare, and interest on the national debt. Interest of $929 billion now nearly equals defense spending of $959 billion. The latter is underestimated because it does not include national security and other truly defense-related expenditures.
Mandatory expenses and expenses vs. receipts
Mandatory Expenditure Chart Notes
- The yellow line represents mandatory spending plus defense spending.
- Total receipts are $4.779 trillion.
- Mandatory spending plus military spending is $4.851 trillion.
Liars and hypocrites everywhere
Neither party is willing to cut Social Security. And the recent vote on the defense budget shows that by a margin of 88-11, neither party is willing to cut defense spending either.
To eliminate the deficit while maintaining mandatory and defense spending, Congress would have to eliminate all other spending.
Of course, that won’t happen despite the constant Republican talk of reducing the deficit and balancing the budget.
Beyond the ridiculous tweet
Public expenditure minus income
There was no surplus in 1999 or 2000. The proof can be found by looking at the national debt which increases every year more than the supposed deficit. This happens because the BEA does not count Social Security as a deficit as if there were actually a trust fund when the money is actually spent.
US Debt Clock 2023-08-02
If you haven’t visited this site, I suggest you do. The chart is interactive and automatically updates every second.
Note that total US debt is now approaching $33 trillion and was “only” $21 trillion when Trump announced he would use tariffs to pay down the national debt. Did anyone really believe it?
Senate votes to throw $886 billion into defense. How much money is wasted?
To see how much is wasted, see my report.
As Fitch says, “Everybody who reads the paper knows that America has a very serious long-term fiscal problem.” But what are we going to do about it?
Interestingly, as a side note, the debt relief was realistically unjustified. Debt write-downs correspond to default risk. This means specifically, not paying interest. It does not take into account inflation or the collapse of the value of fiat currencies at all.
Since the US is not more likely to default in the required sense, the downgrade was not warranted even though Fitch’s comment was entirely correct. The US has a big problem.