America needs to know this - it should be printed on the front page of every major newspaper in the country.
By Daniel at 28 January, 2010, 5:52 pm
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The U.S. is broke. Here’s why.
Decades of political promises made by profligate Congresses have left us with less budget give than at any time in U.S. history.
Thanks to decades of promises for ever-higher benefits and low taxes for the indefinite future, there’s now less give in future budgets than at any point in American history. At least profligate Congresses in the past confined their excesses and temporarily large deficits to the current year. Until recently, they didn’t box in the future.
To see what little give we have left, take a look at the nearby “fiscal democracy index” that I built, along with my former colleague, Tim Roeper. This downward-drifting squiggle shows how much of current revenues remain after taking account of commitments by law to the programs and ideas of the past — even dead — policymakers.
Look closely. As the amount we can spend on the new and the unforeseen shrinks, so does each generation’s democratic control of social and economic priorities. Gradually, over decades, Americans have committed almost all government revenues to what policy nerds call “mandatory programs” — those whose funding and funding growth are set by past laws — and to interest on the debt.
Unsustainable deficits
For the first time in U.S. history, in 2009 every single dollar of revenue was committed before Congress voted on any spending program. Meanwhile, most of government’s basic functions — from justice to education to turning on the lights in the Capitol — are paid for out of swelling, unsustainable deficits.
It’s bad politics, too
Why is trying to control the future this way such bad economics? Imagine a business signing 50- and 100-year contracts that tied up all the hoped-for future revenues. It can’t foresee the future well enough to make those commitments, and it would miss out on opportunities to use the money more wisely.
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