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Larry Womack

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17 Trillion Reasons America Needs a Math Lesson

Posted: 12/06/2013 8:46 am

Somewhere, as I write this, a team of Democratic aides is hammering away at a budget deal. Their negotiating partner is the office of Very Serious Deficit Hawk Paul Ryan, whose eponymous budget would have managed to increase the deficit while simultaneously devastating the poor and middle class with cuts so draconian that Republicans who voted for it eventually became petrified that it might actually become law. So of course he's the GOP's go-to guy on the budget. Of course!

Blind idealogues aside, the sad truth is that people like Paul Ryan are treated (somewhat) seriously because Americans steadfastly refuse to inform themselves about the federal budget. They say, "Just cut something!" We say, "Yeah, that sounds good!" Don't bother us with the numbers, please. And the human toll? We'll gladly pretend that doesn't exist. Until someone tries to close a monument, anyway.

Fewer than 12 percent of Americans are even aware that the deficit has decreased since 2010, in spite of the fact that it has fallen by half in that time. More than half believe, quite wrongly, that it has actually risen.

As for what can be done about that deficit, ask the average person and he or she will say something like, "Well, if we cut all foreign aid..." Which amounts to less than one percent of the total budget. Just 4 percent of Americans know that. Their average guess is 28. Foreign aid also saves money on things like disaster response and military action, so cuts might not even amount to real savings. Still, it is by far the most-named program when Americans are asked how they would balance the budget.

Moreover, people flaunt their ignorance simply by believing that we can cut our way out of debt at all. We can't. It just isn't mathematically possible.

Take, for example, 2012, the year in which Paul Ryan was awarded the Republican Vice Presidential nomination for his Very Serious work on the deficit. That year, total discretionary spending was around $1.3 trillion -- and the budget deficit was $1.1 trillion. In order to slash our way out of that, we would have had to completely dismantle all branches of the US military, close all federal courts and prisons, the FBI, CIA and most of the infrastructure that allows the economy to function. If all of that magically had no effect on government revenue and cost not a penny to do, we would have just about broken even. Subtraction: it's not that hard.

We should also consider that government spending is already at its slowest pace in 60 years (damn that big spender Obama!) so cuts have become rather difficult to come by. Imagine that we decide not to mothball the military, cease enforcing federal law and shoot the economy in the face with cannon. Instead, we merely identify the relatively minuscule but still appalling amount of the budget that is actually wasted. And, rather than divert those funds to essential programs in need, we put that money back in taxpayer pockets. Why, if you want to do that, Tom "fiscal responsibility" Coburn (who is, by the way, much more serious than Paul Ryan and still a joke,) says that he can save you $18 billion. Solving exactly 1.6 percent of that deficit problem and doing exactly nothing to address existing debt.

In case I haven't made this completely clear: anyone who tells you that they can cut, cut, cut America out of debt, or even that our debt is caused by massive amounts of wasteful spending in the first place, is dangerously uninformed, blinded by a fanciful anti-government ideology or lying to your face. The entire Republican budget platform -- the one thing Americans voters like about them -- is really quite deranged.

So, even with the sequester and partial government shutdown, total discretionary spending in 2013 will hold generally steady at around $1.258. Yet, this year's deficit looks to be a mere $680 billion. With a "B." Why?

Because revenue matters. Slow and timid though it may be, we are in the midst of an economic recovery. When Bill Clinton tells us that he balanced the budget with "arithmetic," we must keep in mind that the arithmetic only made that possible near the end of the longest economic expansion in American history.

Most of the time, we are simply unwilling to take in what we need to survive. The Congress and GW Bush administration used the leeway granted by the Clinton surplus to slash taxes while going to war -- a move that now accounts for the largest part of the deficit. If you don't believe me, The Washington Post, or anyone else capable of simple math, just ask Dick Cheney. You can't be too hard on Bush, though. That was just one incident in a 50-year binge of reduced-tax bribery and unrestrained military spending. As a result, we have had federal budget deficits in 51 of the last 60 years. They've left us with an outstanding balance of $17 trillion.

Sorta.

A quick aside to get the Fox viewers up to speed: in spite of what Ryan's predecessor as Republican VP nominee seems to believe, relatively little of that $17 trillion is owed to future Chinese overlords. $5.6 trillion of our debt is foreign-held, and China owns about 23 percent of that -- giving the Chinese a total of around 7.6 percent of our national debt. A sizable chunk, no doubt, but hardly slavemaster status. In fact, Japan's holdings trail China's by a mere $160 million. So when you're asked who the largest holder of our national debt is, please know that the answer is not, in fact, China.

That honor belongs to the Social Security trusts, which hold around $2.7 trillion of the national debt. In 1983, Congress and the Reagan administration realized that the Baby Boomers were going to be a problem for Social Security. They also realized that they really liked to spend money. Like, really liked to. So Social Security was allowed to generate surplus revenue that was then used to buy federal debt. Thanks to this interest, Social Security should remain in the black until 2020. But, of course, the interest that keeps it afloat is still coming from the public coffers.

On top of that, pension funds (both private and government-run) account for a good deal of the publicly held debt, for similar reasons. So if debt is to make us a slave race, our masters will likely be our future selves. That could get rough. I won't be eligible for Social Security until long after its foretold collapse and I'm already... pretty cranky.

So what is to be done about these "entitlements" that some Republicans seem so eager to "address"? Social Security shells out $668 billion annually. That number is intriguingly close to this year's deficit. Medicare, for its part, is in pretty bad shape. To one who wants to slash our way out of debt, these "entitlement" programs just beg for the knife. And things get pretty bad after 2020 -- by 2033, the program should be completely bankrupt.

Sadly, unless we plan on leaving the elderly to die of starvation or disease, the increasing ranks of the needy would simply be shifted to other programs that are actually less efficient. Any actual savings from Social Security spending cuts would hardly be dollar-for-dollar.

And, of course, there is the additional concern that stealing from old people who have paid into a program their entire lives is not a solution, jackass. I can guarantee that nearly everyone who is reading this has, at one time or another, faced some sort of financial dilemma. I feel safe in speculating that the vast majority of them did not solve this problem by looting a retirement home. Outside the bubble of political euphemism, it isn't considered a sensible solution.

So what can be done about the 2033 apocalypse that will come if we all don't agree to cut, cut, cut? The one that makes "difficult decisions" a better alternative than total collapse?

Income over $113,700 is exempt from Social Security income taxes. Lifting that cap would keep Social Security solvent for the foreseeable future. Problem solved, overnight.

I don't know what can be said of a nation that would even discuss stealing from the elderly before taxing the well-off as much as it does the working poor. Except, of course, that it is the same kind of nation that doesn't laugh someone like Paul Ryan off the national stage.

As long as we refuse to acknowledge that revenue is the only sensible answer, Social Security payments will remain a problem. In fact, all told, around $5 trillion of the national debt is actually intragovernmental holdings -- cases in which one department of the federal government owes money to another. And that number doesn't include the "public debt" held by the Federal Reserve ($2.16 trillion) or states and other local governments (over $700 billion). All told, around $7.86 of that $17 trillion figure that we hear so often is really money that American government owes to itself. (That would be nearly six times what we owe those brutal Chinese slavemasters, for those keeping track.)

So, a very, very, very rough breakdown shows that the US government owes itself that $7.86 trillion, foreign investors $5.6 trillion and something in the neighborhood of $4-5 trillion to private companies, pension funds, individuals and "other." The total is pretty fuzzy, because I've taken the most-current and detailed figures handy for each "creditor." If you imagine that the "other" number is a bit larger and the foreign and US-government-held numbers are a bit smaller, you'll have a fairly accurate idea of the picture: we owe a lot of money, but it could more accurately be categorized as "stuff the government has promised to pay out in the future and must pay interest on now," than, "debts the bookies might call in at any minute and OMG turn us all into slaves or something, dontchaknow."

Still, debt costs money. In fiscal year 2013, the federal government paid around $222.75 billion in interest to parties other than itself. That alone is nearly a third of the $680 billion deficit that there is no means, short of a time machine, of cutting. It must be paid.

But anyone genuinely interested in making sure that's done would be more troubled by the 17 percent tax rates paid by the nation's 400 wealthiest people on the $2 trillion they hold than the prospect of grandma running an electric heater. The bottom 50 percent of Americans -- 155,000,000 people -- share the same amount of wealth as those 400 and somehow manage to (barely) get by paying tax rates that average 36 percent. Why in the world should 400 individuals who hold more wealth than 155 million be allowed to pay half as much in taxes on it? It is nothing short of madness.

Yet, time and again, people like Paul Ryan ask us to dismantle vital programs or fall deeper into debt so that the mega-rich -- who use this country's infrastructure and resources more than anyone -- can go on paying lower tax rates than Americans struggling to live on $12,000/year. It's not just morally abhorrent; it is fiscally irresponsible.

And, quite frankly, I'm sick of it. The average American doesn't believe that they should be put deeper into debt so that the super-wealthy can continue to pay lower taxes than they do. The average American doesn't think that a modicum of security in old age is worth less to someone earning $2,000,000 a year than it is to someone earning $20,000. Hell, the average Republican doesn't believe it! They just have no idea what's going on. None whatsoever. Well, it's time to wake up and take responsibility America, before these people rob us all into bankruptcy.

Democrats are hammering out a deal with transparent fraud Paul Ryan when they should be shouting the truth to anyone who'll listen. And the rest of us? We should be reaching for pitchforks.

 
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