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CBO report contains a kernel of truth

September 18, 2013

“Congressional Budget Office (CBO) Director Doug Elmendorf said on Tuesday…that CBO’s estimate in May that the government will run a $642 billion deficit this year is proving a little too optimistic. CBO Director Doug Elmendorf said that slightly weaker revenues than expected will likely push that figure higher but that the final deficit tally for the 2013 budget year ending Sept. 30 will still register below $700 billion.”  AP September 17, 2013 in a story by Andrew Taylor.

The headline that seems to arise most frequently from Elmendorf’s report is that the U.S. must cut entitlement spending. Whether it is the far right or the far left, each seizes and massages the report’s message to suit their respective viewpoints. One side says “tax the evil rich” the other says “throw everyone off the gravy train”.

There is no doubt that far too many people are being supported by, rather than supporting the government. When people in 39 states are receiving government benefits that pay more than working full- time for minimum wage, that’s a problem.

The problem is the solution

Within the irrefutable numbers  advanced by the CBO is the answer. Look again at the quote above. Notice this part; “…revenues were slightly less than expected”.

Of course they were less, and therein lies the real consequence of the policy. Due to many factors, we are becoming a nation of part-time workers. For many reasons, the most visible at the moment being Obamacare, businesses are not growing, and as business income declines, so do the number of people they can employ. 100 people working 20 hours a week don’t generate more revenue than 50 people working 40 hours.

As the people who are working make less they pay in less, and they access even more government assistance. Social Security retirement income is based on earnings. Less earnings equal smaller benefits. Even if the government enacted a work-for-welfare policy,  the people would still not make enough to support the government, and all the people that government forces businesses to hire to implement work-for-welfare means one less job for the person not on welfare. It’s like a snake feeding on its own tail. Eventually the mouth consumes the entire body.

Mr. Elmendorf’s report also contains the eventual solution to the problem. It isn’t a very pleasant solution, but it is still a solution.

Almost every administration since FDR has seen government control of the people through handouts as the answer to all problems. Obamacare is the public face of a good intention implemented in a ruinous way on a grand scale by ham-fisted, ill-conceived government policies, but it is only one of an endless train of bad policies and inept execution. Every social impact program, whether it was the Civilian Conservation Corps, the Affordable Housing Act of 1990, or Obamacare was probably rooted in good intentions.

The future is now

Eventually, and probably not very far in the future, there simply will not be enough income generated in this country to support the nation. The spending will stop because there won’t be anything to spend. The tax-and-spend crowd will be lining up with the rest of us for non-existent EBT cards.

Business turn-around specialists know that when a business is failing, you first cut costs, so that current income catches up with outgo. Still, no matter how much you cut costs, at some point the business must begin to grow revenues. If that doesn’t happen the business fails, plain and simple.

That’s where the nation is at presently. Even if we cut all entitlement programs tomorrow, even if we repeal Obamacare or defund it, it’s a useless exercise if we don’t grow our revenues. Taxing the existing wealth in the country isn’t the answer, because it’s a finite and diminishing resource.

Bottoming out

Addicts generally have to reach rock-bottom before they will accept help. If they don’t receive help, they die. That’s very much where our political class is at the moment. The government is addicted to using its power to stay in power. Any benefits the people receive are purely coincidental, short-term and highly unstable.

The U.S. has a tremendous capacity to generate wealth at many levels, but currently it has no ability to do so, and even less will to try. What’s the point of growing a business and employing lots of people, if the government is simply going to take it all, either directly through taxes, or indirectly through manipulation of the economic conditions?

Big government should and is even equipped by design to do some things well. Infrastructure like roads and bridges and national defense are within that proper role. Sending fat letters home with your kids isn’t.

At some point, sooner rather than later, the whole house of cards and feathers is going to collapse unless we, us, you, the American voter decides to succeed, not just individually, but as a nation. I sure as hell hope we can still do it.

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