It may be too late for cuts in government spending to stave off disaster. Whether we get any cuts at all remains an open question. Most certainly they won’t be enough. The amounts of proposed cuts may sound like a lot but they barely scratch the surface.
Our spending is out of control and getting worse by the day. The Wall Street Journal carried a recent article on Social Security disability payments. The annual cost is $124 billion. Apparently it’s quite easy to get on this welfare role. It pays approximately $1,000 a month. I divided the $12,000 they get each year into the $124 billion and came up with ten million people (napkin math). Did you know ten million people are disabled and collecting from Social Security? I thought it was a retirement program. There is a backlog of 730,000 more people waiting to get on.
Furthermore, they are automatically on Medicare and Medicaid. Excuse me for being hardhearted but I’m guessing two-thirds of them are hypochondriacs. That means they make excessive use of medical resources. Analysts say that this health benefit is worth about $300,000 to a person. It’s probably worth a lot more to unhealthy people. Multiply $300,000 by 10 million and you get $3 trillion. How’s that for a budget buster? And that’s for only 3% of the population. Add in everybody else getting Medicare and Medicaid and the numbers are impossible.
If you analyze the social welfare programs you see they are running away. To pay for these endless government obligations we’ve borrowed so much that we must pay $700 billion in interest this year. John Exeter was a knowledgeable banker who often wrote about the direction of our finances. In 1987 he wrote these prophetic words, “The market place is a crime and punishment world, and this Federal Reserve credit expansion is the greatest monetary crime of all time. Accordingly, the punishment will be far and away the greatest punishment of all time.”