Lost Wages

$12.4 Trillion is the amount of debt outstanding for the USA. The federal government brings in $2.1 Trillion in tax revenue and spends $3.5 Trillion, year after year.

Gross Domestic Product is around $14.3 Trillion now. So, tax receipts are about 14.7% of GDP. Got it?

Now, in order to balance the budget (remember, can't begin to reduce debt till that happens first), we would need to either raise taxes $1.4 Trillion raising it to 25% of GDP or slash government spending by $1.4 Trillion. Perhaps we split the difference. Just raise taxes $700Billion and slash spending $700Billion.

First, you would probably see GDP go down because it costs more to do business with higher taxes and you will never get the coveted $700Billion. Second, if you slash spending, where would you do it? Defense spending is about $660Billion, Social Security is around $759Billion, pensions are $190Billion....interest on the debt, alone, is $558Billion. Everywhere you look is a goiter the size of Canada.

But assume you were able, somehow, to accomplish it and balance the budget. Ok, now we can start to look at reducing debt. But wait, we just discovered that, in addition to owing $12.4 Trillion in bonds, we apparently have robbed all the payroll tax revenue, year after year, from social security, medicare, medicaid, prescription drug benefits, to the tune of $107 Trillion in "IOU's". Once more, it appears we also forgot to mention that the FHA and GSE losses on mortgages is about $6 Trillion. Total real debt owed is not $12.4 Trillion but more to the tune of $125.4 Trillion. We only make around $14.3 Trillion a year in income. If we taxed 100% of GDP, we would be able to pay off the debt in 8.77 years. Of course, that's insane. It's sort of like asking someone to not eat for 12 years in order to pay off a VISA card.

Maybe we just scratch all future social security, medicare, medicaid and prescription drug benefits for everyone....say "I'm sorry" and start over? Assuming that was palatable, it would mean losing $107 Trillion in payroll taxes from employed, legal workers for a lengthy period of time. If we are willing to part with all that money and forgo all the benefits, then we'd be able to eliminate the $107 Trillion. We could also eliminate the bond debt too...since $7.5 Trillion is owed to other countries, we'd tell them to take a hike. Since $1.5 Trillion is owed to people who invested in bonds through an IRA or mutual fund, they'd have to write off all that money as a loss, since it won't ever be redeemed. The Fed owns the rest, which is sort of like Fantasy Land and so we will leave that alone for now. Could we get away with that? Hardly.

So, what do we do? Maybe we play games with our currency. Get the dollar to tank so that our debt is worth far less tomorrow than it is today, then we could pay it off easier. But in order to do that, we'd cause prices of all goods and services imported to us...cars, toys, picture frames, watches, etc, to go way up in price. Wages would have to go up to in order to keep up, but in the mix, we end up getting back into serious deficits because taxable income would keep going down and although we'd have cheaper debt, we'd have a bigger hole to jump out of due to inflation.

Maybe we elect all Republicans in the fall and then take the White House in 2012. Ok, fine, but we already did that and spending, deficits and debt, along with robbing from social security, medicare, medicaid, etc., still happened, even if on a smaller scale than with Democrats...so, history shows that Republicans won't answer this problem.

Yeah, but maybe there could be a reformation and we could send a new breed of people to DC in order to fix this mess, unlike all the other times before. Well, if the USA had no stomach to finish Iraq, and that was far away, brought to us by 24 news channel reporting, how much of a stomach will the USA have to do what I mentioned above? We expect climate control, water you don't have to boil in order to drink, plenty of staples at the grocery stores, lots of pharmacies, doctor's offices, hospitals with machines that go 'ping' and lots of entertainment.

What we are seeing in Greece, Spain, Portugal, England, Ireland, Ukraine, Japan are all the same stories...governments that have continually spend FAR beyond the means of both tax revenue and borrowing capacity. This whole cycle began about 100 years ago as a means to move onward and upward, improving the lives of citizens around the world, and has ended up with global insolvency.

The fact is...as distasteful as it is....we have no answers to our problems. All the capital has been spent and leveraged, far beyond the remaining capital's value. The way I see it, hitting a 'reset' button is about the only avenue left. But that will rock the world in ways we've probably never read about throughout recorded history. All government bonds, derivatives would just have to get written off. Balance sheets all over the world would tank, barring more squirrely accounting FASB rules. It would catapult governments and economies into chaos and world stability would go away for a while. The 'reset' button's bright side would be betting on something good happening once the dust settles.

What I am getting at is that the world you were born into and grew up in is passing away rather quickly. It still looks the same and seems to keep humming like it always has. But just like ENRON, GM or any other business that is in serious trouble, there comes a time when you are out of cards and run to the authorities to seek protection. The difference here being, the authorities themselves are in need of protection, when none exist.

My guess is when the 'reset' button is pressed, the other side of it will probably require a third Humanist Manifesto, since the first two were dismally Pollyannish, if we're fortunate to be thinking about, let alone, writing any kind of manifesto on the other side of this. "The ways of man seem right to him, but the Lord sees the heart." Everything will be alright. However, it won't be because of economic stability, a new provisional government or another computer revolution.

Although I am a screw up, with plenty of mistakes littered through out my life, I have one thing going for me. I am beloved by Jesus Christ, saved by Him and promised to never be abandoned and also promised to inherit an unmovable Kingdom. That may sound Pollyannish to many of you, and I can understand that. I just would hope you would consider the fact that there's no way anyone could read this note and call me Pollyannish, without impugning their sanity :-) I believe I am a realist, and the Kingdom is as real as you can get. If I look back in time, from the time Christ started His church until now, I see kings and kingdoms come and go, with His Kingdom growing and growing. I have His Word and that history to help me stand on something firm in a world where very little, if anything, is firm these days. He suffered and died so that idiots like me could approach God with confidence and simply be loved into the type of person I was always intended to be. Hard pressed to find another alternative to that, to be honest.

In a world about to get shook like a can of paint, I implore you to get on the Rock and stand firm on His unmovable Kingdom. The only thing required is to accept the way Jesus provided, with empty hands. He's done all the rest. I know, many of you think this is nuts. But I've just about tried and thought about every other way. And as for reputation, I have little to lose and everything to gain. Take that for whatever its worth. If I didn't give a rip, I wouldn't bother.