Budget 2012: Some Thoughts

The Administration issued its budget for 2012 and following years. It is worth a look. First note above the explosion of anticipated income taxes from individuals. This can only be achieved if the Government increases taxes on a massive scale. All other elements rely on this drastic assumption. It is unrealistic but it necessary to justify the budget.

I have used 2000 as a baseline year. Why:


1. No wars
2. Stock Market up and down
3. Balanced Budget

I will provide six images which I fell tell a story.

First receipts and outlays. The outlays had jumped in 2009 with the new administration and then ramped up from there. Why? One reason was stimulus etc bu frankly that does not show as a large bump of almost a trillion so one wonders where it went. Second receipts dropped, unemployed and no taxes collected and then not even SSI taxes. But long term there is no attempt to correct expenditures. With little inflation one wonders why the increase, just SSI and Medicare, not really as we shall see.

This shows the same but with a per Pop, per person, ratio. Here we should not see the impact of a growing population, but we do. So why? Too much expenditures.

This is the same but as a % of GDP. Outlays were 25% of GDP! And they are not going below 22.5%! This is a problem.

This is receipts by type showing the major increase is by income taxes, and only and the middle and upper class.

This is SSI. Focus on On Budget numbers and we see they are growing as more people go back to work, hopefully. The on budget has no deficit. The off budget does!

Finally some select departments. HHS is the major grower due to Medicare, Medicaid and ACA! Remember ACA kicks in for 40 million more people! SSI continues to grow but no surprise there. Defense declines.

Why in God's name has Agriculture exploded! DHS is also high but Ag! What do they do...It has more than doubled, and it is not salaries.

One should ask, why should we  increase any expenditures from a 2000 level, exclusive of the mild to zero inflation during this period. Second, we must handle Medicare and SSI, mainly through adjustments of eligibility age and increasing rates for Medicare as well as caps based on income. That is critical. SSI can and will take care of itself if and only if that is all it is used for. But there is a catch, the SSI stats were predicated on Fed interest rates well above 5%. Since the Fed drove those rates down the SSI fund will run short. This is but one example of how the Feds actions are harming the overall economy. One need go no further than these few charts to lay out a course for the future. If we do not then we face collapse.