When I hear that big sucking sound on April 15th, I can’t help but wonder where our dollars are headed. So, now that tax season is well behind us, I thought I’d look at where and how our tax dollars are actually spent.
Here’s the answer from the 30,000 foot level.
Let’s say you end the year paying the Federal government $10,000.00. Who gets what part of that?
Well, about $2,400 goes to Social Security. This pays 42 million people who have passed the age of 62, as well as widows and surviving children. It also pays a little over 10 million people who qualify for disability.
Next from your $10,000 goes about $2,600.00 to Medicare, Medicaid, children’s health and Obamacare subsidies. Roughly 60 million retired folks are on Medicare and that takes about $1,560 of your $2,600. The remaining thousand dollars gets split between Children’s health and Obamacare subsidies.
Then, $1,500 of your $10,000 goes to paying for defense and national security — rebuilding our military capabilities, supporting our bases around the world, paying our troops, and funding research and development.
Another $900.00 or so pays for the safety net. These programs help individuals and families dealing with various hardships. The amount we spend on these programs tends to fall in good economic times and rise in bad times. The safety net includes food stamps, welfare, child tax credits, earned income tax credits, school lunches, housing allowances, and a number of other programs.
Then there’s interest on the debt our federal government owes. That’s about $700. Of course, when interest rates go up, so does the cost of the money we’ve borrowed from people and countries.
Today, historically low rates make interest payments low as well. When rates rise to their normal level, interest payments will go up 30% or more. And, heaven forbid, if rates should head toward the levels we experienced under Jimmy Carter, then it’s Katy bar the door and goodnight good economic times.
$800.00 pays for the retirement benefits of federal workers. That includes the compensation paid to former presidents, retired members of Congress, and the men and women who have served our nation in the military for 20 years or more.
We spend $200.00 on transportation and infrastructure. This would include AmTrack as well as subsidies to the states for road construction and repair.
$300.00 is spent on aid to schools — mostly for our children, but also for adults who return to school.
$200.00 is used for scientific and medical research.
Finally, $400.00 goes into miscellaneous projects and programs.
From all this, you see that half of your $10,000 pays for entitlements which grow on an almost daily basis. The Social Security Administration admits that trust fund reserves will be exhausted by 2037 at which point continuing taxes will be enough to pay only 76% of benefits. But it’s worse than that because the SSA bases its projections on the most optimistic assumptions available.
They underestimate the number of boomers retiring, the amount workers will pay into the system, and the costs of unanticipated benefit payouts.
When you factor more realistic assumptions in, the fund is more likely to be exhausted in 11 years and 8 months, in 2031 not 2037.
Congress has known for decades the fuse on Social Security is on a slow burn toward insolvency. But they lack the guts to address the problem. Why? Because seniors vote in big numbers and even the rumor you might mess with their social security check assures their retribution.
Over the years, the few Republicans who have suggested reforms have seen the lengths to which Democrats will go to frighten seniors into believing reforms are really intended to damage their benefits.
The same with Medicare and Medicaid, the next biggest recipients of our tax dollars after social security. These programs also face insolvency in the near future. But Democrats want to double down on this dismal program and trap everyone in government run healthcare. If they’re successful, the cost will likely exceed your entire $10,000 tax payment. OUCH!
As you consider how your tax dollars are spent, think as well what the election in 2020 means.
All of the Democrats running for President have advocated expensive new programs and substantially increased spending. From so called Medicare for All to the Green New Deal, every one of them have endorsed more spending. All while ignoring the impending insolvency of Social Security and Medicare.
And while every one of them wants more spending, not one of them has suggested maintaining current spending on border integrity, military strength, or national security; much less increasing it.
If one of the Democrats should win, it’s certain anything we spend on public safety will take a back seat to more entitlements.
Democrats are banking on moderates being put off by President Trump’s impolitic comments and tweet gaffes. They’re also doing everything possible to create in the minds of voters the suspicion that Trump is somehow involved in scandal.
But whatever vulnerabilities Trump suffers — real or phony, most Americans know Trump demonstrates real courage to do what he says no matter who he has to take on. Even his often embarrassing comments prove he says what he thinks rather than filtering his every word through an over-managed political process like the politically-correct Democrats.
All Trump needs is a House and Senate that will back him up when he’s right and steer a better course when he’s not.
And, of course, America needs four more years of a Trump presidency to get the reforms other politicians are too corrupt or too cowardly to pursue.