Deficit and national debt problem, part 2

By Rick Ehrlich

The largest causes of America’s National debt are:
A. Defense department expenses over the past twenty-three years
B. Unbalanced entitlement programs whose net costs have ballooned over the same period
C. Drastic tax reductions during (approximately) the past forty-four years
Since 2001, our debt has exploded from $5 trillion to $36 trillion. Approximately, two-thirds can be blamed on military adventures, fraudulent wars, regime change efforts and ‘police of the world’ expenses.

Is there any reason why our annual defense budget needs to be four to five times larger than China’s? China has four times our population and they spend $250 billion per year compared to our $1.2 trillion to $1.4 trillion. (Our defined defense budget is $900 billion but there are other separate items included in the total).

Russia’s budget was $60 billion. The war on Ukraine has pushed that amount to $145 billion.
Neither country is a direct threat to the United States. Could the answer be to close all (or part) of our nine hundred foreign military bases? That could reduce our defense budget by approximately $1 trillion per year.

Included in our debt are entitlements. The largest is Social Security which is paid for by employers and employees and is put into a stand-alone trust fund. Under the umbrella of Social Security are other significant items which are deficit funded. (Social Security Disability is an extremely costly item).

As of March, 2024, once someone reaches an annual income of $168, 600, they cease paying into Social Security. Social Security provides retirement, disability and survivor benefits to almost one in five people in the U.S.

Congress needs to take action to vote on raising the cap on Social Security so that more people contribute to the fund. But most members of Congress make more than $168,600 and they have been inherently lax on taking care of too many of America’s problems.

Medicare is a large contributor to America’s deficit. It was designed to be one hundred percent self-funded by three trusts:

  1. Payroll Medicare Tax
  2. Medicare tax on employers
  3. Medicare premiums charged to and paid by the Medicare enrollee
    In 2023-24, Medicare had only a small shortage in its trillions in receipts and expenses. A small percent of an imbalance should be an easy fix but once again Congress is not acting in the interest of the people or the budget.
    Taxes on corporations, and individuals with high personal incomes, is very critical to the health of America. People like to think that ‘tax cuts are always good’ and then there are those that don’t want to pay any taxes at all.
    Since 1950, our tax rate on individuals has dropped from 96% to 37%. Corporate rates have dropped from 52% to 35%.
    Financial changes must come from Democrats and Republicans. The Military Industrial Complex (who fund the lobbyists and think tanks) is the prime locomotive of this speeding move to America’s bankruptcy and ruin.
    Shouldn’t the biggest, most important national issue be whatever consumes most of the USA’s real budget?

In part three, we will examine what might remedy some of these problems and what we could see in terms of entitlements and how the new administration will handle them. Stay tuned

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