Is the National Debt the Real Problem?

A couple weeks ago I had the opportunity to attend a meeting hosted by First Trust. There I had the opportunity to hear the latest perspective from their Chief Economist, Chief Investment Officer, lead analysts from Equity Strategy Research and Closed-End Funds. The presentations were good, but having been attending their meetings whenever possible I have become acquainted with some of them individually. I think I learn more in our one on one discussions then I do in the formal programs.

The Chief Executive Officer, Jim Bowen, also made a fantastic presentation. He brings a unique and unfiltered perspective which I find refreshing. This particular presentation had one point which I have not been able to get out of my mind ever since.

We have all heard about our growing national debt and the forecast of hellfire it is bringing our way. Jim did not condone our national debt, but he did provide an original view of the situation. He started by pointing out that when President Eisenhower left office, defense spending was more than 60% of federal spending. Since then, it has decreased to about 20%. Conversely, payments to individuals used to be about 20% of federal spending and now it is in excess of 60% (and growing). At the same time, net interest has fluctuated but seems to keep within the 5% - 10% range.

So which should be a bigger concern; our rising national debt or our entitlement programs?

Perhaps even more interesting to me was the breakdown of the payments to individuals.

One role of government is to care for those citizens who are unable to care for themselves, but 76% of payments to individuals is through the Social Security and Medicare/Medicaid programs. These two areas alone represent over 45% of federal spending! The shocking realization to me is that we could conceivably fix our budget problems without withholding services from those who truly need them.

So as we enter the 2012 election season (already?!), if you are concerned about the federal budget, ask yourself which programs could have the biggest impact on our future economic stability. (Hint: It's not our interest payments).

Comments

[Jim]

THE SOLUTION

Everyone living in United States knows that our country is in trouble. We are headed towards civil unrest and rioting in the streets similar to what is happening in Greece and other areas of the world.

It is almost as if there is a dooms day scenario about to unfold and our leaders are saying run up the deficit. Who cares what our National Debt is because the world is about to end and we will never have to pay it back.

Let us put on our Nostradamus thinking caps! Imagine ourselves 100 years in the future looking back at the fall of the United States of America. What solutions will the Historians say that if we had implemented them could of saved us from destruction.

I believe that in this mindset we can easily agree that the following need to be implemented immediately. Not one or some of these solutions but all.

1) One flat rate tax of 20% for all purchases and services in the United States. Dismantle the IRS.

2) Debit cards must be used for all purchases in the United States. This would insure that taxes are being paid and help regulate any year end tax rebates.

3) For every dollar spent for any new product made in the United States the purchaser would receive a 10 cent rebate at the end of the year. This would create American jobs.

4) Any terminally diagnosed person would have an option to receive a one lump sum payment of $45,000 to go home and die with dignity as opposed to low quality life extension in a hospital at a huge cost to society. This money could be used for a spouse or to help put someone in the family thru college.

5) Legalize all drugs. Regulate this industry. This would get rid of the drug cartels and eliminate all the senseless drug related murders. For forty years the United States has been at War with Drugs and we are still loosing. Do not condone drug usage just regulate it.

Jim Burns
You Tube mynation123

[ריהוט משרדי]

By seeing the graph we understand that the National defense has been going in a decreasing order and the payments to individuals has been increasing.But the net interest is remaining little constant with slight variations which are negligible.

[Art Dinkin]

ריהוט משרדי ,

That is exactly the conculsion I came to as well. The debt ceiling may be a political issue, but it is not the cause of our financial problems. If we reduced the payments to individuals, we can reduce the budget deficit.