First, where do we stand, exactly?
The budget for fiscal year 2011, which began October 1, 2010, and ends September 30, 2011, was passed in April, 2011. The Congressional Budget Office sets tax revenues at $2.228 trillion and expenditures at $3.7 trillion, with a deficit of $1.48 trillion.
Right now, the total debt is $14.3 trillion. The Treasury Department reports interest payments on the national debt on a quarterly basis. For fiscal year 2011, total interest payments for the first three quarters were $385.9 billion. For fiscal 2010, interest payments totaled about $413.9 billion.
Others, using Treasury Department data, say that on August 2, the federal government is due to pay about $35 billion in interest to bond holders. On August 3, the government is due to pay about $61 billion in Social Security and disability funds.
Second, President Obama says he “cannot guarantee” Social Security checks will go out on August 3 because the government might not have enough money in its “coffers.”
That is clearly not true. As just noted, there will be enough money in the coffers to pay both Social Security costs and interest on the federal debt, though not enough to pay all federal obligations.
Most of us know by now, however, that Social Security is a Ponzi scheme, where we are using current revenues to pay current obligations. It wasn’t supposed to be that way.
The federal government maintains a Social Security trust fund, segregating revenues raised through the Federal Insurance Contributions Act (FICA) This act imposes a payroll tax on Americans of about 12.4 percent annually (typically paid half by workers and half by employers).
That means a total of $135,000 was paid to the government by or on behalf of each individual employed between 2000 and 2011, with annual income limits ranging from a low of $76,200 in 2000 to a high of $106,800 in 2011.
Right now, the total in trust is $2.6 trillion, but it’s not in cash. The trust fund contains only IOUs from the government’s general fund to the trust fund, because the government for decades has raided the trust funds to pay for other government programs.
So all of the $2.6 trillion in cash that all Americans have contributed since 1935 is gone. That means current Social Security recipients are paid out of current revenues. According to the Congressional Budget Office, annual spending for Social Security (including retirees and the disabled) for 2011 will be about $733 billion, which is about $61 billion per month.
Were it not for laws immunizing Congress and the president from criminal prosecution for official acts, going back for many years, they’d all be in jail for Social Security fraud.
Republicans are winning conservative kudos for embracing “Cut, Cap, and Balance” legislation, due up for a vote in the U.S. House this week. With the above background in mind, let’s take a look at it.
Under the bill, the debt ceiling would be raised by $2.5 trillion, which is the amount President Obama wants to borrow and spend to tide him over until the 2012 election. In return, federal spending would be cut by about $111 billion. But a cut this size amounts only to 4.4 percent of the $2.5 trillion President Obama will be authorized to borrow and spend in the next 18 months. And it would be about three percent of the $3.7 trillion budget Obama proposed in February, rejected in May.
Remember the Government Accountability Office report released in March that identified wasteful and duplicative government spending? The federal government has 15 food safety agencies, more than 20 programs for the homeless, 80 economic development programs, 82 programs to improve teacher quality, 47 job training/employment programs, and 56 programs to promote understanding of finances. There are 18 programs on food and nutrition costing a combined total of $62.5 billion in 2008. Eliminating and consolidating these programs and others identified by the GAO report could save between $100 and $200 billion, according to Sen. Tom Coburn (R. Okla.), who instigated its preparation.
Nevertheless, the “Cut, Cap, and Balance” bill “is going to fire the imagination of millions of Americans,” said one Republican legislator, which will result in a deluge of phone calls, e-mails, and faxes from Americans supporting it. I’m not so sure.
There were two clues that President Obama’s speechwriters are running out of new material for his incessant speeches/press conferences on the debt ceiling and his “balanced” approach to it (meaning higher taxes, not just spending cuts).
One is their use of the phrase “If not now, when?”
Rick Santelli of CNBC, former commodities trader and Tea Party original, said it first. He engaged in an open outcry on CNBC on July 7, urging cuts in government spending and no increase in the debt limit. “Now is the time!” he ranted. “This is the place. We’re here. If not now, when? If not now, when? If not now, when?” Watch the video here.
President Obama repeated the same words at his July 11 press conference, where he recounted urging Republicans to address debt and deficit issues. “Now is the time to deal with these issues. If not now, when?”
IMHO, Frankly, Santelli’s rant was much better.
Second, Obama’s speechwriters seem to be drawing inspiration from former President Carter’s “Malaise Speech,” On the 32nd anniversary of that speech on July 15, Laura Ingraham aired a video juxtaposing Carter’s rhetoric with Obama’s. The similarities were overwhelming. If it anyone but Obama was involved, the media would be calling it plagiarism.