R.E. Walrath: Uncle Sam Maxes out His Credit Card
Uncle Sam Maxes out His Credit Card
By Richard E. Walrath
Every month nearly every household in the country receives a credit card statement. You know the drill -- you open the envelope, stare at the bill, and shake your head in disbelief. You wonder why and how you bought all that stuff, and you wonder even more about how you are going to pay for it.
Then you see that, relatively, small minimum payment required and utter a sigh of relief. Yes, you can pay that -- maybe next month you can pay more.
Uncle Sam has a credit card, too, and he's doing the same thing you are -- only worse. His outgo is going out much faster than his income is coming in. That difference is known as the deficit.
To make up that difference, Uncle Sam borrows money by selling bonds to people who have money to buy them. That's not you, or people like you, you have all you can do just to make the minimum payment on your credit card, and most of the payment goes to pay interest. You did know that, didn't you?
Uncle Sam is now pretty much in the same fix and may be even worse. This year, Uncle Sam's deficit will be between $475 and $525 billion dollars. Guess what? The interest that Uncle Sam -- that's your government we're talking about—will be paying will be almost equal to the deficit.
In other words, Uncle Sam is just making the minimum payment on his credit card, and he's borrowing the money to do it. But it gets worse -- much worse. The deficits are growing much faster than the entire country's output of goods and services -- known as the Gross Domestic Product. At the rate Uncle Sam is using his credit card, the National Debt -- the sum of all the deficits and surpluses since the country began -- will exceed, in a very few years, this country's GDP.
It's almost like you looked at your credit card bill and saw that what you owed was more than your entire income for a whole year. Every month you make a minimum payment which just about equals the interest you are being charged.
How did things get so bad for Uncle Sam when just over three years ago things were looking so good with a surplus as far as the eye can see? In fact, things were looking so good that Uncle Sam was passing out very expensive presents in the form of huge tax-cuts to his richest friends?
In early 2001, with great glee a $1.35 trillion tax-cut was proposed to "use up the surplus that was piling up as far as the eye can see." Strongly tilted toward the wealthiest people in the country, the rationale was that they're the ones who pay most of the taxes.
By the time the $1.35 trillion tax-cut was actually passed and signed by the president--June 2001-- it was well-known that the economy was entering a recession, but the composition of the tax-cut had not changed.
It was back-loaded meaning that the tax-cuts would take place sometime in the future, not right away which is where you would want them in the face of an on-coming recession. And, with the surplus now fading away, the tax-cuts remained tilted toward the rich.
There were some protests, but the
answer was, "If you don't want your tax-cut, you
can send it back."
I felt very strongly about this, so much so, that that's what I did, along with a letter to the IRS in which I wrote on 1-11-02:
In protest of the Tax Relief act which became law in June 2001, I am returning the $300 which I received last year. Enclosed is my check, #1073, in the amount of $300, payment contingent upon the repeal of the Tax Relief Act of 2001.
I consider this tax-cut to be grossly unfair in that it provides most of the benefits, by far, to the richest people in the country. I know not what course others may take to protest this tax-cut for the rich, but unfair tax-cuts are as bad, or worse, than unfair taxes. (They sent me another check for $ 300 and said I had to take it because I was eligible for it and they had to pay it).
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Receipts for fiscal year 2003 totaled 1,781,108 while outlays were 2,156,355. This resulted in a deficit of 374,247 for the entire year. We are only finishing up the first half of 2004, yet we already have a budget deficit for the period of September through March of 299,471. The deficit for the same six month period last year was 253,122, so our deficit has increased 46.3 billion over the same period last year.
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Over the past 18 months U.S. spending exceeded its income 13 months, while only 5 months have shown a surplus. The total deficit for the 18-month period is 673.7 billion dollars.
Why, in time of war are the richest people in the country receiving most of the $1.4 trillion tax-cut while the country is in recession, the government is running deficits, and unemployment in some places is now as high as 6.2%?
Jack-rabbiting deficits which will total over $500 billion by the end of 2004 have put this country in a serious financial bind. A sober and very subdued president appeared on TV early in September after returning from his 35-day vacation to tell us that he had underestimated the cost of the war in Iraq. After an initial "supplemental" of $79 billion, another $87 billion will now be needed, bringing the known total to $166 billion.
In the meantime, back on the home front, the estimated cost of repairing our power grid is $ 100 billion which, "Obviously, said Spencer Abraham, Secretary of Energy, "should be borne by consumers."
For every problem--recession, war, or unemployment, the response has been the same--another tax-cut benefiting, mostly, the wealthiest people in the country.
Not too long ago Argentina announced that it would not be able to meet its payment to the International Monetary Fund—the first step toward bankruptcy. Fifty years ago, Argentina was regarded as having a bright shining future. But then, fifty years ago, the United States was considered to have a bright, shining future.
Uncle Sam has very deep pockets, but they have developed holes. He is maxing out his credit card. He can't continue on this path much longer because he has some very big bills to pay such as your Social Security pension, and your Medicare. There's no money there--all the money in the Trust Funds has long since been borrowed.
Where is the money going to come from?
Richard Walrath is a freelance writer living in the Columbus Ohio area.