Saturday, February 26, 2011

The Only Chart You Need To See To Understand Why The US Is Screwed

Here's the one chart you need to see to understand why the US is screwed.

This is the "income statement" of the United States in 2010.  "Revenue" is on the left.  "Expenses" are on the right.

Note a few things...

First, "Revenue" is tiny relative to "Expenses."

Second, most of the expense is entitlement programs, not defense, education, or any of the other line items that most budget crusaders normally howl about.

Third, as horrifying as these charts are, they don't even show the trends of these two pies: The "expense" pie is growing like gangbusters, driven by the explosive growth of the entitlement programs that no one in government even has the balls to talk about. "Revenue" is barely growing at all.

As we'll illustrate with more of Mary's charts next week, the US cannot grow its way out of this problem. It needs to cut spending, specifically entitlement spending. We hereby announce that we'll give a special gold star to the first "leader" with the guts to say that publicly.

Here's the chart.  Click for larger version.
USA income statement

1 comment:

Carl said...

First, let's clarify what the word entitlement actually means.


1. the act of entitling.
2. the state of being entitled.
3. the right to guaranteed benefits under a government program, as Social Security or unemployment compensation.

— vb
1. to give (a person) the right to do or have something; qualify; allow
2. to give a name or title to
3. to confer a title of rank or honour upon

The key idea of entitle is to "give" or "confer". The government is NOT going to "give" me Social Security benefits. It is going to "return" to me, with interest, the money I paid into the Social Security fund for decades, along with some that my employers paid into it. For those who did not pay into it, Social Security is an entitlement. For me, it is not. Rather, it's returning to me my hard earned money, regardless of how they may have squandered some of it while in their care.

The same principle applies to the money I and my employers paid specifically into the Medicare, Medicaid, and Unemployment funds. These programs were individually and specifically funded to cover their programs, which are insurance-style programs (pooling of money and balancing of costs such that it pays for high bills from what wasn't needed by others that paid in). Now if a person never paid for these, they are getting entitlements. Those who paid into these are not getting monetary entitlements, but are getting back what they and their employers paid for, which is insurance-style benefits from an insurance-style program.

So to correctly and honestly label things in this chart, Social Security, Medicare, Medicaid, and Unemployment are not entitlement "programs" (regardless of who calls them that). Rather, they are programs from which some people receive entitlements (those who didn't pay into them) and many receive back what they and their employers paid in (Social Security) or paid for (Medicare, Medicaid, Unemployment insurance).