The Financial Well-Being of the United States is at Risk; The Level of Government Spending is Unsustainable

The national debt of the US has been the subject of controversy for over three decades. Should the country be deficit spending? Do we need a balanced budget amendment? Should we raise taxes? Should we cut government spending? These are all questions that need to be answered. Our elected officials on both sides of the aisle seem reluctant, if not downright averse, to confronting the problem. Make no mistake, it is a problem. The longer they procrastinate, the more difficult and the more painful the solution will be.   

When yearly deficits were $100B or less there was only a moderate level of concern. Fast forward to 2009 and yearly deficits mushroomed to well in excess of one trillion dollars. These trillion-dollar deficits have, for the most part, continued right up to the current budget year of 2020.

As if trillion deficits weren’t bad enough, the interest expense on the national debt continues to increase every year. The numbers leave no doubt as to the seriousness of the country’s situation. For example, in FY 2016 interest expense on the national debt was $240B. In FY 2020, the current fiscal year, interest on the debt is projected to be $482B. This is double the amount of FY 2016 and represents a 100 percent increase in just five years.

The federal budget for FY 2020 is $4.7T. Of that, the government will need to borrow roughly $1.1T. This amount is just under 25 percent of total federal spending for the fiscal year. What kind of morons have we elected to run this country? What kind of morons would borrow, on a regular basis, 25 percent of the funds needed to run the federal government for a year? What kind of morons would, year after year, mismanage the country’s finances and allow the country to dig itself into a $23T hole that it will never be able to dig itself out of? What kind of morons have we elected that have allowed the financial situation of this country to deteriorate to the point where we are forced to spend $500B per year on interest expense to avoid default?

Our elected officials have voted, year after year, to move this country towards financial ruin. If we continue down this path, we will find ourselves in a situation similar to that of the Soviet Union in 1989. As there is no country, or even a group of countries, with the financial prowess to bail out the US, I feel that we would be at the mercy of our enemies.

Just over 70 percent of the federal budget for FY 2020, or $3.321T is commonly referred to as non-discretionary spending. This number is made up of entitlements and interest on the debt. With the exception of interest expense, this non-discretionary spending is mandated by law. Interest expense, to the best of my knowledge, is not required by law, but is considered mandatory to avoid defaulting on the nation’s debt.

If you think the facts discussed above are bad, read on, it gets worse. According to the Congressional Budget Office (CBO), by FY 2025 government revenue will increase by $956B per year. Government outlays, however, are projected to increase by $1.263T per year. This tells us that by 2025 deficits will increase by at least $307B per year. This will put our yearly budget shortfall in excess of $1.4T per year. The deficit will continue to increase each and every year until we fix the problem or default on the debt. To my way of thinking, it’s a foregone conclusion that this fiscal idiocy can go on forever.

It is my humble opinion that these numbers are understated and will most likely be somewhat higher. What this means is that in fifteen years or so when our national debt rises to $50T or more and interest expense is roughly $1.5T per year, the government of the US could be financially unviable. 

The question that we now have to confront is: How do we keep the federal government viable? Do we raise taxes, and if so, by how much and on whom? Do we cut spending, and if so, where and by how much? Or, do we raise taxes and cut spending? Whatever course of action is decided upon, there will be a substantial level of pain. If and when Congress decides on a plan to deal with the financial disaster that is looming in our not-too-distant future, it is my hope that it  will be acted upon quickly. The longer we wait the more serious the situation will become.

The trillion-dollar deficits cited above assume that no new social programs, such as Medicare For All or the Green New Deal, will become law. These programs are being advocated by Democratic Presidential Candidate Bernie Sanders and other Democrats as well. I have read numerous articles on the subject of Medicare for All, and the consensus is that the price tag to the taxpayer would be between $32T and $36T over a ten-year period. Just how does the good senator intend to pay for this new government largess? 

Have no fear. There is absolutely no cause for concern. Senator Sanders and his merry band of socialists have come up with a vast array of new taxes on just about everyone and on just about everything. These new taxes are designed to take a substantial amount of money away from you, the consumer, and put it under the control of the federal government. After all, who is better able to decide on how your hard-earned money should be spent? Is it you, or the government? According to Senator Sanders, it is the government. 

Let’s begin with two new payroll taxes that are being proposed by Senator Sanders. The first one is an additional payroll tax of 7.5 percent that will be levied on employers. The first $2M of company payroll will be exempt from this tax. This is being done so as not to hurt small business.

Secondly, Mr. Sanders would like to impose an additional 4 percent payroll tax on virtually all employees. The first $29K in household payroll would exempt from this tax. As an example, a household with annual payroll income of $80K would pay an additional $2040 ($51K x 4 percent). If I’m not mistaken that is roughly what the average tax cut that was received by working families from President Trump’s tax cut plan. Isn’t it funny how that worked out? 

It is a well-known fact that Senator Sanders is strongly in favor of taxing the rich. Presently the highest tax rate on individuals is 37 percent. This rate is levied on those people whose taxable income exceeds $500k. The tax plan proposed by Uncle Bernie raises the tax rate on taxable incomes that are between $250K and $500K to 40 percent. The tax rate continues to increase up to 52 percent on incomes above $10M.

For years I’ve heard Democrats harp on the narrative that the wealthy need to pay their “fair share.” In the twenty-five years since I first heard those words uttered by President Clinton, I have not once ever heard anyone explain just exactly how much that “fair share” is.

Further, when you consider that those lousy, money-grubbing, penny-pinching one percenters pay 40 percent of all federal individual income taxes, and that 97 percent of all federal individual income taxes are paid by the top 50 percent of earners, it makes me wonder if there is any amount, short of 100 percent, that would appease people like Senator Sanders and others of the radical left.

Senator Sanders, the self-appointed arbiter of social and financial justice in the US, would also like to impose a 1 percent wealth tax on every household in America whose assets exceed $21M. Put another way, this tax would be levied on all household assets that are in excess of $21M. This tax would be levied every year and when added to federal and state income taxes could push the total tax burden of some people over 100 percent of their taxable income. What justification is there for taxing citizens on money that was already taxed once when it was earned? Also, I would consider pushing one’s tax burden over 100 percent of their taxable income to be taxing at a confiscatory level. This should never be allowed in the United States.

In addition to raising the tax rate on estates, the socialist senator from Vermont would also be in favor of lowering the minimum level of assets that would be subject to the estate tax. It is Senator Sanders plan to reduce the level of assets subject to estate from $11M to between $3M and $5M. Here again, this is just another way to punish Americans for working hard, being successful, and being frugal.

Senator Sanders has yet to determine whether the minimum amount of assets subject to estate will be $3M or $5M. Whatever asset level he decides on will be subject to a 45 percent tax rate instead of the current rate of 40 percent. When the assets of an estate reach a level between $50M and $1B the tax rate will increase to 55 percent. When an estate is valued in excess of $1B a 10 percent surcharge will apply.

Here again it is my contention that since this money has already been taxed once, either as capital gains or as ordinary income, it would be unfair to tax it again. How many times should the same money be taxed? Is it fair to tax hard work and success at these confiscatory rates when the sole purpose is the redistribution of wealth? According to Mr. Sanders it is unjust to work hard, be successful, and leave the fruits of your success to your descendants.

Senator Sanders and his followers believe that Americans should work like little worker bees for the good of the collective. He also believes that really smart people like him should be in charge of spending your hard-earned money. Well, Senator, you can take your socialist ideology and shove it. The vast percentage of Americans are perfectly capable of managing and spending their own money without any help from you.

In this country senator we are free to work as hard as we choose, pay a fair and reasonable amount of tax to support the government, and be free to enjoy the fruits of our labor. It is not—and it should not be—the purpose of the citizens of the US to work for the government. We pay the government to work for us. It is well-known that you are a big fan of the way that things were done in the old Soviet Union. You were so enthusiastic about the proletariat and collectivism that you even spent your honeymoon there. Fortunately, things work differently in this country—I for the better I might add. By the way, I’ve heard that you are now a multi-millionaire. I bet the guilt you are carrying around with you because of your newfound wealth is probably keeping you awake nights.

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Bernie Sanders is also in favor of eliminating, what he calls tax loopholes and accounting gimmicks. According to the good senator these so-called loopholes are nothing more than giveaways to the wealthy.

In reality, these tax policies allow the business community as a whole to lower their income tax burden. Two examples of how this is done are accelerated depreciation on purchases of new equipment and also allowing stockholders of Sub-S corporations to pay FICA and Medicare taxes only on the payroll that they pay themselves and not on the profits of the company. These two programs enable businesses to purchase more equipment, expand their businesses, and   hire more people. Purchasing new equipment creates jobs and makes businesses more efficient and therefore more profitable. When a company becomes more profitable it pays more income tax.

These tax policies work. Every day, all over the country, big business and small business alike are hiring new employees and expanding their businesses. Obviously, these are not the only reasons for this growth. The tax cuts put in place by President Trump along with the repeal of thousands of job-killing regulations have resulted in a massive increase in job growth and also in an increase in tax revenue for the federal government.

These tax cuts were passed by Congress and signed into law by President Trump in December 2017. It took about a month to print and distribute the new tax tables to businesses around the country. These new withholding tables went into effect on or about the 1st of February 2018. Was it just a coincidence or was it the Trump tax cuts that caused the economy to surge? Was it just a coincidence or was it the elimination of thousands of job-killing regulations that caused the economy to surge? Fair-minded people would be forced to admit that the economic growth experienced in the last three quarters 2018 came as a result of the policies put in place by President Trump.
Here again, these policies work. Cutting regulations on business allows them to become more competitive. This is especially true when talking about competing globally. Cutting taxes and regulations make US businesses more competitive in the world marketplace.

The other positive result of cutting taxes is the effect it had on the US consumer. Lowering the amount of tax withheld from everyone’s paycheck put more money into the hands of US consumers. This extra spending power caused an increase in the demand for goods and services nationwide. This, in turn, caused an increase in economic growth here in the US which grew to over 3 percent in 2018.

When you consider that two-thirds of the US economy come from private-sector spending, it is logical to put more money into the hands of consumers. By the way, the tax cuts signed into law by President Trump have created just under seven million jobs in under three years. This growth has resulted in the lowest unemployment rate in nearly fifty years. This low unemployment rate has in turn led to salary and wage increases in excess of 3 percent. This has put more money into the hands of consumers and is providing even more impetus for economic growth.

Ever since Bernie Sanders ran for president in 2016, he has been trying to sell the American public on the benefits of socialized medicine, a.k.a. Medicare for All. Part of his pitch is that the US is the only western country that does not provide healthcare for all of its citizens. He touts the NHS in the United Kingdom (UK) and talks about the government-run healthcare system in Canada as a model for the US.

The senator emphasizes the benefits afforded to the people of the UK, but neglects to mention the serious drawbacks that its citizens are forced to endure. For example, in the last couple years the NHS has become overwhelmed with too many patients and not enough medical professionals. The system has become so backed up that it is experiencing serious problems delivering healthcare services on a timely basis.

For example, drugs—as well as some surgeries—are now being rationed. These rationed surgeries include knee and hip replacements, cataract surgery, and hernias. Tens of thousands of operations are being postponed, some more than once. It is estimated that the number of patients that are waiting for planned medical procedures is roughly 250K. Another problem is that wait times in the ER can be as long as twelve hours. I’ve saved the best for last. The most egregious problem that I’ve come across is that 25 percent of cancer patients are being forced to wait longer than the normal wait time for treatment. Just to be clear, the normal wait time for cancer treatment in the UK is sixty-two days. This is what socialized healthcare looks like in the UK. If this level of service were to become the norm here in the US, there would be riots in the streets. Suffice it to say that it would not be tolerated.
Another favorite talking point of Senator Sanders is that the US pays a higher price per capita for healthcare than many other countries. This is absolutely true. We also receive much better healthcare service than most, if not all, other countries. In the United States we have a capitalist system. This means that the market determines the price of goods and services. Put in very simple terms, the US has the best healthcare in the world. In order to have the best healthcare in the world, we need to pay a higher price. The choice boils down to this: You can get government-run, single-payer, socialized, sub-standard healthcare and pay less money—or you can get the best healthcare in the world and pay a higher price. When it comes to healthcare I choose to pay for the best and in my opinion most Americans would agree with that.

As I mentioned above the most prevalent problem with the healthcare system in the United Kingdom is the long wait times that its citizens are forced to endure. The main reason for the problem, as far as I am able to ascertain, is the scarceness of healthcare professionals. This problem has become so severe that the government is asking retired doctors to come out of retirement and return to work. The government is also offering bonuses of $24K to British doctors who have left the UK to work in other countries to return home and work in the UK. It is my understanding that this shortage also applies to nurses and medical technicians as well. This type of problem would never occur in the US. The reason, here again, is supply and demand. Healthcare is a commodity like anything else. And just like anything else the price of that commodity is determined by the market. This is why, in my opinion at least, there is no shortage of medical professionals in the US.

It appears to me that the most significant cause of the shortage of medical professionals in the UK is the level of compensation that is being paid to those medical professionals. In England, medical personnel work for—and are paid by—the government. It is therefore the government who decides the level of compensation for these employees. If there is a problem of qualified medical personnel leaving the country, it would seem that just maybe the current level of compensation is insufficient.

This is an important point, so I’m going to restate it: The availability of healthcare, like any other commodity is governed by the law of supply and demand. In a capitalist economy, if there is a shortage of a good or service and the demand for that good or service is large enough, someone will come along and fill that demand for a price. In the UK, medical professionals are not being compensated at a level that is necessary to retain those personnel. Therefore it makes perfect sense that if you want to increase the supply of that commodity you should increase the compensation. What good is “free healthcare” if the government does not have an adequate number of personnel to deliver it?

For years we in the US have heard just how great the Canadian healthcare system is. Here again, there are many articles on the subject. After reading several of those articles, and other sources as well, I’ve come to the conclusion that Canadian healthcare is not all it’s cracked up to be. This is not to say that it’s a bad system or that it’s inadequate. It just doesn’t measure up to all the hype that we’ve heard about it. 

It is a government-run, single-payer, socialized healthcare system. It is not free as is suggested by Senator Sanders and his ilk. It is paid for by additional income taxes imposed by the federal government and also by some of the provinces. Another negative aspect of the Canadian healthcare system is that it doesn’t cover everything. This is why 65 percent of Canadians have private, supplemental healthcare insurance. If the single-payer, government-run healthcare plan was so good it shouldn’t be necessary to have to purchase private insurance. Finally, in addition to the higher taxes to fund the single-payer system, and the additional premium to pay for supplemental private insurance, there are also copays.

Another problem which is prevalent in the Canadian healthcare system are the wait times. From the information that I’ve seen, excessive wait times are the major complaint. Average wait times to see a primary care physician (PCP) can be as long as fifteen to twenty-four days. Wait times to see a specialist, after getting a referral, can be as long as twenty-one weeks. Here again, it is my belief that these long wait times are being caused by a shortage of doctors and other medical personnel. This is supported by the fact that there is only one PCP per one thousand people in Canada. I would suspect that this shortage also pertains to specialists. Wait times for MRIs and other diagnostic testing are running about eleven weeks.

I’m going to end this discussion regarding the Canadian healthcare system with an anecdote. For over thirty years, my wife and I were in the motel business in a small resort town in upstate New York called Lake George. One of my properties was open year-round. In the off-season couples from Canada would reserve a unit with a kitchen for two, three, or sometimes even four weeks. Over time, it became known to me that the reason for these extended stays was because one of the spouses was getting a medical procedure done here in the states. The patient would check into the hospital, get the procedure done, and the spouse would visit during the daytime and return to the motel at night.

During my time in that business, there were dozens of couples who stayed with us for that very reason. There is a large number of other motels in the Lake George/ Glens Falls area. It would not surprise me to find out that there were many couples from Canada who, over the years, stayed at these other motels for the exact same reason—rather than wait twenty-one weeks to have the procedure done at home.

I want to touch on one more issue before I end this discussion on the government-run Canadian healthcare system. The criteria for any medical treatment, operation, or other medical procedure in Canada is that it has to be “medically necessary.” The problem that arises is that the determination of what is “medically necessary” is decided by someone in the government. In the US, this determination is made by the patient’s doctor—as it should be. We will probably be forced to make the choice about what kind of healthcare system we want in this country in the not-too-distant future. I know what kind of healthcare system I would choose.

There are numerous reasons why Medicare for All and The Green New Deal are bad for American. First of all, it is not free. We would all pay for it through higher income taxes and other taxes as well. 

Another reason that I am against the Senator’s plan for universal healthcare is that the coverage will extend to everyone. When Senator Sanders says “Medicare for All,” he means exactly that. This would include illegal immigrants, people with temporary visas, and anyone who overstays their visas. The American taxpayer would be responsible for paying for the healthcare needs for anyone who happens to get across our border, whether legally or illegally. To take this to the extreme, Vladimir Putin could come to American, claim asylum, and be eligible for free healthcare. 

Have any of you ever noticed what big spenders liberals are when they’re spending other people’s money (a.k.a. taxpayer money)? They are the most generous people on the planet. However when it comes to spending their own money, they encounter a great deal of difficulty finding their wallet.

I have tried to come up with the answer as to why any American citizen would want to trade the best healthcare system in the world for the second-rate, government-run, socialized healthcare system that is being offered in countries such as the United Kingdom and Canada. It makes absolutely no sense to switch to a government-run system that will cut reimbursement rates to healthcare providers, have longer wait times, lower the overall quality of healthcare, and quite possibly ration healthcare services and drugs. This is the promise of socialized medicine.

Finally, as important as all those other reasons were for not having the country convert over to a government-run, single-payer system, the most important is that it will bankrupt the country that much faster. If we stay with the current system, which means no Medicare for All and definitely no Green New Deal, in roughly fifteen years the country will be $50T in debt—and interest on that debt will be close to $1.5T per year. If the country chooses to make Medicare for All the law of the land, our national debt could reach $75T in fifteen years. At that point, or even sooner, the country could very well be financially unviable.

Do you want to know what’s really scary about this topic? It’s the fact that Bernie Sanders is polling in the top tier of the Democratic primary candidates for president. Not only does he have a very loyal voter base of rabid left-wing radicals, he is also raising a lot of money. As a matter of fact, it appears that he will have more than enough money to last  through the primary season. It is also a very strong possibility that the Democratic candidate for president won’t be chosen until the Democratic convention next summer. What this means to me is that he has as good a shot as any of the other candidates to win the nomination. Although I don’t think that the American electorate would vote an avowed socialist into the White House, it concerns me that he could get that close.

What’s even more scary than the above paragraph is that Senator Sanders is one of those people who thinks that the government has unlimited resources. He is also a left-wing fanatic who would risk the financial well-being of this country to get his socialist agenda passed. His loyal base of young people, many of whom have been brainwashed throughout their academic careers, are totally ignorant of just how detrimental socialism would be to an economy such as ours. This is why they blindly support him. They also support him because he is promising them free stuff such as Medicare for All, free college tuition, and college loan forgiveness. They didn’t live through the Cold War and they evidently haven’t noticed that there is not one successful socialist country on this planet. Socialism doesn’t work—and it never has. To support that claim I will simply say that not one former Eastern Bloc country has returned to a socialist economy. That is significant since these countries now have the right to choose. They just might know something that Bernie and his young, inexperienced minions do not.

Sources for this post:

NPR Website. Article by Lauren Frayer, “UK Hospitals Are Overburdened but British Love Their Universal Health Care.” 

Forbes Website. Article by Sally Pipes. “Britons Version Of Medicare For All Is Struggling With Long Waits For Care.”
Sally Pipes is the author of The False Promise Of Single Payer Health Care.

American Institute Of Medical Sciences Blog / Allied Health Care. “US vs. Canadian Health Care: What Are The Differences?”

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