Donald Trump is planning the kind of deep cuts in Federal spending that need to happen. We face two problems regarding the Federal Debt and the Federal Deficit. The first is we need to zero out total federal spending to match actual IRS generated tax revenues. We haven’t been doing that for decades now, which is where the federal deficit comes from. The difference between what we spend, versus what we raise in taxes is why the federal debt doubled during Obama’s reign of Marxist terror. The total federal debt of $20 TRILLION must either be paid back, or defaulted on. A 20 year repayment plan would require spending cuts, or tax increases of 1 TRILLION per year. In addition, we would have to zero out the yearly deficit, which is the difference between spending and revenue. It is called a budget. The federal government should try it sometime.
It is also a fact that the four core programs are: Social Security, Medicare, Defense, and interest payments on the total federal debt. The total spending for 2016 came to $3.9 TRILLION DOLLARS. The actual federal tax revenues came to $3.3 TRILLION DOLLARS. The 2016 federal deficit, the gap between revenue and spending was nearly $600 Billion dollars, some $590 to be exact. What Trump must do in 2017 is first, reduce the deficit to ZERO. This means Trump must cut the federal budget by nearly $600 billion just to balance it. Next, Trump must begin a pay down the total $20 TRILLION debt on a multiyear basis. Assuming he executes a 20 year-long plan to pay down the debt, he needs an additional $1 TRILLION in cuts per year. This means the total amount to first, stop going into debt, and second, to pay down the debt, means cuts of some $1.6 TRILLION per year for the next 20 years. This means Trump must effectively cut the 2017 federal budget by nearly $1.6 TRILLION in actual dollars, and some forty percent to balance it, and then start the pay back process.
Gang, it is a fact that the core programs, the ones Trump must deal with are Social Security, Medicare, Defense and paying the interest on the total federal debt. The interest payments in 2015 were $229 Billion. Trump has stated he won’t cut Social Security, or Medicare. He can’t refuse to pay the interest payments, and he wants to increase defense spending, as well as do some stuff like build the wall, repair bridges, airports, railroads etc. When you look at the cold, hard economic facts, a couple of things impale you; namely, some two-thirds of the total federal budget are in areas Trump either can’t, or won’t cut. The other fact is the $1.5 TRILLION Trump will need to cut is going to pretty much eliminate everything other than defense, interest payments, Social Security and Medicare. And by “everything else,” I mean, well look at the link below to get an idea.
My basic point is this. The USA is functionally bankrupt. It has been functionally bankrupt for the last two or three decades. We only have two options here. The first is to make the kind of deep spending cuts needed to balance the federal budget, and begin a twenty year repayment plan. The second is to default on the total federal debt. The $20 TRILLION is roughly $14 TRILLION owed to US citizens, ie public debt, and around $6 TRILLION owed to Japan, China, and other countries. The results of any such default to public owners of the debt would be a catastrophic economic situation. The result of a default with China could very well lead to war. Of course, as far back as Bubba Clinton hard assets, like land etc have been used to back the Chinese debt. Otherwise, they would have dumped our paper and ended the Federal Reserves orgy of economic folly.
The politics involved in essentially eliminating all federal spending other than Social Security, Medicare, Defense and interest payments are going to be brutal. The urge to default will be overwhelming in my opinion. Trump may not have the political chops to make it happen. We shall see.
Doomer Doug, a.k.a. Doug McIntosh now has a blog at www.doomerdoug.wordpress.com
My end of the world e book “Day of the Dogs” will soon be available for sale at smashwords. The url is
https://www.smashwords.com/books/view/267340 It is also at the following url