11 Signs That The U.S. Government Has Become An Overgrown Monstrosity That Almost Every American Is Dependent Upon For Economic Survival

Today, the number of Americans who are able to financially survive without any reliance on the U.S. government whatsoever is declining at a staggering rate.  Whether it is through direct handouts, entitlement programs, student loans, government bailouts, government contracts or direct employment, the truth is that now a solid majority of the American people are at least partially dependent on the federal government for their economic survival.  The sad thing is that the majority of the American people say that there is too much government in their lives when opinion polls are taken, but if you try to take the government check that they are getting away from them those same people will scream bloody murder.  But the truth is that it is getting to be really, really hard to be completely independent of the U.S. government economically.  That is because the U.S. government has their hands in almost everything.  The ideal of a “limited federal government” has long since faded away.  Very few people seem to believe in it anymore.  Instead, Americans today look to the federal government as the answer to all of our problems, as the provider of all of our needs, and as the regulator of every single detail of our lives. 

The U.S. government has become the “Big Mother” that we all scramble to for a handout when we get into trouble.

When you sit down and really analyze it, you quickly realize that there is no way that the U.S. government can be extricated from the U.S. economy now.  Instead of the free enterprise system that we once had in this country, today we have a situation where the U.S. government has become the very core of the economy.  It is the hub around which everything else in the economy revolves.

You don’t believe this?

The following are 11 signs that the U.S. government has become an overgrown monstrosity that almost every American is dependent upon for economic survival…. 

#1) The Explosion Of Government Handouts

39.68 million Americans are now on food stamps.  Millions of others are completely dependent on the extended unemployment benefits that they are receiving.  Millions of other Americans are able to survive financially because of the dozens of other welfare programs that the U.S. government subsidizes.  More Americans are receiving some form of welfare than ever before in history, and each month the numbers continue to go up.  Could there come a day when we all receive government handouts every month?

#2) The Entitlements Programs That Threaten To Destroy U.S. Government Finances

Entitlements are the single biggest U.S. government expense.  These programs include Social Security, Medicare, Medicaid and other social Ponzi schemes.  Tens of millions of Americans receive government assistance through these programs.  In fact, nearly 51 million Americans received $672 billion in Social Security benefits in 2009.  We all have friends or family members who receive these kinds of payments.  But cutting so many people a check year after year is slowly but surely destroying U.S. government finances.  According to an official U.S. government report, rapidly growing interest costs on the national debt together with spending on major entitlement programs will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  That is before a penny is spent on anything else.  This is clearly not a sustainable financial situation by any definition, but who wants to tell tens of millions of Americans that their checks are going to be reduced?

#3) The U.S. Government Is Now Even Paying Mortgages

Yes, you read that right.  As part of the “stimulus” package, the U.S. government is going to send money to some of the states that were hit the hardest by the real estate crisis.  So what is that money going to be used for?  Well, Florida, Michigan, California and Arizona have all announced that they plan to use $1.4 billion the Obama administration is sending their way to help the unemployed and the “underwater” pay their mortgages.

#4) Without The Student Loan Program A Huge Percentage Of College Students Would Not Get An Education

The federal student loan program (which was recently entirely nationalized) helps millions of college students pay for their education.  Without this assistance by the government, a lot less students would be going to college.  In fact, many of you that are reading this article directly benefited from the federal student loan program.

#5) The Bailout Of AIG

One of the biggest insurance companies in the world, AIG, would not be in existence today if not for direct federal government intervention.  It kind of makes you wonder what George Washington and Thomas Jefferson would think about a federal government that hands big bags of cash to a giant insurance company so that it can survive.  Whether it was so they could pay off their debts to Goldman Sachs or whether it was so that they could keep paying out record-setting bonuses, the truth is that AIG would not have made it without the federal government stepping in.

#6) The “Too Big To Fail” Banks

But it wasn’t just AIG that got bailed out.  A number of big banks may have gone under if not for the U.S. government.  The U.S. government decided that they were “too big to fail”.  Well, what about all the small banks that are going under?  The truth is that they are “too small to bother with”.  We now live in a nation where the U.S. government is the one who decides which banks live and which banks die like dogs.  Doesn’t that just make you feel all warm and fuzzy?

#7) The Bailout Of General Motors

But not only does the federal government bail out financial institutions – it is also now in the car business.  Yes, grand old General Motors may have ended up on the scrap heap of history if not for the U.S. government stepping in.  So if you work for General Motors or if you work for any company that does business with General Motors, you can thank Uncle Sam for the fact that you still have a job.

#8) The Bailouts Of Fannie Mae and Freddie Mac

If the U.S. government had not bailed out Fannie Mae and Freddie Mac, we may not have much of a mortgage industry at this point at all.  According to Inside Mortgage Finance, government-related entities backed 96.5% of all home loans during the first quarter of 2010, which was up from 90% in 2009.  So if you borrowed money to buy a home over the past couple of years, there is a very strong likelihood that the U.S. government was involved.

#9) The U.S. Government – The Nation’s Biggest Employer

According to the Bureau of Labor Statistics, approximately 2 million civilians work for the federal government, excluding the Postal Service.  When you add in all U.S. military personnel, that number goes much higher. 

The truth is that as the government continues to expand (become more bloated), more Americans than ever are hopping aboard the gravy train.  Today, the average federal worker now earns about twice as much as the average worker in the private sector.  So if you want to do little work, produce little of real value and enjoy super cushy benefits, maybe you should apply for a job with the federal government too.

#10) Millions Of Americans Are Employed By Firms That Rely On Government Contracts

When considering the impact of the U.S. government on the economy, you can’t forget the hundreds of companies that would go out of business if their U.S. government contracts were taken away.  There are literally millions of people who work for companies that do business with the government.  If the government disappeared it would cause economic chaos for those firms.  The truth is that a whole lot of people make a really good living plugging into the sweetest revenue source of them all – the U.S. government.

#11) The U.S. Government Takeover Of The Health Care System

The U.S. government takeover of the health care system is going to fundamentally change the economics of the health care industry.  The U.S. government will now play a major role in deciding which hospitals get built and which do not.  Approximately 17% of U.S. GDP is spent on health care, and now the U.S. government has unprecedented control over where that money goes.  Over a dozen new taxes have been established by the new health care reform law, and the U.S. government is going to pour an unprecedented amount of money into the system.  So will this result in all of us getting better health care?  We’ll just have to wait and see.

The truth is that the Founding Fathers never envisioned a federal government that completely dominated that national economy.  But that is what we have got.  As of now, only a very small percentage of Americans are still able to say that they are completely financially independent of the U.S. government. 

You see, in economic terms the U.S. government is not just the elephant in the room.  It is the elephant that sat on the room and nearly suffocated everything else out of existence.

As Americans, we live in an economy that is so intertwined with the government that it is impossible to separate the two anymore.

But the really bad news is that the U.S. government is in massive financial trouble.  According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015.  Many economists regard that as an incredibly dangerous threshold to cross.

If U.S. government finances collapse, it will mean the collapse of the entire U.S. economy as well.  There is simply no separating the two.  And considering the fact that the U.S. government has piled up the biggest mountain of debt in the history of the world, things don’t look promising.

America is headed for an unprecedented economic collapse, and the U.S. government is leading the way.  If you can get financially independent, now is the time to try to do that, but the reality is that we will all feel massive economic pain when this thing comes crashing down.

The Silent Entitlements Monster: Social Security, Medicare And Interest On The Debt Will Gobble Up Every Single Tax Dollar By 2020

There is a silent monster that looms menacingly over U.S. government finances.  Every politician knows about it, but very few of them ever want to talk about it.  This silent monster grows larger every year, and yet nobody seems to know quite what to do about it.  Those who have closely analyzed this monster all seem to agree that one day it will create a financial tsunami of a magnitude that is absolutely unprecedented, but there is vast disagreement about how to escape this financial tsunami or if it is even possible to escape it.  The name of this monster is “entitlements” – Social Security, Medicare and other social Ponzi schemes that the U.S. government has locked itself into funding.  It would be hard to understate the seriousness of the problem that entitlements present.  In fact, according to an official U.S. government report, rapidly growing interest costs on the national debt together with spending on major entitlement programs will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  By 2020, that figure will be up around 100 cents of every dollar of federal revenue.  So that means that interest on the debt and spending on entitlement programs will eat up everything the U.S. government takes in before a penny is spent on anything else.  That is a recipe for national financial suicide.

And unfortunately, the problem is only going to get far, far worse when you project things out beyond the year 2020.  Right now, interest on the debt and spending on entitlement programs like Social Security and Medicare eat up only about 10 percent of GDP.  By 2080, they are projected to eat up approximately 50 percent of GDP.  In fact, things are even more dire than the chart below indicates.  This chart is based on previous government figures that projected that mandatory spending will exceed government revenues at some point between 2030 and 2040, but the latest government figures now project that this will happen right around 2020.  So as mind blowing as this chart is, keep in mind that it actually understates the problem we are facing….

This week, there was news that the Social Security system is in much worse shape than previously projected.  According to the Congressional Budget Office, this year the Social Security system will pay out more in benefits than it receives in payroll taxes.  This was not supposed to happen until at least 2016.

Now it is happening in 2010.

It turns out that the “recession” that we have just been through has hit Social Security revenues really hard.

And unfortunately, as waves of Baby Boomers start retiring, these “Social Security deficits” are going to get even worse.

So where will the money come from to pay the benefits that are owed?

For now, the money will come from the $2.5 trillion Social Security Trust Fund that has been accumulated.

But keep in mind that the $2.5 trillion figure is extremely misleading.

There are not $2.5 trillion dollars sitting around in a bank account somewhere to pay these benefits.

The truth is that the Social Security Trust Fund does not contain any actual assets.

The only assets the Social Security Trust Fund has are IOUs from the U.S. government.

So basically the U.S. government owes the Social Security Trust Fund $2.5 trillion dollars, and now it turns out that the Social Security system is going to start needing that money.

So where will the U.S. government get that money?

Well, they will borrow it of course.

The reality is that the Social Security program is simply not sustainable.

Back in 1950 each retiree’s Social Security benefit was paid for by 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025 it is projected that there will be about two workers for each retiree.

As a society, we simply have not been producing enough new workers to sustain the current system.

Of course the politicians all say the right things to make us think that they are going to do something about this crisis.  For example, Barack Obama recently had the following to say about the massive deficits the U.S. government keeps piling up: “It keeps me awake at night, looking at all that red ink”.

But the truth is that neither political party would dare propose a dramatic restructuring of Social Security or Medicare that would significantly reduce benefits.

Why?

Because it would be political suicide.

Say what you want about old people – the truth is that they vote more than the rest of us do.

Anyone who would dare “take away” their Social Security or Medicare would suddenly find hordes of old people voting against them in the next election.

But something has to be done.

The 2009 Financial Report of the U.S. Government was recently released, and it basically says that the U.S. government is facing financial Armageddon if something drastic is not done….

Absent a change in policy, under this scenario, the interest costs on the growing debt together with spending on major entitlement programs could absorb 92 cents of every dollar of federal revenue in 2019.

Keep in mind that this is before anything is spent on defense, health care, education, homeland security, job creation or anything else.

The following chart was pulled right out of the report.  These aren’t the projections of some Internet wacko.  These projections are in an official U.S. government report.  The implications of the chart below are absolutely mind blowing….

Keep in mind that the U.S. government and the U.S. economy are already on the verge of financial oblivion in 2010.  So what is going to happen if these projections are anywhere close to accurate?

In addition, the report also admitted that the present value of projected scheduled benefits exceeds earmarked revenues for entitlement programs such as Social Security and Medicare by about $46 trillion over the next 75 years.

$46 trillion!

Either the U.S. government is going to have to radically slash Social Security and Medicare benefits or they will have to come up with tens of trillions of extra dollars from somewhere.

And remember, the $46 trillion figure is just the “present value” of those future payments.

Because of inflation, the “actual value” of those future payments will be far greater.

In a section about Social Security and Medicare, the authors of the report confessed that “it is apparent that these programs are on a fiscally unsustainable path”.

Obviously something has got to give.

These programs cannot keep on paying the same level of benefits.

It is financially impossible.

But what are we going to do?  Millions upon millions of elderly Americans rely on these programs.

Are we going to reduce payments to a level where they can only afford dog food to eat and a shack to live in?

As a society, we are really between a rock and hard place.

If we continue on the same path, the United States government is going to go bankrupt.

But any politician who tries to cut benefits or raise taxes will likely face the wrath of the voters at the ballot box.

So for now the U.S. government just continues to spend even more money and continues to go into increasing amounts of debt – apparently hoping that somehow everything will just turn out okay.

But things are not going to turn out okay.  We are headed for a financial mess of horrifying proportions.

The truth is that it doesn’t matter how much the U.S. government cuts spending in other areas if it does not get entitlement spending and interest on the national debt under control.  If those expenditures are not addressed, it is absolutely guaranteed that the U.S. government will be swamped in red ink for many years to come.

But until severe financial pain starts happening, a large percentage of the American people are not going to be motivated to do anything about this problem.

But by then it will be too late.

The Mystery Of The Shemitah

The 2009 Financial Report Of The U.S. Government Is Out – America’s Economic Goose Is Cooked

The 2009 Financial Report Of The U.S. Government has finally been released, and the news is not good.  It basically confirms much of what we already know – that the United States government is a complete financial mess.  The U.S. government budget deficit for 2009 was a record-setting 1.417 trillion dollars.  The total liabilities of the U.S. government rose from 12.178 trillion dollars at the end of 2008 to 14.123 trillion dollars by the end of 2009.  At their present rates of growth, the interest on the national debt and spending on entitlement programs will gobble up almost every single dollar of federal revenue by the end of the decade.  Throughout the report, the word “unsustainable” is repeatedly used.  The authors of the report understand that the U.S. government simply cannot keep spending and borrowing like it has been recently.  But if the U.S. government slows down this reckless spending even a little bit it could literally plunge the U.S. economy into a deflationary depression.  In fact, even with all of the “bailouts” and “stimulus packages” there are many who would argue that we are already in a depression.  In any event, the authors of the report make it clear that the United States government is facing a financial crisis of unprecedented magnitude.

Just consider the following chart below.  This chart comes straight out of the 2009 Financial Report Of The U.S. Government, and it shows how explosively federal deficits have grown in recent years….

The reality is that deficits of three or four hundred billion dollars per year were catastrophic enough.

But a deficit of 1.4 trillion?

That is national financial suicide.

In fact, the chart below from the White House Office of Management and Budget shows just how dire the financial position of the U.S. government has become.  The government has dramatically increased spending at a time when government revenues are actually falling….

But this was supposed to be a time when the federal government would be running surpluses to prepare for the massive growth in entitlement spending that everyone knew would come when the Baby Boomers retire.

But that is not happening.

Instead we are already running record-setting deficits.

So what is causing these deficits?

Rampant, out of control spending.  Just check out this chart of federal net outlays….

What would happen to your own personal finances if your household spending kept increasing like that?

But things are not going to get any better any time soon.

As interest on the national debt piles up and as spending on Social Security and Medicare explodes it will be extremely difficult to control the U.S. federal budget deficit.

The report projects that the rapidly growing interest costs on the national debt together with spending on major entitlement programs will absorb approximately 92 cents of every dollar of federal revenue by 2019.

That is before anything is spent on defense, education, homeland security, job creation or anything else.

In particular, the growth of interest on the national debt promises to absolutely crush U.S. government finances if something is not done.  Just consider the following chart pulled right out of the report….

Take a moment and let the implications of that chart sink in.

Are you prepared to saddle future generations with interest payments that gobble up 30 percent of GDP?

But wait, there’s more.

According to the report, the present value of projected scheduled benefits exceeds earmarked revenues for social insurance programs such as Social Security and Medicare by about $46 trillion over the next 75 years.

So either the U.S. government is going to have to radically cut back Social Security and Medicare benefits or they will have to come up with tens of trillions of extra dollars from somewhere.

And remember, the 46 trillion dollar figure is just the “present value” of those future payments.

Because of inflation, the actual value of those future payments will be far, far, far greater.

In a section about Social Security and Medicare, the authors of the report freely admitted that “it is apparent that these programs are on a fiscally unsustainable path”.

Well, can’t we just “grow” our way out of these problems?

Hardly.

The truth is that the U.S. economy is caught in an economic death spiral.

Sometimes words just cannot express how bad things have gotten.

Sometimes it takes charts.

The following chart shows changes in our national income since 1950….

This next chart shows changes in our exports of goods and services since about 1930….

Are you starting to get the picture?

America’s economic goose is cooked.

We are drowning in a sea of debt at the same time our once mighty economic machine is sputtering to a stop.

Meanwhile, the financial powers that be are not about to let a good crisis go to waste.  Just like during the Great Depression, the sharks are using hard times as an excuse to gobble up the smaller, weaker fish.  In fact, there are persistent whispers that the financial elite see this current economic crisis as the perfect opportunity to consolidate the U.S. banking industry.

In any event, it does not look like things are going to get back to “normal” for most of us any time soon.

Lastly, one interesting tidbit in the 2009 Financial Report Of The U.S. Government can be found in footnote 2 on page vii of the report.  In that footnote it tells us why the financial results for the Federal Reserve are not included in the report….

The Federal Reserve is an independent organization and not considered a part of the Federal reporting entity. As such, their financial results are not consolidated into the Government’s financial statements.

Very interesting.

Anyone have any comments?

Austin Coins

 

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