Catastrophically Cutting the Deficit

As you know, the White House put together a bi-partisan commission to figure out how to get the deficit down. The group made what sounded like sensible proposals. Cut this…trim that. But even if the proposals were accepted in their entirety – which they won’t be – only about a third of the deficit would be eliminated.

In a nutshell – which is where these things belong – the feds spend about one out of every four GDP dollars in the US. They collect, however, only about one in every five or six dollars worth of GDP. That is a pretty big gap – nearly 10% of total GDP.

If you’re going to cut that kind of a deficit you’re going to need more than a bi-partisan commission. You’re going to need a catastrophe.

Heck, we could cut the budget in half an hour. We’d just get rid of everything that was not part of the original plan – that is, everything that was not necessary for the defense of the country or the maintenance of law and order. We’d have a huge surplus overnight…and lynch mob by daybreak.

Deficits are a big problem. They’re not going away. We’re not going to “grow our way out” of them. Left unchecked, the country will go broke. So you can expect a lot of pantywaist proposals and pussyfooting around on the subject in the years ahead. And then the country will go broke.

The big item is health care. It seems to grow uncontrollably. Americans don’t want to give it up.

We went to the doctor today. We paid $220, in cash. That was the end of it.

“Come back next year,” she said.

Seems controllable enough to us. If we don’t have $220 we won’t go back.

But Americans seem to like going to doctors and hospitals…especially if someone else pays for it.

Bill Bonner
for The Daily Reckoning