John Boehner says “America’s broke.” Scott Walker says Wisconsin is broke. Michael Moore says that America is not broke at all. Who should we believe? (Yes, I know, that was too easy.) Nick Gillespie at Reason TV wonders what else we would call it when an organization spends 40% more than it receives in a year and projects similar spending patterns for the foreseeable future, offering a bleeped-out term as a compromise. Even though Nick references Charlie Sheen and tiger blood, I’m pretty sure that the term isn’t winning:
OK, but what should you call a family or a country that spent about 20 percent of GDP for each of the past 60 years while raising less than 18 percent of GDP each year? And that is facing a massive balloon payment (let’s call it entitlement spending on Medicare and Social Security) in the not-too-distant future? And has to keep borrowing money just to pay today’s bills? And has no chance of increasing its take-home pay to cover its expenses?
It’s a pretty safe bet that most of us would call that family or country broke. Or something along those lines.
Here are federal deficit projections from President Barack Obama admits in his own proposed 2012 budget that the red ink will continue to flow for as long he may be in office.
And what about the states? It’s true that states have to balance their budgets each year by law. But that doesn’t mean they don’t spend more than they take in. Wisconsin alone is looking at a shortfall of $1.8 billion in the next year. Here’s what the Center on Budget and Policy Priorities says about the mismatch between spending and revenue: “2012 is shaping up as states’ most difficult budget year on record. Thus far some 45 states and the District of Columbia are projecting budget shortfalls totaling $125 billion for fiscal year 2012.”
Then there’s local government. The National League of Cities is estimating that aggregate revenue shortfalls between 2010 and 2012 will end up totaling somewhere between $56 billion and $83 billion.
Reason’s blog has charts and references for these numbers. As Nick says, if the first step to solving our problem is to acknowledge we have one, we still have yet to begin to do so.