March 4, 2010
By Michael Snyder
hat tip: Blacklisted News
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….
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….
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?
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.
The video speaks for itself: <iframe src=”http://embed.newsinc.com/Single/iframe.html?WID=1&VID=25241471&freewheel=69016&sitesection=nydailynews&width=635&height=357″ height=”357″ width=”635″ scrolling=”no” frameborder=”0″ marginwidth=”0″ marginheight=”0″></iframe> From the article: Cassandra Feuerstein of Chicago was thrown face first by a Skokie officer into...