Sometimes the truth is ugly and nobody wants to hear it. Ignoring the truth is what got us into the current budget deficit mess and the insurmountable national debt we now face as a nation.
Hope is a remarkable thing. Hope that our actions will pay off keeps us working toward the goal and it generally pays off.
False hope, on the other hand, causes us to work toward solving a problem which is impossible to resolve. Because we fail to recognize it can’t be fixed, we keep working and hoping and can’t understand why our exertions aren’t achieving the goal. False hope gives us an incorrect view of the possibilities and ignores reality, leaving us unprepared when the feces finally hit the fan. Our teachings from the cradle to the grave to never give up, only make the problem worse.
The national debt and deficit spending by Congress is just such an unsolvable problem. Congress gladly stokes the fires of our false hopes and keeps us distracted from reality. We come up with back-of-the-envelope solutions on how to eliminate deficit spending, yet almost none of us have looked at the actual budget numbers, or tried to work the math out. How many of us have tried to understand the budget deficits by outlining how we would personally balance the budget if we were granted the power? Doing that would give each of us a better understanding of reality and what’s possible and what isn’t.
In this article I’ll move from a back-of-the-envelope analysis to a spreadsheet analysis. I’ll present the hard numbers, taken from the 2025 federal budget, to show why budget deficits are way past the point of being controllable, and why the national debt can only continue to grow exponentially. Then I’ll present a few ideas on what we as individuals can do to prepare for the inevitable financial catastrophe that awaits our nation.
How ready will we be when it happens?
DOGE – Department of Government Efficiency
DOGE has given us another damaging dose of false hope that we can be saved. We believe that financially-sensible businessmen like Musk and Ramaswamy can recommend enough cuts to save us. Musk has said he can cut $2 trillion off the federal budget. Well, so can I but my cuts aren’t any more likely to be passed by Congress than DOGE’s recommendations. (Just the same, I’d love to see his $2 trillion plan.) Congress controls the purse strings, the same Congress that got us into this mess in the first place. The number of DOGE recommendations they’ll actually approve to reduce deficit spending and the national debt will be will be minuscule, comparable to trying to put out a raging forest fire with a squirt gun.
Uncle Sam’s Budget versus Income
You’ll see numbers all over the board on budget discussions. The numbers I use come from the Budget of the US Government For Fiscal Year 2025, p. 141, table S-4 on the govinfo.gov website.
Discussions about the national debt almost always talk in terms of what percent of the budget each program is spending. Pie charts show it to us visually but fail to put things into a proper meaningful perspective. The important thing we need to understand is how much of Uncle Sam’s income each program is allotted, not what the deficit-spending budget allocates. The budget pie charts only show how much Congress is spending but fail to demonstrate how much of it is deficit spending.
For that reason, the following discussion will put things in terms of federal income, not the budget.
Social Security and Medicare’s Contribution to the National Debt
For reasons soon to be obvious I won’t dwell here too long.
These two programs take the largest bite out of Uncle Sam’s income, 45.2%. When medicaid is added in, these three programs eat up 55.9% of income compared to 42.2% of the budget. Taking up 42% of the budget is a “wow” number. Using up 56% of Uncle Sam’s income should be a “holy cow” number. Can you see the deception of always putting fiscal things in terms of the budget instead of in proportion to Uncle Sam’s income?
When it comes to social security and medicare, we believe we should get what we have coming because we paid into the system all those years via payroll taxes. Even though we knew all along it was a Ponzi scheme, and knew in the end someone’s generation would be left holding the bag, we kept sending fiscally irresponsible politicians to Washington instead of demanding changes in these programs to make them sustainable. We hope we’ll have passed on to our reward before the house of cards we’ve created collapses, let our children’s generation deal with it!
We didn’t complain when the money was stolen from the social security fund to pay for the pointless war in Vietnam. Instead of marching on Washington with torches and pitchforks for their theft, and instead of protesting the needless war the money was spent on, we kicked back with our Life magazine looking at photos of a little girl running with all her clothes burned off after being napalmed. Then we voted the same SOBs into office in the next election, begging for another dose of propaganda with a large order of bull manjure on the side but no Social security tweakingS
After neglecting all the things we should have been doing, we still think we’re owed all the money we paid in to the Ponzi-scheme Social Security fund.
Medicare funds the research that’s created our unnaturally long lifespans which have caused the demographics of the country to shift too far to the geriatric side. A very disproportionate part of the population is now on Social Security and Medicare, and for much longer periods of time than recipients in the past, making these programs even more unsustainable than they already were. What’s been good for Grandma and Grandpa, in fiscal terms has been bad for us as a nation. Don’t call me a heartless eugenicist for merely pointing out the mathematical facts, but would we have been as willing to fund these technologies if we had to use our own money instead of Medicare money?
The 1:42 ratio of workers to Social Security and Medicare recipients in 1940 has dropped to below 1:3 today. FICA contributions from three workers aren’t enough to support a Social Security recipient so the difference is made up from Uncle Sam’s general income.
Based on the fact that only three readers are agreeing with any of this, it’s safe to say that 56% of Uncle Sam’s income will continue supporting these programs.
Businesses help contribute to their employee’s 401k and IRA retirement plans. A fiscally responsible government would do the same and phase out both Social Security and Medicare as well as all government pensions. Businesses can’t afford to have these kinds of drags on their income and as we can see from our national debt, neither can governments. In times past when Uncle Sam had smaller deficits and a tiny national debt, people were more self-reliant. We often lived in two-and three-generation households. Today, we prefer unsustainable deficit spending and a runaway national debt so we can avoid the inconvenience of families taking care of each other. We once lived in a country where, if necessary, our parents lived with us when we were young and we lived with our children when we were old. We’re now paying the price of having lost a large part of the self-reliant lifestyle our ancestors lived by.
While Trump is talking of perhaps using some of the income generated by his drill-baby-drill approach to help raise money for the Social Security program, many economists are confident it will only add a pittance, some saying it will help a maximum of 4%.
Again, our unsustainable Social Security and Medicare/Medicaid programs suck up 56% of Uncle Sam’s annual income.
Other Mandatory Expenses
Twenty five percent of Uncle Sam’s income goes to pay for other mandatory expenses. This includes such things as salaries for federal judges, congressmen, and the president. The vast majority of the expenses in the “other” column are various welfare programs: free school lunch, IRS earned-income credit, unemployment payments, disability, and assistance for needy families among others. Veterans benefits come out of the discretionary budget and represents approximately 1.3% of Uncle Sam’s income. I’m going to move them from a discretionary expense to a mandatory expense since it’s not likely to be defunded.
These “other” expenses use up 25.0% of Uncle Sam’s income. When added to the 55.9% that Social Security and Medicare spend, these other mandatory expenses bring the total to 80.9% of Uncle Sam’s income.
The vast majority of that 81% is paid out because we as a people sold our spirit of self-reliance for a few shekels. We want taxpayers to fund our retirements because we were fiscally irresponsible during our working years and failed to save enough for retirement. Instead of churches and charities taking care of the poor as they’ve always done, we now allow the government to do it using money collected from unwilling taxpayers, creating a dependent underclass who has no reason to strive for self-reliance.
(To be continued tomorrow, in Part 2.)