Thursday, May 5, 2011

The real picture of entitlement spending

While Washington continues to battle over the budget, the forecast for entitlement spending grows more grim.

This graph by The Heritage Foundation's lead budget analyst, Brian Riedl, shows the trajectory of entitlement spending in the US budget.

Riedl's estimates reveals an increasingly problematic trend. From 2008 to 2020, he projects entitlement spending (Social Security, Medicare and Medicaid) to increase $909 billion.

The question we should be debating is not whether or not we should reform entitlements but how. Entitlement spending continues to drive up the debt, and the problem is only getting worse.

This projection certainly has significant implications for Kentucky, particularly as the commonwealth continues to struggle with its Medicaid budget. As a joint state and federal program, the forecast for increasing federal Medicaid spending will not leave Kentucky's program untouched.


Hempy said...

Money is not the problem. There are a number of sources that essentially escape tax free. To generate new sources of revenue, follow Adam Smith's advice. Find other sources of revenue. Four such sources are:

One, tax the foreign exchange $4-trillion-a-day derivatives market. That’s about $1.44 quadrillion a year. If a maximum 5% proportional rate tax were in effect with both seller and buyer paying his 5% share that would bring in about $144 trillion.

Two, the US derivative market is about $600 trillion a year. At the same rate, paid by seller and buyer each, that would bring in another $60 trillion.

Three, banks launder drug money to the tune of about $1.5 trillion a year. That would bring in $150 billion a year with the banks and drug cartels each paying 5%.

Four, tax campaign contributions. The donor, and recipient politician, would each pay a proportional rate that too would max out at 5%.

While not as large as the druggies, bankers or the derivative marketeers, it too would contribute to solving the deficit. The budget deficit would be a thing of the past.

What’s so wrong about taxing these guys? They all basically qualify as criminal elements.

Anonymous said...

When money enters my hands, it gets reported and taxed. When I pay money to others, it gets reported and taxed.

So have the lobbyists kept the tax off the foreign exchange, US derivative market, and campaign contributions?

Hempy said...


Quite likely.

fashion said...

I think money is the problem for poor person.

Holly said...

Hempy, how do you qualify these sources as "criminal elements"?

Hempy said...


Evidently you didn't follow the Wall Street financial activities what with Lehman Brothers and AIG. These were involved in a variety of derivative transactions. Some were like Ponzi schemes.

Laundering drug money for the drug cartels qualifies as criminal activity.

Concerning Congress, Mark Twain had an appropriate quote:

"It could probably be shown by facts and figures that there is no distinctly American criminal class except Congress."

All these activities qualify as being morally and spiritually bankrupt when it comes to economics. Keeping up with Congress and the criminal activities of some of its members is ongoing.

Hempy said...


Money can be a problem for anyone. The wealthy can't seem to get enough. It's like they're addicted.

The poor don't have enough.

Logan Morford said...


Finding new sources of revenue is not ALWAYS the right solution.

When you are faced with personal financial hardship, do you look for areas in your life where you can curb your spending/change your lifestyle or do you just say to yourself "I need more money, guess I'll go get some"?

If it's the latter, you need to write a book. I'm sure a lot of people would like to have that knowledge.

Hempy said...


For government, the capitalistic thing to do is to find new sources of revenue. The sources provided are a few of the untapped sources.

A tax on the movement of money is consistent with what Alexander Hamilton advocated as did Adam Smith.

If you're an individual and you need more income, the thing to do is to find an area to work that you have an interest. If you lack the job skills, then acquire those skills to qualify for such a job.

Why not improve oneself so one doesn't have to curb spending?

A philosophy to stagnate and go backwards is a typical conservative response.

Anonymous said...

Re: Hempy's May 7th Comment

Finding new sources of revenue the way Hempy always implies doing it does nothing to create an expanded economy. In fact, such an action can stifle economic expansion.

However, allowing the economy to expand by controlling the government's drain upon it will increase revenues from existing tax streams.

Hempy said...

Quite the contrary Anon. Increased revenues allows for the maintenance and upkeep of infrastructures as well as providing new infrastructure, such as broadband Internet service to rural areas.

It also allow for money to be allocated for research and development for the progress of science and useful arts as stated in Article I, Section 8, Clause 8 of the Constitution.

The sources of revenue I've cited are skating through the economy relatively tax free. That's not only unjust, but it reveals moral and spiritual bankruptcies pertaining to economics. It does nothing to secure the blessings of liberty for ourselves and our posterity.