r/AnCap101

I was in high school during the first Obama term, when the TEA Party movement was all the rage, Occupy Wall Street was a thing, and you know what was the biggest, most talked about political issue for a couple of years between 2008 and 2011 or so?

The debt, the deficit, and Federal spending.

Since that time, the fundamental picture of the Federal government's finances has not changed at all.

The US Federal Government is headed for a fiscal crisis in the near future, within the next ten years and possibly by the time the next president is inaugurated the crisis will already be upon us!

Here's the basic facts of the situation:

Federal spending on all military-related purposes (including healthcare for veterans!) accounts for less than 20% of total Federal spending.

Here's a breakdown of Federal spending by category, from the US Treasury Department:

• 22 % Social Security

• 14 % Net Interest

• 14 % Health

• 14 % Medicare

• 13 % National Defense

• 10 % Income Security

• 6 % Veterans Benefits and Services

Collectively, Federal military spending (combined with Veterans benefits) makes up about 19% of all Federal expenditures.

Just Social Security plus Medicare/Medicaid accounts for half of all Federal spending -- literally 50% of all Federal expenditures. We are spending twice as much on old age pensions and healthcare for the poor and old than we spend on the military.

Add to that the amount of money the Federal government spends on interest payments for our outstanding debt and spending on means-tested welfare ("income security"), and literally three-quarters (74%) of the Federal budget is spent on some form of welfare, entitlement, or the debt.

Moreover, from the CATO Institute:

> The Congressional Budget Office now projects that over the next 10 years, the United States will borrow an additional $25 trillion. About $16 trillion of that will go toward interest payments alone. By 2036, interest costs, Social Security, Medicare, and Medicaid are projected to consume 100 percent of federal revenues.

> Read that again.

> Under current law, within a decade, every dollar collected in revenue will go toward autopilot entitlements and debt service, leaving nothing for national defense or any other core function of government. See Figure 1 if you, too, need to see it to believe it.

Source: https://www.cato.org/blog/us-fiscal-dominance-coming-fiscal-inflection-point-how-congress-can-fix-debt-crisis-its-too

And if you think there is an easy way out of this situation: think again!

A lot of people seem to have no idea of the scale of this problem. I've seen some people seriously contend we could balance the budget by simply cutting foreign aid.

Nonsense! All foreign aid comprises less than 1% of the Federal budget. Should it be eliminated entirely? Absolutely, but that's not going to even put a dent in the spending problem, let alone 'solve' a problem caused, overwhelmingly, by entitlement spending. For fun, I did a back of the envelope calculation about foreign aid to Israel versus Social Security spending, and the US government spends more on Social Security in one year than has been given to Israel in aid money in the entire history of Israel's existence. Remember that next time you see a libertarian complaining about aid money to Israel (which should be eliminated, to be clear, but let's not pretend as if that is the cause of our government's fiscal woes).

I've seen lots of libertarians say that if the US would just stop waging foreign wars and intervening abroad, that would solve our fiscal problem. No it won't.

As I pointed out at the beginning: all military spending combined, along with healthcare and benefits for veterans, accounts for less than 20% of total Federal spending. Cutting military spending would help, but we could totally eliminate all military spending and still have a fiscal crisis on our hands. Remember: under current law the Federal government will be mandated to spend 100% of its revenues on Social Security, Medicare/Medicaid, and debt payments by the mid-2030s.

Even liberal think tanks (who are serious and take this problem seriously) admit: there is no easy solution to this problem. Inevitably, to solve this will require increasing taxes and cutting spending, so says even the Brookings Institution (Brookings is pretty left-of-center).

You can't put tariffs on imports and solve this problem.

You can't raise taxes high enough to pay for all the money the Federal government has promised to spend. The US government has a spending problem not a problem raising revenue. Spending can always outpace tax revenue; there is no upper limit to the amount of money a government can spend, but there is a very real, hard limit to the amount of money a government can extract in taxes, with the harmful economic effects compounding and worsening the more a government taxes (leading to the death spiral of higher tax rates yielding lower and lower amounts of tax revenue, both net and gross).

The only way out of this problem is to cut spending. Having robust economic growth would also help a lot, but it's unlikely, if not impossible, to have enough economic growth for that alone to solve this problem without spending cuts and, probably, some increase in taxes (as much as I hate to say it).

You know what else will help? More immigration. Immigrants created a vast fiscal savings for the government because immigrants in the United States consume welfare at lower rates compared to native citizens, and while non-citizens can be eligible for entitlements like Social Security, only a minority of them actually qualify (compared to the vast majority of native-born citizens, who are automatically enrolled in Social Security). So, while the ideal would be that no one is entitled to any welfare spending, from a purely fiscal point of view, it is preferable that American citizens have zero children, and instead we let in infinite numbers of immigrants.

You don't like that idea, would be my guess, but don't blame me, the messenger: I'm simply telling you what the incentives of the welfare state point to!

I'm adamantly in favor of immigration for other reasons (it's a basic human liberty to be able to move around without state-imposed restrictions, immigration is good for an economy, and so on), but I understand these days many "libertarians" are opposed to immigration. For what it's worth, I think the best argument against immigration is the fact that it helps prop up the welfare state (and, ironically, most anti-immigration arguments are predicated on preserving the welfare state, but only for the native citizens of a country -- the idea that we should have socialism but for the nation, a kind of nationalist socialism, if you will).

You need to understand: the fiscal crisis will compel the Federal government to admit more and more immigrants, legal or not, because on some level the people in government understand that immigrants are useful tax cattle who can be made to pay more in tax revenues without also requiring equivalent or greater expenditures.

This is why throughout most of the Western World (especially Europe) immigration continues to be "too high" even in the face of overwhelming opposition to immigration from voters: because the bureaucrats understand what voters choose not to, that you can have a welfare state or you can have a ban on immigrants, but you can't have both.

Not when the welfare state has systematically over-promised benefits because the welfare state was designed by Otto von Bismarck back in the days when birth-rates were exponentially higher and life-spans much shorter. You could get away with a Ponzi-scheme welfare state where you tax young working people all their working lives and give some benefits for a couple of years to the few who reach old age at the very end of their lives. When the average person dies before the age of 70 and there are about 20 working age people for every 1 retiree, the math works out. When you have an aging population and people routinely live into their 80s, the math collapses, especially in a democracy where you have larger numbers of older voters than younger voters, not only because you have numerically more old people, but also because old people vote at higher rates, and tend to vote as a bloc on the issue of welfare benefits, whereas younger voters tend to be more splintered.

I say all this because I've come to realize that probably a majority of libertarians in the movement today don't know any of this, what I would consider both basic facts and the most important issue facing us today.

Instead, so many libertarians want to waste time talking about non-issues like transgender children or whatever. So so so many libertarians will bang on about foreign wars and foreign aid and immigrants -- for all the talk among libertarians about the "uniparty" and how the Democrats and Republicans are all the same, it's shameful that libertarians have bought into the biggest example of the uniparty: the consensus that our government should spend more than it takes in taxes and never talk about this issue let alone do anything to reform it.