4/28/16 House of Cards
Last weekâ€™s commentary on unfunded liabilities generated more email than any other topic in the past few years. Viewers expressed alarm at how Washington has created a financial house of cards that â€“ without change — will one day collapse. Washington will run out of money.
Hereâ€™s whatâ€™s happening behind the headlines.
Discretionary spending refers to appropriations that pay for government programs such as the Departments of Defense and Education. Congress votes on these each year.
Non-discretionary spending are entitlement programs such as Medicare, Medicaid and Social Security. Washington long-ago promised how much itâ€™ll pay out to people. Non-discretionary spending also includes interest payments on the 19 trillion dollar national debt.
This spending eats-up two of every three dollars spent in Washington. This is what will break the bank.
As currently structured, entitlements promise to pay out more money than weâ€™re taking in. One-day thereâ€™ll be no money left for these programs. This is called unfunded liabilities.
Many viewers suggested cutting Congressional pay and ending welfare to make-up the difference. This is well-meaning. But itâ€™s only a drop in the bucket.
If government taxed everyone at 100% — by confiscating every cent they earned â€“ it still wouldnâ€™t be enough.
The only way out of this mess is to completely overhaul these entitlement programs.