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"In God we trust; everyone else must bring data" - W. Edwards Deming - "Out of the Crisis"
The above quotes are some of my favorite ideals as it relates to mathematics; and as such they are fitting starting points for this first part of my "Life at the Intersection of Metaphors and Mathematics" This series (not sure how many parts it will be yet); is inspired out of two simple premises:
1.) America is operating at a level that is completely unsustainable based on the level of revenue collected and the amount of budgeted expenditure.
2.) The spin doctoring from politicians, lobbyists, and many media outlets with regards to item #1 is irresponsible and reprehensible.
Pick a newscaster or a politician and play the drunken blame game; I'm not listing any of the idiocy here because frankly this post is long enough for me to split as it is, and I try my best to make a habit of ignoring idiocy whenever possible. I only mention the practice at all to tell you that the words found throughout this series will not come from opinions based rhetoric or naive idealism; it's going to be pragmatic reality. In other words; we're not going to talk about how things SHOULD be; we're going to talk about how things ARE and what we need to do to keep them this way.
The Ground Rules (aka"raw Data")
- All numbers are being pulled from The United States Debt Clock as of May 19, 2011 in U.S. Dollars.
- All dollar values are rounded to the single millions position.
- The National Debt is a lifetime; gross amount. All other amounts are annualized for fiscal year 2011
- All census/quantitative data is exact as of the time of review for this writing.
- The Monetary Data being used is as follows:
National Debt: $14 trillion, 386 billion, 370 million ($14,386,370,000,000.00)
Federal Spending: 3 trillion, 552 billion, 378 million. ($3,552,378,000,000.00)
Federal Revenue (Taxes Collected): 2 trillion, 187 billion, 242 million ($2,187,242,000,000.00)
Federal Deficit (calculated from above): 1 trillion, 365 billion, 135 million ($1,365,135,000,000.00)
M2 Money Supply: 9 trillion, 68 billion 453 million ($9,068,453,000,000.00)
The Big 6:(see itemized list below): 3 trillion, 63 billion, 954 million
1. Medicare/Medicaid - 813 billion, 270 million ($813,270,000,000.00)
2. Social Security - 710 billion, 944 million, ($710,944,000,000.00)
3. Defense - 697 billion, 797 million, ($697,797,000,000.00)
4. Income Security (i.e. Unemployment): 426 billion, 907 million ($426,907,000,000.00)
5. Interest on National Debt: 207 billion, 709 million ($207,709,000,000.00)
6. Federal Pensions and Benefits: 207 billion, 327 million ($207,327,000,000.00)
-The Census/Quantitative data being used is as follows:
U.S. Population: Three hundred eleven million: (311,384,344)
U.S. Taxpayers: One hundred eleven million; (111,403,195)
U.S. Households: Eighty-One million (81,940,278)
U.S. Retirees and Disability Benefit recipients: Sixty-Five million (65,315,100)
U.S. Food Stamp recipients: Forty-Three million (43,939,257)
A little perspective:
After all that raw data; lets step back and put the situation in terms that actually mean something. The choice to round the the monetary numbers to the single millions position was a calculated move for reasons both practical (as it is the best place to do the math) and psychological; as it is a number that all of us can relate to.
An average ordinary "millionaire" seems to be the person at the crux of the issue from those on the opposing sides. One side operates under a premise that millionaires are soulless; evil people who have prospered by the broken backs and sweat covered brows of the average working man; and has since bought and sold the government to keep their ill gotten gains to themselves for as long as possible. The other side espouses that the millionaires are the lifeblood of existence; "When is the last time a poor person hired someone" they scream loudly and proudly. They are the beneficiaries of mathematics and SOMEONE making the most of the opportunities and gifts bestowed upon them; after all; we all come into the world cold, naked and hungry; and it usually gets worse from there. The one thing that everyone can agree on is that one million dollars is a lot of money; yet it is the absolute smallest amount we are considering for our analysis.
America's Budget
Any financial person worth his salt will tell you the single most important aspect of fiscal success is the budget. A thoughtful; well planned and executed budget will all but guarantee prosperity while a poor budget or a great budget that goes ignored will most assuredly result in poverty for someone that doesn't inherit or win wealth.
For our purposes a budget is very simply a written accounting of X (How much money we have coming in over (Z) period of time vs Y (How much money we are spending over (Z) period of time. Budgets exist in 3 states; a surplus (X-Y>0), a deficit (X-Y<0) or balanced (X-Y=0). The number one objective for almost any financial planner is to balance a budget (as most folks with money issues are operating at a deficit) and slowly grow a surplus. If we take this same approach with the United States of America's budget; here is what we find:
Revenue - Spending = $2,187,242,000,000.00 - $3,552,378,000,000.00 = $ -1,365,135,000,000.00
In plain English; we are spending $1,365,135,000,000.00 more over the course of (Z) than we are earning. (Remember, Z=fiscal year 2011). In terms of percentages; ([R/{R-S}]*100) our deficit is a whopping 62.4% of our revenue generation; meaning to pay all the bills we have racked up in our daily operations, we need to borrow 37.6% of what we are spending.
Put it another way, in real world terms; how long do you think you could survive if you spent every penny you earned; then borrowed another 38% on your credit cards to keep your household functioning; how long could you make it operating that way? What would you do when you couldn't borrow anymore?
This is the question that the United States of America will soon have to answer. . .
(end of Part One)
