Addressing an elite audience of financial advisors on the day the U.S. government hit its debt ceiling, Andrew Friedman, an expert on government affairs, told a grim tale of rapidly deteriorating public finances amid political gridlock in Washington. Friedman, formerly an attorney at the prestigious Covington & Burling law firm, made it clear that though we may overcome the current debt ceiling crisis, the United States seems to have indeed hit its spending limit on the national credit card.
Perhaps the most sobering statistic in Friedman’s address to advisors attending IMCA’s annual convention in Las Vegas was the fact that mandatory spending programs — entitlements including Social Security, Medicare and Medicaid — now total 58% (or $2.2 trillion) of the government’s $3.8 trillion budget this year. That figure exactly equals the amount of tax revenue collected by the government in 2011.
In other words, every penny the government uses to pay for our two large military operations in Afghanistan and Iraq, for the operations of every government agency (Pentagon included) and payment of salary and pension benefits to employees, for interest on our national debt, etc. — is borrowed money.