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Is America’s Spending Out Of Whack?

WASHINGTON – OCTOBER 1: An Activists pickets during a protest near the US Treasury Department October 1, 2004 in Washington, DC. Activists, organized by the Jubilee USA Network, protested for 100% debt cancellation for impoverished nations which the G-7 Finance Ministers who where discussing. (Photo by Brendan Smialowski/Getty Images)

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Jobs, Jobs, Jobs. Everyone today wants to know, “Where are the jobs?” Some might answer that they’re all overseas. Others would point to computerization or automation for killing many jobs. No one seems to look toward government for the loss of jobs. Instead, everyone seems to look to government to solve the problem of no jobs. It’s like expecting the fox to bring back the chickens.

How Does The US Spend Money?

The Federal Government has three areas of “Mandatory Spending.” The following much be budgeted to be paid before anything else, one, Medicare and Medicaid ($529 billion); two, Social Security ($896 billion); and three, the interest on the federal debt ($251 billion). Or, to put things in perspective, about half of our $3 trillion plus yearly budget is allocated to those three areas.

But those three are not the real biggies. Only Social Security trumps defense spending ($756.4 billion). That’s more than the $700 billion to bail out banks  received during the 2008 recession. Thanks to the sequester, and the winding down of the war in Iraq, military spending is slowly being reduced. According to the Office of Management and Budget it was highest in 2010 when it reached $851.3 billion.

Other Over The Top Spending

We spend more on defense than Health and Human Services ($73.1 billion); Education ($68.6 billion); and Housing and Urban Development ($32.6 billion) combined. Do defense contractors have the ear of Washington bureaucrats?

How Does Government Create Money?

It’s very simple. When government pays it’s bills money is created. Press a few computer keys and trillions of dollars just “appear.” It’s really pretty amazing.

You and I can’t live beyond our means; but the government doesn’t have that problem.

Since government can print money, the government can easily live beyond its means. If you had a government printing press in your basement your bills would be no problem. Need a new furnace, no problem, order it, print the money and put it in.

That’s a very simplistic version of how the government creates money. It works because the actual dollars don’t really exist in the physical world. They are just computer images that we all accept as having value.

Unfortunately Wars Are Not Good For Jobs

While big bucks are spent on weapons, clothes, boots, guns, tanks, planes, ships, ammo, etc. not that many jobs are created. Why? It’s because the bulk of our military spending is devoted to technology, rather than actual usable raw material in the field.

Defense spending creates about 8,555 jobs for each billion dollars spent. I know that sounds like a lot but if you compare it to building roads and bridges you’re looking at 19,795 jobs for every billion spent.

Some Final Thoughts

Government often interferes with our free market system. If the government wants more of something they subsidize it (electric cars); if they want less of something they tax it (cigarettes).

This “promote the general welfare” system is fine in many cases but it often opens the door to areas of abuse. When the Federal Government tries to direct personal behavior for their personal agenda a lot of American’s resist. Prohibition comes to mind.

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