The past week has brought still more evidence that America is fiscally doomed owing to the twin burdens of the Welfare State and Warfare State. The latter, of course, is demographically and politically immovable owing to the coming tsunami of Baby Boom retirements and the absolute cowardice of the GOP when it comes to curtailing the social security and medical entitlements and performing its job as the tribune of fiscal rectitude in American democracy.
But the Warfare State’s grip on the nation’s finances is no less forbidding, as we learned from two new outbreaks of Empire First in Washington. That is, the Donald’s embrace of gung-ho interventionism in Venezuela and the 100% vote of the newly elected liberal firebrands in the U.S. House for preservation of NATO.
So the fiscal math is straightforward and prohibitive. A decade or so down the road the Welfare State will cost 18.5% of GDP under current law, the Warfare State will be pushing 5% of GDP when you count Veterans and interest on past wars, and the rest of government – including even minimal pork barrel and normalized interest expense – will a cost at least 4% of GDP.
That brings the future outlays side of the Federal budget to 27% of GDP at a minimum (compared to 21% this year) relative to a revenue baseline which will not even reach 17% of GDP this year; and which is ferociously guarded by the junk yard dogs of the anti-tax GOP, who have sabotaged any and all efforts to find more benign sources of revenue (such as a consumption tax) – even as they remain AWOL on cutting entitlements, the domestic pork barrel or anything else.
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