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Edgy About Government Spending

By Charles Payne, Principal Analyst


US Debt

With U.S. debt at $20.0 trillion and counting, a lot of Americans are on edge and rightfully so, when it comes to government spending. This is coupled with a conservative economic orthodoxy that dismisses the notion of a nation spending its way out of debt and that one can see the biggest hurdle for Donald Trump’s budget. Its aim is to prime the pump with a lot of spending (or investment) that allows for the flow of commerce that ultimately increases economic output.

In the process, the debt as a percentage of the Gross Domestic Product (GDP) declines; eventually, there will be room for deep cuts to actually lower the amount of debt on the books.

Initially, however, cuts are coming from all areas that will spark howling and reignite the class debate and politics of envy. The focus is on cutting the growth rate of spending on anti-poverty programs, while sharply increasing our defense spending by $54 billion and lowering taxes for the richest corporations in the world. Critics will say the budget is heartless.

That being said, there is no doubt billions are wasted in government, and every presidential candidate has vowed to find such waste, fraud, and abuse by using the savings as a cornerstone for reform.  It is really heartless for the federal government to make changes to anti-poverty programs that might have actually increased dependence rather than provide a temporary stop-gap for folks down on their luck?

The fact of the matter is cradle-to-grave welfare is a scourge of the west. It has retarded growth and individual contributions to society. There is a thin line on where charity begins to hurt the recipient. By the same token, the richest nation in the world has preached austerity to the world. The notion that the poorest are making the biggest sacrifices isn’t going to play well in a media that already isn’t fond of this administration.

Crazy Checks

I have written and discussed the so-called “crazy check” for years, but now the phenomenon has gotten to the point where it will bankrupt the Social Security Disability Fund any minute now.  Back in 1961, 25.7% of the Social Security Disability Insurance (SSDI) recipients were diagnosed with heart disease and 16% of neurological ailments.

Now 31.5% of the recipients have mental illnesses (14.9% with mood disorders), and back pain has jumped to 30.5% from 8.3% in 1961. 

The bottom line is there is a lot of abuse in the system. It’s hard to deny people’s claims for mental or back problems.  However, there are 11 sub-categories for mental illness: schizophrenia, neurocognitive, depressive, intellectual disorder, anxiety, somatic, personality impulse control, autism, neurodevelopment, eating disorders, and trauma/stress.

There is significant abuse in the system. It would be a shame to not have funds for folks that are truly disabled and to save taxpayers for a program that has become a de facto welfare program.

As we pay attention to the name-calling and hysteria that will follow the unveiling of the Trump budget today, remember that there really is waste, fraud, and abuse; it makes victims out of those abusing the system along with those who are paying into the system, and those who will need the system to be viable in the future.

Charles Payne
Wall Street Strategies


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