Have you noticed how panicked the White House wants us to be about their reduction in their pay raise?
The 2% ‘budget cut’ is not a CUT, it is a reduction of the RAISE in spending.
Why do they want to spend more money?
I think it is because they want to tax more. They want to spend and waste more, so they can tax and borrow more.
And they do not understand the damaging result of borrowing money.
How long can you live on borrowing 33% of your income? One year? Maybe less?
Let us use a simple example.
“Joe” earns 50,000 dollars a year. He decides to party more, so he borrows $16,650 to fund his lifestyle. Since he borrowed the money, it is ‘tax-free’ for now. So, he is HAPPY.
He borrowed the money with 15% interest.
Now, here is the interesting part of the example. The government borrows at a much lower rate than it would ever allow us to borrow at …. because government fears hyper-inflation.
Interest is $2,475 a year. So, next year, his income will be $47,525. A four percent PAYCUT.
So, let us look deeper at our Federal problem.
We currently pay 248 billion a year in interest. 1.5% interest rate.
What happens when China demands the more historical rate of six percent? That is four times the current rate. And we would need to pay a trillion a year in just interest.
That is a twenty-six percent pay cut to the Federal budget. What will we cut?
Will we cut then? Or, will we cut now?