Can pigs fly? When we look at the U.S. debt situation, the word “hopeless” often comes to mind, even if you are quite the optimist. Though no situation is ever truly hopeless when we serve a sovereign God , we still need to be realistic. Faith is a great thing when it is placed in the right hands. Take God, for example. Trusting in Him is a “sure bet”. We may not get all we want, but He will certainly provide for all of our needs like it says in Philippians 4:19, “And my God will meet all your needs according to his glorious riches in Christ Jesus.” (NIV) The trouble in this world begins when we place faith in the wrong hands. In this case, we often place far too much trust and confidence in our political leaders. This is where my concerns lie, in that, I do not believe politicians will ever do what is necessary to fix the U.S. budget issues. I mean leaders who can’t come to an agreement on less than 1.5% of the budget ($50 billion in cuts) certainly are living in never-never land. Think about that for a moment. Imagine if you had a severe debt and spending problem: You had $60,000 of income coming in ($5,000 per month inflow) Meanwhile, you were spending over $100,000 per year ($8,333 per month outflow) This would be a shortage of $40,000 per year or $3,333 per month Could you not find $1,500 or $125 per month to cut? Most of us could easily find $1,500 a year of waste in our budgets: Eating out too much, movies, videos, cable TV, phone bills, etc. The truth is if we were forced to find savings, we would do all we can to salvage our finances and avoid bankruptcy. Why can’t our fearless leaders do the same? So how bad is our debt problem? In order to see if our problems are solvable, we need to dissect our shortages. As of June 1 st , 2011 our total outstanding Treasury debt stood at $9.7 trillion. That is a HUGE number, but that is not the total debt! We have to add another $4.6 trillion of “intra-governmental holdings” otherwise known as “IOU’s” placed in the Social Security bucket. That means the total Federal government debt is $14.35 trillion! How in the world can we pay this off? Assuming our leaders got serious, I know this is a pretty BIG assumption, it would still take over 20 years to pay off this debt WITHOUT adding any new debt and assuming the U.S. used 1/3 rd of its current revenue to pay toward its debt. If we look at the current situation, we see the U.S. will take in approximately $2.173 Trillion in 2011 according to the OMB . Yet there is a current deficit of $1.65 trillion per year. So even if we solved the current deficit, we would still need to live off 2/3rds of our tax revenues in order to pay off the current debts within 20 years! If our leaders can’t agree on $50 Billion, how will they find nearly $2.5 trillion per year? Sorry for the poor grammar, but “it ain’t happening!” Quite the uphill battle! It would take at least 20 years to pay off the Federal government deficit IF we balanced budgets from 2011-2032, and the Federal government devoted one-third of its total revenue to paying off our National debt! In order to fight a battle, we need to bring the right weapons and game plan . Right now, we are bringing a shovel to a gun fight. We keep digging a hole, hoping we can find a place to hide. Hiding won’t win the battle! The reality is that even if we just protected Social Security and pay interest on our current debt that would eat up $900 billion or nearly 62% of our $1.45 trillion budget. That would leave only $550 billion a year for the military, Medicare, Medicaid, mandatory and discretionary expenditures, infrastructure, NASA, the FBI, Homeland Security, and every other expense! This would mean we would need to CUT EVERYTHING by 80% to balance our budget and free up enough cash to pay off our debt off within 20 years. Now you are beginning to see how serious our debt situation has become. Our politicians couldn’t agree on less than 2% in cuts, how could they ever get even close to the 80% level? So there is a better chance of pigs flying than our political leadership getting serious about reducing the deficit, never mind our overall debt! With leaders ready to raise the debt limit, my concern is we will NEVER get even close to the cuts we need to make. Some questions to consider: What do you think would be a good solution to get out of this mess? How do we get out of this situation BEFORE we become another Greece? Do you have confidence that we can avoid defaulting on our debt? We would love to hear your thoughts ahead of the August 2nd debt ceiling deadline. Meet us in the comments! Photo by Chris Breeze Related Articles: Government and Finances Social Security Facts & Info You Probably Didn’t Know Charitable Giving Stats: The U.S. Shines Obama’s health care reform bill – your thoughts? Why I Don’t Want a Big Tax Refund Next Year Set a Time Goal to Get Out of Debt Faster Jay Peroni, CFP® is author of The Faith-Based Millionaire , Chief Investment Officer at Faith-Based Investor , and host of the Rethink Wealth radio show . His life passion is helping individuals and businesses keep Christ first in the investment and financial planning process. The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .
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Can the U.S. Solve its Debt Problems?