How Did USA Inc.'s Financial Reality
Get to this Difficult Point?
USA Inc. Has Not Adequately Funded Its Entitlement Programs
Recessions come and go (and affect USA’s revenue), but future claims (related to entitlement program commitments) on USA Inc. now meaningfully exceed its projected cash flows.
For the last 40 years, management (the government) has committed more long-term benefits through ‘entitlement’ programs like Medicaid / Medicare / Social Security...without developing a sound plan to pay for them.
Many of these programs provide important services to low-income, unemployed, and disabled Americans in great need for help. But without proper financing, support may dwindle.
KP i USA Inc. | High Level Thoughts 37
USA Inc. Has Substantially Expanded
lts “Business Lines” Over Past 80 Years
From 1789 to 1930, 41%!‘ of USA Inc.’s cumulative budget was dedicated to defense spending (compared with 20%! in F2010), per the Census Bureau.
This began to change in the 1930s, when the federal government substantially expanded its role (in effect, expanded its “business lines”) in response to the Great Depression.
Note: 1) 41% is the cumulative defense spending (excluding veterans’ benefits and services) as % of cumulative total federal spending from 1789 to 1930. including veterans’ benefits and services, defense spending would have been 49% of cumulative annual budget from 1789 to 1930 and would have been 22% in F2009. Source: Census Bureau, “Historical Statistics of the United States, Colonial Times to 1970,” Data series ¥Y 457-465.
KP a USA Inc. | High Level Thoughts
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