William Gross of PIMCO has gathered together two charts (hat tip: Instapundit) that illustrate the pickle that Uncle Sam finds himself in. First, there is a lot of discussion of the Federal debt grown too large. For perspective, it is important to note that the US has three other liabilities (promised future payments) each with a present value from nearly as large to nearly four times larger than the Federal debt:
So, something has to get cut. That raises the question of where the Feds are spending their money. The next chart shows where Federal dollars are spent:
The first thing to notice is that, while are current total spending is quite high, the allocation among the various categories is very close to historical norms. In the above chart, 100% represents the $3.8 trillion that the Feds plan to spend in 2011. Total Federal revenue (taxes and fees of all kinds) is estimated to be a mere $2.2 trillion. Balancing the budget would require reducing spending by 37%. Looking at the numbers above, it is clear that this would be major surgery, not a minor outpatient operation.
•Can we tax the rich enough to balance the budget?