HERE IT IS: Your Short Course On Why The US Is Screwed

US entitlement spending

[credit provider=”Mary Meeker, Kleiner Perkins” url=”-usa-inc-february-24-2011-2″]

As we noted last week, Mary Meeker of Kleiner Perkins has published an excellent analysis of the financial condition of the United States.It’s several hundred pages long, so we’ve been highlighting parts of it in shorter form.

Here’s the big story…

If you listen to Republicans and Democrats (and even the Tea Party) bellyache about what’s wrong with the US, you can be forgiven for thinking that the problem is that we spend too much on, say, Education. Or defence.

Well, that’s a crock.

We spend a LOT of Education and defence, of course, but we arguably don’t spend too much on these things, at least as a percentage of GDP. (We certainly spend too much on them relative to what we can afford).

What really busts our budget are the mind-boggling amounts we spend on our entitlement programs–Social Security, Medicare, and Medicaid (especially Medicare and Medicaid).  These programs are wildly more expensive than any other budget items, and they’re also growing like weeds.

If we don’t get Medicare and Medicaid expenses under control, the USA will go broke, pure and simple. And yet, almost no one in Washington has the stones to even talk about this, let alone do something about it. They just kick the can down the road.

What must we do to fix this problem?

Well, as Mary’s charts show, there’s almost no chance that we can “grow our way out of the problem.”

To fix this problem, we must cut entitlement spending (or, at the very least, cut entitlement spending growth). Of course, cutting entitlement spending is taboo in Washington, which is why our wimpy “leaders” never talk about it.

Don’t believe us? See for yourself. What’s killing us is our entitlement programs. Everything else is fine.

[slideshow]
[slide
permalink=”first-the-big-picture-the-pie-on-the-left-is-revenue-the-money-the-government-has-available-to-spend-the-pie-on-the-right-is-expenses-the-money-the-government-actually-spends-note-the-vast-portion-of-spending-that-comes-from-the-entitlement-programs-1″
title=”First, the big picture. The pie on the left is “revenue”–the money the government has available to spend. The pie on the right is “expenses”–the money the government actually spends. Note the vast portion of spending that comes from the Entitlement programs.”
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[slide
permalink=”the-prior-chart-showed-just-a-single-year-2010-heres-what-the-deficit-looks-like-over-time-as-mary-meeker-observes-if-a-company-were-spilling-ink-like-this-shareholders-would-freak-2″
title=”The prior chart showed just a single year: 2010. Here’s what the deficit looks like over time. As Mary Meeker observes, if a company were spilling ink like this, shareholders would freak.”
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image=”http://static.businessinsider.com/image/4d6bbf4fcadcbb0d02050000″
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[slide
permalink=”and-dont-let-anyone-tell-you-that-the-problem-is-just-the-recession-here-the-problem-is-separated-into-structural-dark-blue-versus-cyclical-light-blue-were-now-screwed-even-in-good-times-3″
title=”And don’t let anyone tell you that the problem is just the “recession.” Here, the problem is separated into “structural” (dark blue) versus “cyclical” (light blue). We’re now screwed even in good times.”
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image=”http://static.businessinsider.com/image/4d6bbf454bd7c88108100000″
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[slide
permalink=”basically-over-the-past-15-years-weve-spent-an-average-of-8-more-than-weve-taken-in-that-includes-those-happy-surplus-years-which-are-a-distant-memory-4″
title=”Basically, over the past 15 years, we’ve spent an average of 8% more than we’ve taken in. That includes those happy surplus years, which are a distant memory.”
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image=”http://static.businessinsider.com/image/4d6bbf34ccd1d54e75270000″
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[slide
permalink=”so-whats-the-problem-well-from-a-high-level-the-problem-is-that-the-government-is-doing-a-lot-more-than-it-used-to-heres-how-spending-has-changed-as-a-percent-of-gdp-over-the-past-200-years-5″
title=”So, what’s the problem? Well, from a high level, the problem is that the government is doing a lot more than it used to. Here’s how spending has changed as a per cent of GDP over the past 200 years.”
content=””
image=”http://static.businessinsider.com/image/4d6bbf3d49e2aeba7b0a0000″
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[slide
permalink=”and-heres-a-look-at-the-same-trend-over-time-federal-government-spending-has-soared-from-3-of-gdp-to-24-6″
title=”And here’s a look at the same trend over time: Federal government spending has soared from 3% of GDP to 24%.”
content=””
image=”http://static.businessinsider.com/image/4d6bbf6dcadcbbf701110000″
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[slide
permalink=”and-now-lets-start-to-get-a-sense-of-the-portion-of-that-spending-thats-coming-from-the-entitlement-programs-they-started-in-the-1950s-look-how-fast-theyre-growing-7″
title=”And now let’s start to get a sense of the portion of that spending that’s coming from the Entitlement programs… They started in the 1950s. Look how fast they’re growing!”
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image=”http://static.businessinsider.com/image/4d6bbf3accd1d508770a0000″
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[slide
permalink=”were-also-spending-a-ton-on-housing-and-healthcare-especially-relative-to-savings-8″
title=”We’re also spending a ton on housing and healthcare, especially relative to savings.”
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image=”http://static.businessinsider.com/image/4d6bbf5349e2ae9a7a0c0000″
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[slide
permalink=”healthcare-spending-growth-alone-is-staggering-its-growing-7x-faster-than-gdp-9″
title=”Healthcare spending growth alone is staggering… It’s growing 7X faster than GDP.”
content=””
image=”http://static.businessinsider.com/image/4d6bbf7649e2aea977230000″
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[slide
permalink=”and-now-look-at-the-growth-of-entitlement-spending-11x-over-45-years-10″
title=”And now look at the growth of Entitlement spending: 11X over 45 years!”
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image=”http://static.businessinsider.com/image/4d6bbf634bd7c813083b0000″
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[slide
permalink=”by-the-governments-own-estimate-entitlement-spending-plus-the-interest-on-our-debt-will-consume-all-government-revenue-by-2025-freaked-out-yet-11″
title=”By the government’s own estimate, Entitlement spending plus the interest on our debt will CONSUME ALL GOVERNMENT REVENUE by 2025. Freaked out yet?”
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image=”http://static.businessinsider.com/image/4d6bbf5f49e2ae107c010000″
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[slide
permalink=”all-of-this-of-course-adds-up-to-massive-future-liabilities-heres-what-our-unfunded-medicare-medicaid-and-social-security-liabilities-look-like-relative-to-our-current-debt-which-alone-is-frightening-12″
title=”All of this, of course, adds up to MASSIVE future liabilities. Here’s what our unfunded Medicare, Medicaid, and Social Security liabilities look like relative to our current debt (which, alone, is frightening).”
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[slide
permalink=”by-the-way-if-you-exclude-what-were-spending-on-medicare-and-medicaid-the-us-budget-looks-fine-in-fact-were-actually-making-money-dont-you-wish-we-could-just-exclude-those-things-13″
title=”By the way, if you EXCLUDE what we’re spending on Medicare and Medicaid, the US budget looks fine. In fact, we’re actually making money. Don’t you wish we could just exclude those things?”
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[slide
permalink=”but-cant-we-just-grow-our-way-out-of-the-problem-sure-if-we-grow-vastly-faster-than-we-ever-have-before-how-likely-do-you-think-that-is-14″
title=”But can’t we just “grow our way out of the problem?” Sure, if we grow vastly faster than we ever have before. How likely do you think that is?”
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image=”http://static.businessinsider.com/image/4d6bbf5accd1d5a176330000″
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[slide
permalink=”want-more-depressing-details-click-through-mary-meekers-whole-presentation-15″
title=”Want more depressing details? Click through Mary Meeker’s whole presentation…”
content=”Mary Meeker’s Definitive Guide To The US Debt Crisis >
image=”http://static.businessinsider.com/image/4d66dbbfcadcbbc00f020000″
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[/slideshow]