Friday morning Senator Johnson spoke to a full room at WESTconsin Credit Union on the subject of federal spending and our deficit. Absent from his promoted discussion was any mention of the US economic health which continues to deteriorate as the new non-farm payrolls report was issued just as he began his speech and showed only 88K new jobs added and a massive 663K people leaving the labor force. His speech was, in short, full of reality about our current debt and deficit and short on translation to the real world economics.
Senator Johnson covered 29 slides in his speech and I have accessed some key charts used from his website.
Spending, according to Johnson, has ballooned over the last decade and is set to explode from here due to entitlements. These projected numbers are likely understating the reality of a 2022 budget, as continued spending will cause interest rates to rise precipitously.
This spending was juxtaposed against the percent of our economy the federal government takes from the private sector, which he says has grown from 2% at the start of the 20th century to 24% today. These costs are largely driven by entitlement programs and what Johnson explains is a lack of understanding by most Americans that for every $1 we take in Medicare taxes we spend $3, and the reality that there really is no Social Security Trust fund. All solidly true points.
During questions one gentleman blamed the US trade deficit for the ills in America and asked that he read the book he had written and sent him. Another commended Johnson for the information provided and asked how we end the “stupidity” of people who don’t understand the situation? In all Johnson had a room of supporters who agree that spending is out of control and we need action soon.
What was notably missing in his presentation was any real blame for the problems, which is the private bank called The Federal Reserve. Without the Fed currently buying 70-80% of all US Treasuries the credit markets would have raised the cost of borrowing by now and acted as a natural limiter of the governments spending. Money printing of course causes inflation but according to Johnson food inflation is running below the overall inflation average which is officially under 2%.
So what did I ask? I asked if he did his own grocery shopping. The idea that food inflation is under 2% is absurd and I pointed to Economist John William’s data which points to a 10% inflation rate if we remove the government manipulation of the numbers. When I asked if he would support a full audit of the Federal Reserve his answer was, “I think we already know what the Federal Reserve is doing.”
Final note- although the event started late we ended right on time…Senator Johnson had a television interview to do.