Taxes, Spending, and Powerball Winnings
In 2016, I described what Congress could have done with the then-astronomical $1.5 billion Powerball winnings. With the recent $2.04 billion Powerball prize, it’s time for an update. What could Congress do with the money if they were the sole winners of the Powerball, based on the CBO’s budget for 2022?
Federal spending on education is projected to be $73 billion. The Powerball winnings would fund this for ten days.
Defense spending is currently set to be $714 billion. The Powerball winnings would last twenty-four hours and thirty minutes.
Congress is slated to spend a total of $1.09 trillion on Social Security. The Powerball winnings would cover this for about sixteen hours.
$1.2 trillion was allocated to Medicare and Medicaid combined. If Congress matched all the Powerball numbers, they could fund this for fourteen hours and sixteen minutes.
To pay off just the 2022 deficit of $1.38 trillion, Congress would have to win the Powerball 690 times. With drawings happening twice per week, Congress would have to win every time the Powerball was drawn for the next six years and three months, and that does not even consider that the prize value resets once the Powerball is won.
All told, for Fiscal Year 2022, the U.S. Government has spent $6.27 trillion. In other words, Washington politicians spent the equivalent of the Powerball winnings every two hours and forty-seven minutes. Again, I ask, “what do we get for this grotesque amount of spending?” A 21 percent approval rating for Congress, according to a recent Gallup poll.
Now let’s just be honest. Balancing a budget can seem difficult at times. But most Americans manage to do exactly this, year in and year out. We rarely hear of Washington politicians falling on hard financial times in their personal lives, so we know they can do it. Thus, we are left with but one conclusion: there is something about the chambers of Congress that, upon entrance, render people who are perfectly capable of balancing their own household budgets suddenly incapable of doing so on a larger level.
What causes this?
Imagine for a minute that you had a credit card, that you were allowed to set your own credit limit, that you were viewed as a hero for using and vilified for not using, and for which you would never have to pay the bill. What would you do with this mythical credit card?
Washington politicians do not have to imagine, because this is their day-to-day reality. Congress can set its own debt limit, and can raise it at any time by any amount. In fact, the House Committee on the Budget has even argued that we should “abolish the debt limit” altogether.
Today, it is widely believed that federal spending creates jobs. And it is common practice to express federal spending with figures such as “jobs created” or “jobs supported.” For example, using the average personal income in the U.S. of $63,214, the $73 billion of education spending could be said to support approximately 1.1 million jobs in education. Thus, the incentives that elected officials face is clear: more spending means more jobs. To do so is to be an economic hero. To suggest otherwise is to be accused of not caring about people.
Finally, today’s Washington politicians will not be held responsible for such profligate spending. Future elected officials will instead inherit the fiscal mess today’s officials create, just as today’s have inherited the fiscal mess caused by past officials.
Today’s fiscal mess is not a problem of insufficient revenues. It is the inevitable result of giving Washington politicians a mythical credit card that they can use to enjoy benefits today while passing the bill on to future taxpayers who had no voice in the decision to spend. A system that rewards our elected officials for spending today, without regard to the future costs, inevitably leads to one conclusion: ever-growing public debt. The current debt crisis is no mystery.