Something Has to Give

With tax season just barely behind us, it might be nice to know where our hard-earned dollars have gone now that they’re in Uncle Sam’s pocket. There are really only three ways to spend a tax dollar – for the past, present or future. Here’s what I mean…

A portion of the 2013 budget goes to pay bills we racked up in the past. “Interest on Federal Debt,” which now accounts for a little more than 12% of the budget, is the best example of this. This money does little, to nothing, to fuel future economic growth. We’ve spent the money already. It may or may not have been spent wisely. Either way, it’s a done deal – except that we’re still paying the bill.

What I call “present day” spending includes categories like Government and Food & Agriculture. These are keeping-the-lights-on expenses. We have to pay them today, to get through the day. Tomorrow we’ll have to pay them again, to get through that day. And so on…

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The third way to spend a tax dollar is for tomorrow. This is all about investment in future growth. Spending on Science and Education shown in the chart above, fall into this category.

The idea is that, in a perfect world, $1 spent today on scientific research and development will create economic value of $2, or $3, or $5 a few years down the road. The same principle applies for education spending. Society enjoys practically no benefit today, from money spent educating our youth. The payoff is many years down the road, as young students grow up as mature, productive contributors to the economy.

Here’s the thing… I don’t know if our government actually gets the concept of investing for the future. Part of me thinks they understand. After all, research and development investments are now being counted toward GDP.

Yet, it seems to me we’re still stuck on the hamster wheel of spending far too much of today’s tax dollars on yesterday’s excesses and today’s necessities… rather than saving and investing for a better future.

Just look at the aforementioned categories of spending… just one cent of every dollar goes to science and just three-and-a-half cents to education. Meanwhile, we’re spending more than a quarter of each tax dollar on military spending.

Something has to give.

Rodney cracked open the mystery of the Federal Reserve and the government last week at Demographics School. Unfortunately, I couldn’t be there as we’re getting ready to launch my new service, Cycle 9 Alert. However, I’m going to listen to the Demographics School audio as soon as it’s ready (I’m told it should take about 10 days to arrive). I may not have been able to be there physically in Phoenix, but I wouldn’t miss Demographics School for the world.

As Rodney said above, you only have until midnight tonight to reserve your copy of this audio. Don’t miss the deadline.

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Categories: Markets

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.