America's economy en route to Titanic 'iceberg'

By Kirk Elliott, Ph.D.

Editor’s note: The live webinar begins Tuesday, Jan. 17, at 12:00 p.m. ET in the live blog box below. Click Here to Launch the Webinar

As I reflect on all the economic news and woes of 2011, I realize that we haven’t seen the tip of the iceberg. There is something hiding just under the surface that has the power to bring the western world to its knees.

What is it? Debt! Simply put, America and Europe have too much debt and not enough revenues to support it.

I believe 2012 will be a year of transition and change. Stating the obvious, it is an election year, and that will bring with it many challenges as a new administration will have to deal with the aftermath of a country on the verge of collapse, or the current administration continuing our march down the road to serfdom. Either option is going to have to deal with the painful reality that public spending needs to be cut dramatically.

We have become a nation of takers. Medicare/Medicaid and Social Security now consume 60 percent of the United States’ projected tax revenue of $2.5 trillion in 2012. The total amount of Social Security, Medicaid, TARP and other mandatory programs of food stamps, unemployment compensation, child nutrition, supplemental security for the disabled and student loans – a whole gaggle of entitlement programs – balloons to 84 percent of projected tax revenue:

• Social Security – $761 billion
• Medicare – $468 billion
• Medicaid – $269 billion
• TARP – $13 billion
• All other mandatory programs – $598 billion, including food stamps, unemployment compensation, child nutrition and tax credits, supplemental security for the disabled and student loans.

This $2.109 trillion represents 57 percent of the federal budget for 2012. However, we must remember that the federal budget is at minimum at a $1.3-trillion deficit for 2012. And, these numbers are based on projected tax revenues. In a recession, tax revenues will be less than projected, thus amplifying the problem.

According to a Washington Post op-ed article written by Bryan Lawrence of Oakcliff Capital, the $1.3-trillion deficit is completely understated, and the real budget deficit for 2012 is $4.2 Trillion. Why the discrepancy?

Lawrence wrote, “In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. … If the government followed corporate accounting rules, that $2.9-trillion increase would be added to the $1.3-trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2-trillion deficit is something that Americans need to know about.”

Needless to say, we have a major problem on the horizon, and even in an election year politicians do not have enough mojo to overcome this ridiculous amount of spending. The rug is about to be pulled out from underneath the majority of Americans, and the aftermath will be nothing short of complete upheaval that will make the problems in Greece look like child’s play.

Prepare! Prepare now, as this is just one item on a laundry list of problems that could bring this great country to its knees.

There is still time, and remember the promise that God makes to His people in the Old Testament: “If my people, who are called by my name, will humble themselves and pray and seek my face, then will I hear from heaven and will forgive their sin and will heal their land” (2 Chronicles 7:14).

Be sure to contact my office at (866) 211-8986 or email me at kirk@kirkelliottphd.com and request a free copy of our newest DVD, “Monetary Madness,” which will help you navigate through the economic mess that’s bearing down on us. Also, if you are in the Florida area, our firm will be holding a one-day conference in Orlando from 9 a.m.-12:30 p.m. on Feb. 8. The cost is $200 to attend, but if you call me to register, I will pay the registration fee.

In addition, I am conducting a live webinar on Tuesday, Jan.17, for WND.com. It’s free, and you will be able to ask questions. Click Here to Launch the Webinar