The day has arrived. Today is the deadline for the U.S. to fully approve an increase to the country's $14.3 trillion debt-ceiling. The U.S. House of Representatives passed a bi-partisan deal Monday to increase the country's spending limit through the end of 2012, and the Senate is set to take up the legislation today. The compromise, which includes $2.4 trillion in spending cuts over the next decade, came together in the final moments Sunday evening at the White House after weeks of bitter debate.
But for all congressional haranguing and behaving like children (See: AMERICA HELD HOSTAGE: U.S. Debt Talks Hijacked By Gang Of Angry Children), it might do some good to take a step back and ask how we got here in the first place.
In The Real State of America Atlas: Mapping the Myths and Truths of the United States, authors Cynthia Enloe and Joni Seager, did just that. In the section "Money Comes, Money Goes" they provide a detailed picture of where the U.S. government collects money and spends money using a series of charts and graphics.
2010 U.S. Government Revenues
For the fiscal year 2010, the U.S. government collected $2.2 trillion: 40% of revenues came from social insurances taxes, 43% from individual taxes, 7% in corporate and other taxes, and a tiny 3% in excise taxes.
2010 U.S. Government Spending
For the same fiscal year, the U.S. spent $3.6 trillion: 21% went to Medicare and Medicaid benefits; 20% to Social Security benefits; 20% to defense and security-related activities (like the operations in Iraq and Afghanistan); another 20% to program areas such as education, transportation and the environment; 16% to social safety-net spending like food stamps, home heating insurance and supplemental social security insurance; and finally 6% went to pay all the interest on the U.S. national debt.
When Enloe and Seager looked at these numbers in context of the current debt and budget debate, two things jump out at them:
1) How yearly budget deficits have ballooned in such a short amount of time. In 1995, the U.S. had a budget deficit of $164 billion. In 2000, under President Bill Clinton, the U.S. budget was actually in the green at $236 billion. And today, the country is project to have a deficit of $1.6 trillion by year-end.
2) Where the money is coming from and that corporate America pays a lot less in taxes than one might imagine. According to the Government Accountability Office, 57% of U.S. companies doing business in the U.S. paid no federal income taxes for at least one year from 1998 to 2005. For example, in 2009 GE, Bank of America, Citigroup and Valero did not pay any taxes on income. (See: GE Paid Less in Taxes Than You Last Year, Says The New York Times)
(Note: the previous paragraph contained an error. A representative from Valero points out that the company did not pay income taxes in 2009 due to the fact that the company did not make any income that year. See the 10-K here.)
On top of that the authors found it "quite astonishing" to learn that 83 of the largest 100 U.S. companies have overseas tax havens. In 2007, Citigroup had 427 subsidiaries in foreign tax havens, Morgan Stanley had 273, New Corps had 152, Bank of America had 115, and Procter & Gamble 83.
And get this, there is one single address in the Cayman Islands that is home to 19,000 corporations as their home address -- tiny P.O. boxes!
Big Payday for CEOs
While corporate profits remain high, the good times continue to roll in for some of the wealthiest people in corporate America.
In the book, the authors also focus on the incredible disparity between workers' pay and the big paydays awarded to some of the country's top CEOs.
Check out this comparison! In 2009, the Oracle CEO Larry Ellison received total compensation of $57 million dollars. The equivalent of the combined salary of 1,772 average workers or 3,767 minimum-wage earners!
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- budget deficits
- excise taxes
- Cynthia Enloe