(Also known as Shameless Self Plagiarism)
Back in the day, before I became an intermittent and frequently vanishing blogger I tried my hand at long winded FaceBook posts...
The data here is 13 years old. I have not updated anything from the original. It appears that the article I read that originally inspired this has been pulled down in that time so it is not available for reference. The wikipedia links still work, I don't know to what extent the pages have been updated.
Neocons Talk Deficit but Won’t Budge on Defense Cuts
I read the article above (Thanks Rudi for the link) and it got me started thinking again about the Federal Budget, the National Debt and how the dialogue in Washington about balancing the budget seems to go nowhere. In my opinion Debt discussions tend to devolve in to arguments about items that are barely a blip on the radar because the majority of the budget is so politically charged that talking about cutting it is political suicide.
Budgets have two basic components, Revenue (Income) and Spending (Where the money goes). In theoretical terms balancing a budget is easy. Make Spending less than or equal to Revenue. Bingo, your budget is balanced. If the budget gets out of balance, as ours in the US has, there are two basic options, increase Revenue and/or decrease Spending.
Unfortunately this is where things break down.
An estimated 84% of our National Revenue comes from Individual Income Tax and Social Security and other payroll taxes. So barring the discovery of a new Revenue stream increasing Revenue basically means raising taxes (Ack, Political Suicide).
That leaves us with cutting Spending. Cut Social Security? Suicide. Cut Medicare? Suicide. How about cutting interest on the National Debt? Oh, wait. That would be illegal wouldn't it? Cut Defense spending? Maybe not automatic suicide, but definitely playing with fire.
So what does that leave? What is up for discussion?
Here is where I want to talk about some numbers. Most of the figures I'm using come from wikipedia
http://en.wikipedia.org/wiki/2010_United_States_federal_budget
http://en.wikipedia.org/wiki/US_national_debt
These articles contain links to the federal documents from which the numbers are drawn. I believe that they are fairly accurate give or take $10 Billion here and there.
In 2010 the Federal Budget is $3.55 Trillion.
The estimated revenues are $2.831 Trillion.
This leaves a budget shortfall of $1.169 Trillion (Generally rounded off to $1.17 T)
This means that approximately 33% of the budget is deficit spending. Viewed from the other direction it means we are spending approximately 49% more money than we have.
So where is that money going?
In the 2010 Budget the most expensive sectors are:
- Social Security 19.63%
- Department of Defense (Military spending) 18.74%
- Other Mandatory Spending 16.13%
- Medicare 12.79%
- Medicaid and the State Children's Health Insurance Program 8.19%
- Interest on the National Debt 4.63%
- Health and Human Services 2.22%
- Transportation 2.05%
That represent 84.38% of the Budget. No other department comprises more than 1.48% of the budget. Therefore I'm going to focus on those eight categories because even eliminating all other segments of Government spending together would only eliminate about $554.5 Billion, less than half of the deficit.
The Federal Budget can be divided into two types of spending according to how Congress appropriates the money: discretionary and mandatory. Discretionary spending refers to the portion of the budget which goes through the annual appropriations process each year. Mandatory spending does not go through appropriations.
Of those top eight spending areas only three fall in to the category of "Discretionary Spending".
Department of Defense
Department of Health and Human Services
Department of Transportation
The other five are classified as "Mandatory Spending".
Just because something is in the Mandatory Spending category does not mean that it can't be reduced, just that it is a different process. (I'm still trying to figure out how that is done)
Of those the five categories that are in mandatory spending "Other Mandatory Spending" tends to get the most attention as a potential place to cut the budget because it is the most vague and includes many programs that are lumped together as Welfare. However it also includes such things as federal employee retirement and disability, unemployment insurance, some veterans’ benefits, Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), and the earned income tax credit (EITC).
As it turns out the "Other Mandatory Spending" bucket was subject to the largest budget cuts from 2009 to 2010, -15.2% (Around $102.3 Billion).
The Health and Human Services budget was reduced 1.7% (Around $1.3 Billion).
Those were the only categories among the top eight that went down from 2009 to 2010.
The Defense budget had the largest increase 2009 to 2010, +12.7% (Around $75 Billion).
Social Security increased 4.9% (Around $31.7 Billion).
Medicare increased 6.6% (Around $28 Billion).
Medicaid increased 12.0% (Around $31 Billion).
Interest on the National Debt increased 18.0% (Around $25 Billion).
Department of Transportation increased 2.8% (Around $2 Billion).
So what do I mean when I say don't let anyone kid you? Just this. Anyone who says they have a plan for balancing the budget that does not raise taxes and that won't touch Social Security, DoD, Medicare, Medicaid or interest on the National Debt is full of it. Those five categories are 63.98% of the budget. To balance the budget while leaving those five intact and not raise taxes we would have to do everything else on 3.02% of the current budget. That's around $107.2 Billion to do the work that currently takes $1.279 Trillion.
So don't let anyone kid you. To balance the Budget, the DoD appropriation will have to be reduced, Revenue (Taxes) will have to increase. Realistically the entire Social Security, Medicare, Medicaid system is going to have to be examined and restructured. Because if we don't look at everything, all of the spending and all of the revenue, then all we are doing is arguing over who gets the spare change wedged in the cushions of the National Couch.
