The President unveiled his new budget today: 3.83 trillion dollars. The numbers fairly boggle the mind. The total budget works out to just about $12,500 per person in the United States, or about $47,500 per family. Or $34,800 for each of the 110 million taxpayers in the country. Of course, 41% (about $1.56 trillion) is deficit spending, meaning that 41 cents of every dollar the government spends in fiscal year 2011 will be paid for (supposedly) in the future. But with an existing debt of $12.5 trillion, this year’s budget will push the accumulated national debt past $14 trillion: about the same as the U.S. Gross Domestic Product. Interest on the debt alone amounts to about $175 billion per year, or about $2,200 per family, 25% of which ends up in the treasuries of other countries that hold U.S. debt securities.
This year, total government debt will exceed total income for the entire country. The White House budget office says that debt will remain at that level through 2019 (that is, debt will roughly equal GDP), but those projections rely on GDP growing faster than most analysts say it can. At $14 trillion, national debt is almost 20% of all household and business assets in the entire country. If government spending continues at this rate, the accumulated federal debt alone will exceed total assets in 20 years or so. That doesn’t include the approximately $40 trillion (currently) in debt owed by local and state governments, corporations, and individuals.
I won’t try to lay the blame for this situation on the President. Not on the current President, and not on the former Presidents. Undoubtedly, they all have contributed to it by proposing budgets that fund pet projects or further their own agendas, but that’s to be expected. No, the real blame lies with Congress for approving such outrageous spending over the decades, and with us–the American voter and taxpayer–for continuing to allow it.
The President on Wednesday announced a proposed spending freeze on domestic discretionary spending as a way of trying to get the deficit under control. As laudable as that is (any freeze or decrease in government spending gets my vote), it’s pretty difficult to take it seriously. He’s talking about a projected “savings” of about $250 billion over the next 10 years. That’s less than 3% of the total debt expected to accumulate over that period, or about 1% of total spending. And it’s highly unlikely that Congress will approve even that miniscule spending reduction.
The President is in a tough spot because there are programs he positively cannot touch. Even if he were willing to forego re-election, there’s no way Congress would approve cuts in those programs. Doing so is tantamount to political suicide. What programs? I’m so glad you asked.
The following numbers are from the FY 2010 budget
- Social Security is 19.63% of the budget. 13% of the people in this country are over 65 years of age, and a very large percentage of them vote. Need I say more?
- Medicare is 12.79% of the budget. See above.
- Unemployment, welfare, and other “mandatory spending” is 16.13% of the budget. Almost untouchable, regardless of which party controls Congress.
- Medicaid and associated programs: 8.19%. Ditto.
- Interest on the national debt: 4.63%. Can’t have us defaulting on our debt.
When you throw in the Department of Defense share of 18.74%, the total comes to 80.11% of the budget that the President has almost no control over. The budget is 20% over revenue before the President even gets to attempt spending reduction. Think of that: if you cut out military and all government spending other than the programs I mentioned above, we’d still have a budget deficit.
This is nothing new, by the way. I remember the same math being presented to me in 1981 or 1982. If anything, the President has fewer options today than Reagan did back then.
I see three ways out of this mess: Reduce spending, raise taxes, or somehow increase GDP by about 50% so that current tax rates will cover the deficit. In the current climate, spending reductions and tax increases are political suicide, and a 50% increase in GDP is impossible. Tax increases are less suicidal in most cases, and they have the “benefit” (in political terms) of pissing off fewer people, so that’s the route Congress will likely take in an attempt to prevent the inevitable. Even so, there’s no way they can make up a 40% budget deficit (or even a 20% deficit) with tax increases.
No. I guess I don’t see any way out of this mess. Our spending is out of control and there isn’t anybody in a position to slow or stop it. It’s a frightening thought.