The Federal Budget and the Bad News for Most Americans

In my last post, I discussed how Romney's proposed cutting of funding for NPR is a drop in the bucket.  You could eliminate all federal funding for NPR for a year, and it wouldn't balance the budget for one day.  I also wrote about my surprise that, in a poll last year, only 27% of Americans knew that federal funding for public broadcasting was less than 1% of the total federal budget.

In poll after poll, one of the issues that concerns Americans the most is the federal debt.  It keeps increasing each year by leaps and bounds.  For the last several years, the yearly deficit has exceeded $1 trillion.  This means that the government is spending over $1 trillion more each year than it takes in from tax collections.

So Americans say they want a balanced budget.  But unfortunately, most Americans do not really understand what that would entail.  Most Americans do not really know what makes up the federal budget.  It makes it easy for people like Romney and Obama to demagogue the issue (Romney probably more so).

Here is a pie chart of a breakdown of federal spending for FY 2011.  The numbers can vary slightly depending on the source you use.  There are some items in the budget that can get grouped in different categories.  Also, as any libertarian in his right mind knows, the amount listed for defense is really military spending.  It has little to do with defense, as a large portion of military spending is spent on making war and empire building.  But although there are slight variations between sources, the following is a reasonable summary of the breakdown.

Medicare and Medicaid made up 23% of the budget.  Social Security was 20%.  So-called defense spending was 19%.  Interest was 6%.  So between just these things, that is about two-thirds of the entire federal budget.  If none of these things are touched, then you would basically have to eliminate the rest of the entire budget to get somewhere close to a balanced budget.

This means that everything else would have to be eliminated.  This would include federal funding for food stamps, unemployment checks, foreign aid, education, energy, agriculture subsidies, roads, airports, housing, government employees, the Post Office, and thousands of other things.  While much of this might seem appealing to libertarians, how many Americans are going to agree to a balanced budget if it means getting rid of almost the entire federal government, aside from the military, healthcare spending, and Social Security?

But Romney (and Obama) are not proposing to do away with any of this.  Romney has offered a few token cuts with NPR and Planned Parenthood.  These are rounding errors in the deficit.  Neither one has proposed any kind of significant reform for Social Security or Medicare.  The only thing I heard from Romney is that perhaps we should have means testing (stiff the rich) for Social Security.  Again, this is a drop in the bucket.

The federal budget cannot be balanced without addressing military spending and so-called entitlement spending.  But Romney actually wants to increase military spending, which would make the problem even worse.

Even if all of the wars were ended and the majority of bases overseas were closed, it would still not come close to balancing the budget.  It would make a dent, but we'd still be at least half a trillion dollars or more in the hole every year.

The scary thing is when you look at projections for future budgets.  The percentage for healthcare goes up and up.  (I have not even touched on the unfunded liabilities here.)

Military spending will be cut in the future.  It is inevitable.  The laws of economics alone will dictate this.  Wars will end before senior citizens get stiffed out of Social Security checks.

However, there will have to be, at a minimum, major reforms for Social Security and Medicare.  It is inevitable.  There will be cuts.  Some of these cuts may be in the form of raising the retirement age to collect.

The federal budget as it stands now, and with the projected path that it is on, is unsustainable.  It is a matter of time before Congress is essentially forced to scale back dramatically.

This will be a shock to most Americans.  It is not just a simple matter of cutting funding for Big Bird.  It is a matter of making serious and drastic cuts in spending in most areas.  It means there will be a complete change in the role of government in our society.  It is inevitable whether the American people are ready for it or not.