Understanding the federal budget

Note: Although I try to keep GRS a politics-free zone, today's topic is inherently political. I've stayed as neutral as possible in the article, but I know that there'll be some political discussion in the comments. Please keep conversation civil, as always.

Recently at The Simple Dollar, Trent posed the question, “How much do taxes matter to you?” As might be expected, his readers responded with passionate comments from both sides of the political spectrum. The discussion frustrated me, though. There's just too much misinformation, and people offer their opinions as if they were facts.

I'm as guilty as anyone else.

Because my own education on this subject is weak, and because I want GRS readers to be informed, I spent twelve hours last week researching a variety of tax topics. From this research, I've written two articles: this one about the U.S. budget, and a second part about taxes, which I'll publish next week.

These posts are meant simply to be educational. There's no takeaway other than knowledge. We cannot have informed discussions about taxes and government spending if we don't have the baseline information. These two articles record my attempts to discover that baseline information.

Note: Though I've done my best to be accurate, I'm sure there are errors in this post. As they're caught, I'll make corrections.

To begin our discussion of taxes, let's examine the state of the U.S. budget.

The U.S. Budget

The U.S. budget is complex, and it's the source of much political debate. Some argue that we should cut our military spending and use the money to fund a national health care system. Others argue that nationalized health care is the road to socialism, and that we should reduce our current government health programs. Others simply want to cut all government spending. But how much is actually spent where?

The U.S. Office of Management and Budget (OMB) provides a website devoted to the budget of the United States government. You can download the entire budget in PDF form (~2mb file), or browse only for the sections that interest you. There are a variety of supplementary materials available, too.

All of this information is overwhelming. To make the numbers easier to understand, Jess Bachman produces an annual Death and Taxes poster, which attempts to visualize the entirety of the federal budget. The poster contains over 500 programs and departments. The size of each item on the poster is proportional its budgeted amount.

 

The Death and Taxes page allows you to zoom around and look at sections of the poster from within your web browser. There's even a “quick find” feature that allows users to look up the sections that interest them.

You can also order the poster, of course. It's $24. When I asked Bachman for permission to use excerpts of the poster in this article, he went above and beyond for GRS readers: Order two or more posters and get 50% off when you use the code ‘slowly' at checkout. Yes, that's essentially a “buy one, get one free” deal. Order one for yourself, and give the other to your local high school history department.

From the “Death and Taxes” poster, here's a glimpse of the total U.S. national budget:

Although this says “2008 federal budget”, it's actually for 2010.

Even though this image simplifies things, it still took me a couple of minutes to understand it. The penny in the middle represents receipts — from taxes and other sources. The big black chunk missing from the penny is the budget deficit. The government has to borrow this money to stay afloat. The colored circles around the outside edge represent where the government is spending money. Again, the area of each circle is proportional to the expense. (I have no idea why the equation [Outlays = Receipts + Deficit] doesn't balance. Can someone explain?)

Looking over the budget, here are some datapoints that interested me:

  • The Department of Defense has a budget of $534 Billion, which is 37.5% of the overall $1421 Billion discretionary budget. (What does “discretionary budget” mean? See the next section of this article.)
  • I've always thought the Department of Homeland Security was a sort of boondoggle. Looking at its $41.383 Billion budget, however, I see that it was basically created by shuffling agencies from other departments. Customs and the Coast Guard are a part of Homeland Security now, for example.
  • The Department of the Interior, which is home to programs like the National Park Service, etc., has a budget of only $12.007 Billion. That seems really low compared to some other parts of the budget.
  • NASA's budget seems low, too. Is $18.686 Billion per year really going to provide a manned mission to Mars in my lifetime? We'll need to raise that budget if this geek is going to have a chance of dying happy. (I can dream, can't I?)
  • The United States Postal Service has outlays of $78 Billion, most of which are covered by fees. About 5% ($3.776 Billion) of the agency's budget comes from tax dollars. This is much less than I would have guessed.
  • The Department of Education has a $46.69 Billion budget. Of this, $29.64 Billion (63.4%) is for Special Education and Education for the Disadvantaged.
  • The Financial Literacy and Education Commission (which falls under the auspices of the U.S. Treasury) is far, far too small to be listed here.

If looking at the budget poster online is overwhelming, you can scan the spending on various departments in this data-only list of budget spending (it's just a blog post, so it's not too daunting).

As someone who has served on a small-town budget committee, I guarantee you that each of these government organizations — both the ones you support and the ones you don't — can provide rationalization for every penny they receive. In fact, they probably wish they had more money to work with.

But as a taxpayer, I wish I had more money to work with, too.

There's a balance to be found here. And it's arguments over this balance that create divisions among our political parties and lead to tirades about taxes.

Discretionary Spending

You may have noticed that the U.S. budget is divided into discretionary spending and non-discretionary spending. What's the difference? In my personal budget, non-discretionary spending (or mandatory spending) includes things like the mortgage and utilities and essential food. Discretionary spending includes videogames and comic books and restaurant meals. But what does it mean for the government?

  • Mandatory spending (or “direct spending”) is required by law. Social Security, Medicare, Medicaid, and other federal programs (such as Unemployment Compensation, Food Stamps, Student Loans, etc.) are mandated by law. Our elected officials must change the laws before they can change spending on these items. These programs are sometimes referred to as “entitlements”. If you meet the requirements for a particular program, you're entitled to receive benefits.
  • Each year, as a part of the budgeting process, the President and Congress negotiate discretionary spending. Whereas entitlement programs are ongoing, most discretionary expenses require annual renewal. Requests for discretionary spending are made via an annual appropriation bill, which authorizes the government to spend money. Discretionary spending covers programs like the U.S. Forest Service, the Department of Agriculture, the Food and Drug Administration, the Peace Corps — and the military.

Using data from the Congressional Budget Office, I was able to create a graph that shows that discretionary spending as a percentage of the U.S. GDP (gross domestic product) peaked in 1982, and then fell under Presidents Reagan, Bush, and Clinton. It jumped under President George W. Bush:

 

The Congressional Budget Office data breaks discretionary spending down further. In this chart, I've retained the mandatory spending line, but split discretionary spending into three categories: defense spending, domestic spending, and international spending. Again, these numbers are graphed as a percentage of GDP:

 

Both defense and domestic spending increased under President Bush. I suspect they'll both increase under President Obama, as well. How much of this is due to each man's political philosophy? How much is due to the political and economic exigencies of their time? I don't know.

“That's great,” my wife said when I showed her these charts. “But what about total spending. You need a chart for that.” Right. Here's some info about all government spending (including state, local, and federal). What we want, though, is this data from the U.S. Office of Management and Budget.

Here are total U.S. government budget outlays as a percentage of GDP over the past 80 years:

To me, it looks like President Clinton is the only one to systematically reduce spending.
But as several commenters have noted, there are other factors to the 1990s reduction.

Despite fiery rhetoric from both sides, no one political party can honestly claim to be anti-spending. I think that most of us understand that some government spending is necessary — we just worry about the degree of spending that occurs.

It's a fine thing that citizens want to keep government spending in check, but it's important to note that just because you don't want or need a program doesn't mean that there aren't other citizens who want or need it. (I was raised in a “peace church”, for example, and so am naturally opposed to military spending. Yet I recognize that for most U.S. citizens, this is a high priority. I've learned to temper my upbringing with the knowledge that mine is not the majority opinion.)

Although this is a long article, it provides only a cursory glimpse of the U.S. budget. It doesn't even begin to touch the subject of where this money comes from! Tune in next week for the second half of my research, in which I try to uncover the truth about taxes.

Postscript: Here's a new New York Times editorial from Warren Buffett, in which he writes that recent deficit spending was justified to save the economy, but cautions that government needs to be prepared to pull back on spending or risk making things even worse. In order to ward off inflation, Buffett says, “Once recovery is gained…Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources.”

Update #1: Several people have requested info about the relationship between national debt and GDP. In the comments, Joshua points to this national debt graph. He also suggests cross-referencing these graphs with info on party divisions of the U.S. Congress.

Update #2: I amended my Bill Clinton statement. As several commenters have noted, there are other factors to the spending decline during the 1990s, including an expanding economy and a Republican-controlled legislative branch. Also, Ginger-Kathleen sent e-mail asking about government salaries. The President makes $400,000 per year and has a huge expense account. Members of both houses receive $174,000 per year.

Graphs courtesy of me. Images courtesy of Jess Bachman, creator of the Death and Taxes poster. Bachman is generously offering a deal for GRS readers. Order two or more posters and get 50% off when you use the code ‘slowly' at checkout. “It's basically buy-one, get-one-free,” Bachman says. Thanks, Jess!

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Emily@Under$1000PerMonth
[email protected]$1000PerMonth
10 years ago

That poster is an excellent resource. I knew our deficit was huge and it worried me, but I didn’t know it was that huge. Looking over all of the other little budget circles, I’m visualizing that chunk missing, that chunk that we don’t have enough to pay for.

Kris
Kris
10 years ago

Am I the only one that can’t see the graphs? Since the new format I can’t see a lot of the pictures in the blog… I’m really curious about the tax article.

Sam
Sam
10 years ago

I find my own little city’s budget to be more interesting because I can see (or not see) how the money is spent. The money I pay in taxes to my city, county and other local taxing authorities (i.e. health care district, water, etc.) provides the police, fire, road, sidewalk repair, parks upkeep, the local library etc. Here in Florida we just received our initial tax estimates and while values have gone down the city and county are increasing millage rates to try and collect the same amount in taxes. So while values are down, people’s pay is down, taxes… Read more »

ethel
ethel
10 years ago

This is really an excellent and informative article. I appreciate its neutrality and educational tone. In a time of a lot of political “static” that makes real data hard to secure, this is invaluable.

Four Pillars
Four Pillars
10 years ago

Very interesting post on government spending – I hope some enterprising Canadian blogger does the same for Canada (too much work for me). 🙂 One point about spending as a percent of GDP – the GDP is not constant, it goes up in good times and falls in recession. Spending tends to be more constant so you will often have an increase in spending as a % of GDP during a recession even though the actual spending hasn’t changed (or might have gone down). This is shown most clearly in the “Budget outlays as percentage of GDP” chart for the… Read more »

Erik
Erik
10 years ago

JD,

This is an excellent presentation on a complex subject.

If this doesn’t can used in high school econmics classes, it will be a shame.

The national budget and how taxes are calculated are two things I think Americans must understand to be a financially productive citizen.

Well done.

Erik

Lara
Lara
10 years ago

Thanks J.D. This is a lot of great information that isn’t always easy to find. I’m not sure that Bill Clinton actually reduced spending, though. GDP zoomed under Clinton. I think he just didn’t increase spending as fast as the tax receipts increased. As for me, I could very easily wave goodbye to NASA without shedding a tear. I think people get so incensed over taxes because they have different beliefs about what a government should be. I have somewhat libertarian leanings. Military spending is one of the few areas I feel the government should be responsible for. Many of… Read more »

Wise Money Matters
Wise Money Matters
10 years ago

I fall closest in line with the “cut all spending” mentality though there’s a few areas in which I’m ok with moderate government spending. I do find it interesting that our military is our highest expenditure. I’m all for having a strong military defense but I’d love to see more funding for things like science and medicine and less for military. I think things like health care, national forests, and even education could be handled better as private institutions with government oversight rather than being directly managed by the government. More along the lines of the FDA. They make sure… Read more »

CallMeWilliam
CallMeWilliam
10 years ago

This is just nitpicks about JD’s charts, which are mostly fantastic.

I might do the following:
1. Get rid of the horizontal grid lines. The actual numbers on that axis aren’t important, just the direction.
2. Get rid of the years and add on Presidents instead. Put very faint horizontal grid lines for Presidents. This would pull out any differences caused by the President.
3. Currently, you use the same color for “Defense” as “Mandatory Spending”. I’d change that.

Other than that, great charts.

… Sorry for the nitpicks, I’m a professional analytics trainer.

Tracy
Tracy
10 years ago

Excellant job JD. I would echo four Pillars comments.

Studying our federal budget is a real eye opener. I was a no question proponent of gov’t health care until I learned that half of all gov’t spending is non-discretionary spending…and as our population ages, this is expected to increase dramatically. Cutting discretionary spending is not enough to overcome these increases. I’m not sure what the solution is but it is clear that some change is in order.

J.D.
J.D.
10 years ago

@Lara (#7) I know that most people could wave good-bye to NASA without shedding a tear. But I’m a geek, and a science-fiction geek at that. Space exploration goes to the heart of my being. It’s an irrational thing, maybe, but it’s something I support. 🙂 Anyhow, thanks to you and Tracy and Four Pillars for suggesting that spending as a percentage of GDP may not be the best way to graph budget-related topics. All of the government data, and most of the non-government data (some of which I use in next week’s tax post) is provided in GDP-relative format,… Read more »

Shara
Shara
10 years ago

I’m with Lara. I think many things are important, but I don’t take it the step further to think that the federal government should be responsible for funding. I think retirement is important, but I disagree with Social Security. I think education is important but the Department of Education is a joke. What has the Department of Energy done that couldn’t be done in industry or under Department of Defense? Wise Money Matters said science and medicine are important and I agree, but I DON’T THINK THE FEDERAL GOVERNMENT SHOULD BE PROVIDING THE FUNDING. Science and Medicine advance too fast… Read more »

Jess
Jess
10 years ago
J.D., The reason why Outlays – Receipts does not equal Deficit is because I use the ‘on-budget’ deficit figure. What the government does is take all the surpluses from Social Security receipts each year and uses it to subsidize the rest of the government, its about $150 billion a year. Officials use the off-budget deficit figure in public because it looks lower, but ignores the building SS deficiency. If I used the off-budget deficit figure too, it would add up.

You can find the data on tabel S-3 of the following document.
http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf

Rob
Rob
10 years ago

I think citizens are taxed enough, our politicians should “make do” with what we send them. This of course means that before we enact any further spending, we need to make massive cuts. I am frustrated when I hear politicians and pundits claim that increased revennue (more taxes!) is a foregone conclusion. Why can’t they just figure out how to prioritize all of our programs and live with just the programs that we can afford, and cut the rest? If we need government-provided healthcare, and it’s a higher priority item that other current budget programs, then make the necessary cuts… Read more »

Jen
Jen
10 years ago

Kris, Not seeing the pictures might be a setting in your browser, you might want to uninstall and re-install or check your security settings. I actually do website testing and I checked this page and the graphs work on both Mac and Win for firefox, internet explorer, safari, and chrome.

JS Dixon
JS Dixon
10 years ago

I am really impressed with this article! You addressed truth in a plain common sense way without stepping on the toes of any political party. Could you do some looking in to monetary policy as well? Right now my understanding is that the US government pays the Federal Reserve (which is more private than federal) with bonds. The bonds raise in value over time while the dollar decreases in value, this creates a debt that could not be paid off with every US form of money from around the world. To my knowledge the only president that has ever eliminated… Read more »

RetiredSyd
RetiredSyd
10 years ago

Thanks for a very informative post. I have also researched this in the past and been too frustrated to sort through it all, so thanks for doing that. I would be very curious to also see a graph of the deficit’s percentage of GDP over the years, since there is so much discussion of us “not paying for what we’re spending.” (That is not a new phenomenon.) Like you, I think some things are more worth it than others in the budget, but that’s the curse, and blessing, of living in a civilized society. People act like the big bad… Read more »

J.D.
J.D.
10 years ago

@Jess
Say what? I guess on some level I knew the government borrowed against Social Security, but I never understood what that meant before. In a personal finance context, that’s like borrowing against your Roth IRA in order to fund your current year’s spending. I DON’T LIKE THIS.

@Kris (#2)
For esoteric reasons, images are no longer stored on the GRS server. They’re stored on the server for my personal site. I’m willing to bet that for whatever reason, your browser is blocking stuff from foldedspace.org. In order to see images, let foldedspace.org through.

The Tim
The Tim
10 years ago

Now, for fun, go through that giant poster and try to identify all the expenditures that are actually authorized by the Constitution in the specific enumerated list of Congress’ powers in Article 1, Section 8.

After all, “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Right?

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher
10 years ago

Perhaps the largest challenge that this data represents is its enormous complexity combined with the lack of communication with the public at large, which creates desensitization and complacency. In other words, most people pause for just a moment then shrug off the projections for $9 trillion deficits over the next ten years. “What’s another one or two trillion? Oh well, on to my cup of coffee…” We are all guilty — not just politicians — of not learning and/or communicating the ramifications of our budgeting decisions. The internal dialogue is something like this: “If it doesn’t harm me directly, I… Read more »

Jule
Jule
10 years ago

Thanks for this great post, JD.

I’ve been trying to understand the state of U.S. finances. My gut says that spending more than we have is self-destructive–even for a big country. I’m looking for facts.

I came upon I.O.U.S.A., a really interesting non-partisan documentary that I got from Netflix. This is not the first time in history that the U.S. has had a huge debt. It is the first time that the U.S. government has borrowed from foreigners instead of its own people. You can see a free abbreviated version at http://www.iousathemovie.com.

Matt Brundage
Matt Brundage
10 years ago

To extend a bit upon what Shara said (comment #12)… regarding spending under Clinton (or any other president), we must remember that it’s the legislative branch that controls spending. In the mid 90s, the Contact with America (http://en.wikipedia.org/wiki/Contract_with_America) played a major role in the budget process during the latter half of Clinton’s presidency — a time when we actually had federal budget surpluses. Those were the days. While the president does influence spending, ultimately, all spending bills originate in Congress. And when Congress is controlled by the competing political party, the president’s budget aspirations may not be entirely met. For… Read more »

trb
trb
10 years ago

@Rob 14 – the reason that programs can’t be prioritized is because the federal budget has to be passed by the Senate, the House, and the President’s office. Each of these groups (and each member within each group) has different priorities. If at any point there is less than a clear necessary majority, it goes back to the drawing board. Our congressmen almost never agree on what is ‘not important’, because our citizens almost never agree. So the budget grows, because it is easier to add programs and deficit spending than it is to cut programs that someone likes. Hell,… Read more »

jtimberman
jtimberman
10 years ago

JD, Thanks for this post. I did a lot of research on this during the election as well. I also like this chart:

http://zfacts.com/p/318.html

Coupled with this data:

http://en.wikipedia.org/wiki/Party_divisions_of_United_States_Congresses

It is interesting to look at which party was the majority under which president when the Debt to GDP ratio was going up or down.

Chase
Chase
10 years ago

Great, informative article!

I was surprised to see that our debt interest alone is >$150 billion for one year.

I think it would be interesting to see spending of other countries, in terms of “per capita”. Are we one of the few countries with just huge spending per capital? Discretionary spending alone is ~$4,600 per person given the numbers in the post. I would assume that mandatory spending would be much larger than this.

Rob
Rob
10 years ago

trb, I am sure that you are correct. As far as I am concerned, there should be no deficit of any kind and citizens are taxed enough (too much, actually). So, our dear leaders need to figure out how to reconcile these two items before any further spending is even considered. Kicking the can further down the road without really solving the problem doesn’t do any good.

partgypsy
partgypsy
10 years ago

Thank you for posting this, that poster really looks interesting! There is so much heat, misinformation out there it is good to have some unbiased data to look at.

Christopher Chantrill
Christopher Chantrill
10 years ago

You say that at http://www.usgovernmentspending.com/us_20th_century_chart.html the chart on spending as a percent of GDP is “false info,” and then you got the real data from OMB. But the chart you show is federal spending as percent of GDP. On usgovernmentspending.com the chart is federal+state+local spending as a percent of GDP. Over the last ten years federal spending has been about 20 percent of GDP and total spending has been about 35 percent of GDP. The whole point of usgovernmentspending.com is that you can’t get an understanding of government spending by just looking at the federal government. You need to look… Read more »

Chase
Chase
10 years ago

An interesting list, debt as a percentage of GDP.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

I was surprised to see countries like UAE, Venezuela, and China to still have debt/GDP of 15%-20%.

Ian
Ian
10 years ago

Great post J.D.

You say “I was able to create a graph that shows that discretionary spending as a percentage of the U.S. GDP (gross domestic product) peaked in 1982, and then fell under Presidents Reagan, Bush, and Clinton.”

Am I alone in seeing that the graph says that discretionary spending peaks in 1968 and then falls until 2000? Or are you saying that since Reagan, it reached a peaked in 1982 and then fell until the beginning of George W. Bush’s term? I’m just a little confused on that one.

Brian
Brian
10 years ago

@Shara

Scientists do actually decide where the money goes. I work at a lab in an academic institution. NIH (National Institutes of Health) just gets a funding amount. Then, once grant proposals are submitted they are reviewed by other scientists in field. The federal government doesn’t really have much control over HOW the money is spent, but just how much they give.

Just wanted to clear up that little bit.

Kevin
Kevin
10 years ago

@JD (#18): Ooooh… that just set a light off in my had. Since last week, I’ve been unable to visit GRS or the forums. using Firefox on my home PC. I get a server disconnect error. Occassionally, the main page of the forums will load (without any stylesheets or images), but I can’t get into any of the categories. It works with IE, so I figured a Firefox upgrade had broken something. I was unaware you’d moved some things around. I’ll check my AdBlock settings when I get home and see if “foldedspace.org” happens to be on any of the… Read more »

Chris
Chris
10 years ago

As an employee of the Dept. of Homeland Security (which is not a boondoggle haha), I think this poster is a great resource and should be reviewed by every citizen.

You should know where all your tax dollars are being spent. You wouldn’t give a finance manager free control over your portfolio and not ask for statements would you?

Des
Des
10 years ago

@ Kris & JD,

I access this site from my work computer. I can’t see the images either. I went to foldedspace.org and, as it turns out, that site is blocked by my employer’s WebSense filter. If it was ever an option to change where your images are housed, JD, that would be really wonderful. As it is, I turn up on a “violation report” every time I view your site for this reason.

Albert
Albert
10 years ago
Since this is a inherently political topic, I’ll make a quick point to head off oversimplifications: because discretionary and mandatory spending costs do not show up all at once the year the bill is passed, but come up in the following years, one has to look at when the actual spending bills were passed and by whom, rather than when costs actually hit the accounting paper.

This means charts that simply tell how much money was spent per year are not particularly helpful in showing us what decisions actually led to the costs.

J.D.
J.D.
10 years ago

Strange. I’m baffled as to why foldedspace.org might be blocked for some people. Des, can you tell me what a “violation report” is for your web filter? I’ve never done anything remotely evil with any of my sites, so I’m not sure how they could be blacklisted. Do you also have trouble accessing images at jdroth.com?

I didn’t realize this was an ongoing issue or I would have found an alternative solution by now!

Daniel
Daniel
10 years ago

JD–I think it would be a great idea to also include some comparative data from *other* countries about their federal budgets as a percent of GDP. Many of us have the impression that the US is a highly profligate country, and admittedly we are above average in that category, but there are lots of countries (including Japan!) that are much worse off. Also worth noting that among the countries with the lowest debt to GDP ratios there is a very high incidence of countries that have flat taxes. Gives support to the counterintuitive (and ironic) conclusion that high taxes create… Read more »

J.D.
J.D.
10 years ago

@Daniel (#37)
Great idea. If I have time today, I’ll do it. (I have to write tomorrow’s post first, plus I have the podcast.) Next week’s post on taxes does have a comparison chart that shows the tax burden in 30 countries as a percentage of GDP. It’d be interesting to see budgets as a percentage of GDP, though.

If anyone has free time, you could save me a little work by finding the raw data on other countries’ budget vs. GDP. 🙂

Bear
Bear
10 years ago

It’s already been noted the effect during the Clinton years was due to a very spending adverse directed Congress. While it was Republican led I think they’re all dogs! ; ) Although you have to add in the enormous effect of the dot com boom that pushed increases in the GDP to amazing levels. Note that at the rate we’re going under the combined Obama/Democratic Congress we’re very likely to see the largest increase in the history of the country. Notice the enormous spike! Add to that the healthcare fiasco and most likely within 12-24 months we’ll see inflation like… Read more »

Afzal
Afzal
10 years ago

Very interesting topic and explanation….good to know the details.

Thanks!

...
...
10 years ago

“To me, it looks like President Clinton is the only one to systematically reduce spending.”

Isn’t that due to the massive expansion of the economy during his term?

J.D.
J.D.
10 years ago

I’ve added a clarification on my Clinton comment. You guys have made some good points. I was thinking narrowly instead of broadly…

E
E
10 years ago

Wow, JD, thanks for doing all the research! This info is fascinating!

It is kind of overwhelming to think, in order to “fix” our budget problems, we ALL have to agree! 😀

RB @ Financial Samurai
RB @ Financial Samurai
10 years ago

Wow JD, GREAT research!!! This is one of the most informative posts I’ve read online. You’re right that ” no one political party can honestly claim to be anti-spending”. All politicians have an incentive to SPEND LIKE THE WIND. If you don’t spend your budget, you lose it. There are no rewards for being fiscally prudent. In a nutshell, what matters most is the interest rate we have to pay others to fund our OVER SPENDING. That interest rate is in the form of treasuries. I’m impressed and AMAZED foreigners still want to buy our treasuries with the 10-yr yield… Read more »

Tyler
Tyler
10 years ago

RE: NASA. For anyone following the news of the Augustine Commission (per the request of President Obama, the commission is reviewing the current NASA manned spaceflight plans, and if feasible with the current projected budgets for NASA), they are agreeing with you JD – manned spaceflight will NOT meet the current goal of developing spacecraft and rockets to send man to the Moon by 2020 and to Mars in the future with current and projected funding. On the same thought, comments like Lara’s make me sad – NASA (and the space race) is the reason we have Velcro and the… Read more »

Ross Williams
Ross Williams
10 years ago

“that’s like borrowing against your Roth IRA in order to fund your current year’s spending” Not really, since Social Security is not a savings program. Current receipts pay current benefits. Right now, wage earners pay more in taxes than is required to pay current benefits. At some point in the future, about 2018, that will change and benefits paid will exceed the social security taxes collected. Then money from other taxes will have to be used to pay part of the Social Security benefits and that spending will show up as a larger deficit. The “social security trust fund” is… Read more »

Tracy
Tracy
10 years ago

That poster is awesome.

Thanks for all of your research JD! Guess someone’s got to do it.

🙂

Chett
Chett
10 years ago

J.D.,

Just a suggestion, but a post this long and this cumbersome with details should be a Saturday or Sunday post. As I pop in on my lunch break to see what’s happening on GRS I know there is no way I’ll ever be able to digest the information here in the short amount of time that I have. Maybe I can get to it tonight……………..

Kevin@OutOfYourRut
10 years ago

JD–Great idea leading the tax discussion with the budget issue.

It seems that for most people any discussion of taxes is driven by emotion. “I like this program; we need that program”, etc.

It doesn’t seem as if most people think about the numbers behind the budget, perhaps because we’re all kind of shell shocked at the size of the numbers. To ordinary people they seem incomprehensible.

But as (hopefully) concerned citizens, we really do have to be aware of the numbers and what they mean.

The Biz of Life
The Biz of Life
10 years ago

My take on Clinton is that he wised up after the mid-term smack-down in his first four years when his program to dramatically expand the government was shot down. It was the fortuitous circumstances of fiscally disciplined (at least at that time) Republicans and a strong economy that he didn’t fiddle with too much that helped him stumble into a balanced budget. Sad to be a witness to what has happened since then. Makes me think divided government is best for the country. If nothing else the posters emphasize the need to dramatically reduce the size, complexity and scope of… Read more »

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