Cutting the federal budget

So, you want to cut the federal budget?  Be my guest.  A lot of people want to do that.  After all, the government is just wasting our tax dollars, anyway, right?  They’re spending a a trillion more than they’re taking in, right?  We need to eliminate that deficit, don’t we?

Here’s a snapshot of 2010 federal spending using mostly data from the Center on Budget an Policy Priorities (or CBPP, which, you’ll note, gets it’s data from the Office of Management and Budget).  I’ve added in a few details for clarity as noted below (* and **).  And don’t worry too much that it’s now 2012, the budgets and deficits are similar.  To be sure, the issues are exactly the same.

CBPP presents the budget in six broad categories: Defense, Social Security, etc.  They break out the categories of Safety Net and Other to show the major programs under each.  I took the liberty of also separating out Medicaid and CHIP from SS for added detail.

* CBPP provided no dollar amounts for Safety Net programs.  I provided estimates of the major programs based on Google searches, most of which were taken from CBO or OMB data.  The last three programs (child care, housing assistance, home heating assistance, etc.) I ignored because verifying the numbers is tedious and they only amount to a few billion dollars among them.

** CBPP gave the percentage breakouts for Other, but not the actual budget amounts.  These I calculated from the percentages.  You will note that these subprograms do not sum to the Other category total due to rounding.

So, in 2010, the government took in $2.2 trillion and spent a whopping $3.5 trillion.  For the arithmetically challenged, that, means we had a deficit of $1.3 trillion.  Okay, now you’ve got a pretty decent list of what we spend money on right in front of you.  YOU decide where to cut $1.3 trillion.

Defense?  Sure, that’s a good place to start.  But how much are you going to cut?  $200 billion?  $500 billion?  Don’t forget that aid to Israel, Pakistan and Egypt are in that total, as well as Homeland Security.  Also, don’t forget that there are more than a few people still out there who would just as soon see us all dead.  Cutting more than $100 billion or so from this total is doable, but probably not feasible politically.

Okay, how about Medicaid?  After all, that’s just “welfare” for people too poor, too lazy or too stupid to buy insurance, right?  No, not exactly.  Almost half of Medicaid goes to the disabled.  Most of these people are on long term care and unable to work.  Many are actually on life support.  Remember Terry Shiavo?  She was on Medicaid.  President Bush flew to Washington D.C. on a Sunday just to sign a bill to KEEP her on Medicaid-funded life support.

And more than half of all nursing home care is paid for by Medicaid (no, Medicare DOESN’T cover that).  And before you start eyeballing the Children’s Health Insurance Program (CHIP), know that it’s a mere $11 billion of the total.  That’s a lot cheaper than taking forty or fifty million kids off CHIP and then having to pay for their chronic conditions later because they couldn’t afford to see a doctor early.

Okay, we can’t slice interest on the debt.  How about those Safety Net Programs?  Buncha freeloaders, anyway, right?  Well, okay, there’s the Earned Income and Child Tax Credits.  $130 billion is a lot of money.  What do those go for?  They are direct payments to the poorest working taxpayers.  If you are working, but you don’t earn very much, you get some of your money back in the form of direct payments.  If you have kids, as well, you get a little more.  Think of it as incentive to work and support your family, even if you have to work at McDonald’s.  Yeah, you could cut this, but effectively you’d be raising taxes on the poorest, most vulnerable citizens – and the ones who are ACTUALLY WORKING!  Bad idea.

Then there’s Supplemental Security Income (SSI).  This is a Social Securit monthly stipend for people who are fully or partially disabled, but are too young for regular Social Security.  Most have had debilitating illnesses or injuries and either can no longer work or can’t work much.  You gonna cut these people off?  I don’t recommend it.

Then there’s unemployment compensation.  Sure, you can tell all the lazy bums living large on unemployment to “get a haircut and get a real job,” but, unless they’re willing to move to China and work for pennies a day, the fact remains that there aren’t enough jobs for all of them.  Consider also that every penny of those unemployment checks get spent in short order because that’s all the income most unemployed people have.  Then think about the fact that removing that $156 billion from the economy amounts to just a tad over 1% of GDP.  And seeing as how the economy is only growing at a rate of just over 2%, cutting off unemployment just doesn’t make sense, purely from an economic, much less humanitarian perspective.

Food stamps and school lunches?  Forty-six million people are dependent upon food stamps.  School lunches are about $10 billion of that $76 billion, give or take a billion.  You want to cut this?  Go ahead, but first read Matthew 25:31-46 and think for a minute whether you might be separated with the rest of the goats come Pearly Gates time.  Your choice.

That’s pretty much it for the Safety Net programs.  The other stuff is nickles and dimes.  Heck, you can cut the whole thing – tax credits for the poor, disability checks, unemployment, food stamps, child care, home heating, the whole nine yards – and you’ll STILL be only 40% of the way to eliminating the deficit.

So what’s left?  Other.  Veterans benefits and federal retirees?  You can’t seriously cut that, right?  Oh, but there’s scientific and medical research.  There’s an easy $70 billion.  Transportation and infrastructure –  roads, bridges, air traffic control?  Need any of that?  Education – ANOTHER easy $100 billion!  Never mind that most of it goes to help kids pay for college. Non-security foreign aid?  Toast.  Next time there’s an earthquake in some third world backwater, we’ll tell ’em we’re broke.  And what’s this “All other?”  How about, Congress, the courts, U.S. Attorney’s, FBI, that kind of crap.  Okay, we have to keep most of it, but we can do without the EPA and stuff, right?

So let’s take stock.  Let’s say we cut $100 billion from defense, dump everything but SSI and tax credits for the poor from the Safety Net programs (another $250 billion), cut research, education and foreign aid ($200 billion) from Other Programs and slash 10% of what’s left of that (another $50 billion).  And while we’re at it, let’s cut ALL of Medicaid that doesn’t go for children, the elderly or the disabled (15% or about $40 billion).

So far you’ve trashed a lot of defense programs, destroyed most of the social safety net, eliminated all scientific and medical research, made it so that pretty much only wealthy people can afford to send their kids to college and pretty well ensured that we will be of no help to any country that suffers a natural disaster. And you’ve only saved about $640 billion or LESS THAN HALF of the deficit.  Where you going to get the OTHER $660 billion, Einstein?  Social Security?  Medicare?  Defense?

One final point.  The candidates vying to take the current president’s job have made no bones about the fact that they won’t cut ANYTHING from Defense.  In fact, the presumed nominee has vowed to INCREASE the size of the standing army and build additional ships for the Navy. And yet he has also promised to REDUCE TAXES and ELIMINATE THE DEFICIT.  I see an arithmetic issue here.  Do you?  Where do you think HE plans to cut?  Somehow, I don’t think I need to spell it out for you, but columnist Ezra Klein of the Washington Post does such a good job, I hereby outsource that task to him:

The federal budget is fairly simple. I can explain it to you in fewer than 30 words: Most of the money comes in through taxes and borrowing. The vast majority of it is then spent on programs for the old, programs for the poor and defense. That’s pretty much it.

Mitt Romney’s plans for the federal budget are also fairly simple. I can explain them to you in less than 100 words: He’s promising that taxes will go down, defense spending will go up and old-people programs won’t change “for those at or near retirement.” So three of his four options for deficit reduction — taxes, old-people programs and defense — are either contributing to the deficit or are off-limits for the next decade.

Romney is also promising that he will balance the budget and reduce total federal spending by more than $6 trillion over the next 10 years. But the only big pot of money left to him poor-people programs. So by simple process of elimination, poor-people programs will have to be cut dramatically under a Romney presidency. Around 40 percent of projected spending, according to the Center on Budget and Policy Priorities.

The Family Budget and the Federal Budget

I got one of those serial right-wing emails today from one of my low-information-voter acquaintances.  It went like this:

This rather brilliantly cuts thru all the political doublespeak we get. It puts it into a much better perspective.

  • U.S. Tax revenue: $2,170,000,000,000
  • Fed budget: $3,820,000,000,000
  • New debt: $ 1,650,000,000,000
  • National debt: $14,271,000,000,000
  • Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

  • Annual family income: $21,700
  • Money the family spent: $38,200
  • New debt on the credit card: $16,500
  • Outstanding balance on the credit card: $142,710
  • Total budget cuts: $385

Got It ?????

The intent, clearly, is to lead the average American Idol fan to the conclusion that our deficit is caused by congressional reluctance to adequately trim “fat” from the budget.  I was incensed, of course, but quickly realized that the REAL problem could be brought to light simply by extending this analogy.  So I replied like this:

So, the family has a budget of $38,200 (after taxes, let’s assume) and debt of $142,000.   You can find a breakdown of 2011 federal spending HERE and a model of how the average American family spends its money HERE.  Matching the family expenses along the same lines as the government, the family will spend its annual budget roughly like this:
Housing & food (roughly 49% of household spending):                                     $18,700
These roughly equate to Medicare, Medicaid, Social Security & interest on the debt, which compromise 49% of federal spending and all, like housing & food, are basically unavoidable.
Healthcare, insurance & pensions (roughly 31% of household budgets)          $11,900
These roughly equate to federal discretionary and non-entitlement mandatory spending, which make up 31% of federal budget.  It’s basic O&M, cutting it is doable, but seriously short-sighted and unwise.
Clothing, entertainment and everything else (20% of household budgets)       $7,600
Roughly equates to Defense, 20% of federal budget.  There is some room for cutting, but even cutting it ALL won’t fix the problem and would be kind of like walking around naked and with no shoes.
So, the family takes in $21,700 and spends $38,200 annually.  What are you going to cut from that family budget so you can cover its needs AND pay down that debt, Einstein?  Answer: You’re not.  You can’t.  It simply costs too much to properly house, feed and provide for the family to solve the problem simply by cutting spending.  You’re going to have to get some of the people in that house who are not pulling their weight to contribute to the family income.  It’s the same problem we have as a country.
Okay, you say, let’s cut Medicaid.  After all, that’s just welfare for people who can’t afford to pay for their own medical expenses, right?  Fine.  If this hypothetical family was apportioned by age the same as the U.S. population, there would be two adults aged 30-54, two children aged 15-23, one child under 14 and one adult over 65.  Most Medicaid goes to poor children, nursing home care and people on life support.  Cutting it would be like deciding not to spend money on the youngest kid’s insulin treatments, unplugging the life support of one of the adults or throwing grandma out into the street.  Pick one.

The 1% and its apologists are fond of making this a choice between freeloaders and hard working people.  It’s not.  It’s a choice between really RICH people and the rest of us.  It’s a choice between greed and need.  Pick a side.  But be careful.  Someday you might be the one who needs insulin treatments, nursing home care, life support or be the grandma or grandpa who kicks kicked to the curb.  Your choice.