This week it is time to consider unthinkable option number three with regards to the federal budget. Previously we have discussed unthinkable option number one, do nothing and keep spending more than we bring in, and unthinkable option number two, raise taxes to make up the differences between revenues and expenditures.
Unthinkable option number three is based on something that a lot of people claim they want but to this point no one has been able to get accomplished. In poll after poll majorities of Americans claim that they want a smaller federal government that both taxes and spends less. But unfortunately what people do not want to “spend less” on are the programs from which they benefit.
Social Welfare programs are the proverbial third rail of American politics and any time there is even half-hearted discussion about where to start cutting the federal budget anyone that has their hand in the cookie jar fights tooth and nail to keep these programs funded at their current levels. Or, they scratch and claw even harder to make sure that they get nice big increases from year to year. The excuses are numerous as to why they are entitled to other people’s money and thrown about with great ease to defend their piece of the government pie. But the excuses aside, we are here to look at the real, hard numbers.
For unthinkable option number three we are going to appease these folks who want to maintain the benevolent hand of government while reducing the size of the federal government. What we will do is start whacking but we will keep their precious little programs intact. This exercise, will be eye-opening to all those who think that we can get back to fiscal soundness as a nation by cutting everything else except their own little piece of the pie.
Let’s revisit some of the numbers from last week shall we? In 2008 the federal government received $2.569 Trillion in revenues while racking up expenses of $3.094 Trillion. Once again, for the record, that was a deficit of $525 billion.
Let’s breakdown where all this spending was at least targeted to go:
Mandatory spending: $1.788 trillion (+4.2%)
$608 billion (+4.5%) - Social Security
$386 billion (+5.2%) - Medicare
$209 billion (+5.6%) - Medicaid and the State Children's Health Insurance Program (SCHIP)
$324 billion (+1.8%) - Unemployment/Welfare/Other mandatory spending
$261 billion (+9.2%) - Interest on National Debt
Discretionary spending: $1.114 trillion (+3.1%)
$481.4 billion (+12.1%) - Department of Defense
$145.2 billion (+45.8%) - Global War on Terror
$69.3 billion (+0.3%) - Department of Health and Human Services
$56.0 billion (+0.0%) - Department of Education
$39.4 billion (+18.7%) - Department of Veterans Affairs
$35.2 billion (+1.4%) - Department of Housing and Urban Development
$35.0 billion (+22.0%) - Department of State and Other International Programs
$34.3 billion (+7.2%) - Department of Homeland Security
$24.3 billion (+6.6%) - Department of Energy
$20.2 billion (+4.1%) - Department of Justice
$20.2 billion (+3.1%) - Department of Agriculture
$17.3 billion (+6.8%) - National Aeronautics and Space Administration
$12.1 billion (+13.1%) - Department of Transportation
$12.1 billion (+6.1%) - Department of the Treasury
$10.6 billion (+2.9%) - Department of the Interior
$10.6 billion (-9.4%) - Department of Labor
$51.8 billion (+9.7%) - Other On-budget Discretionary Spending
$39.0 billion - Other Off-budget Discretionary Spending
Just for the record there is a $192 billion difference between the budget numbers here and what was actually spent. Yes, the government actually spent more than it budgeted. I know, a real shocker right?
Now where in this budget can we get that $525 billion from just to break even? Well, we could cut the entire budget of the Department of Defense and the War on Terror ($626.6 billion) which gives us a $101.6 billion surplus. That means that without any military at all we could pay down the debt ($12 trillion) in about 118 years. This is hardly, if you ask me, a reasonable solution. Not to mention that if there is one thing that the federal government does which is actually constitutional it is to maintain a military.
I am not saying that there is not savings that can be found in this line item and that there is not waste in the defense industry. What I am saying is that it is not reasonable to slash the military budget to zero just to pay down the debt in over a hundred years. A hundred years, I would add, we would not survive without a national defense.
OK, so let’s look at other things in the budget. But remember we are not going to look at cutting a single penny from Social Security, Medicare, Medicaid, Unemployment Benefits or any other of those items under “Mandatory Spending.”
Let’s start with the low hanging fruit and do what most people themselves do when they are in debt. We are going to cut the small discretionary items. So say goodbye to $51.8 billion in “Other On-budget Discretionary Spending” and $39 billion in “Other Off-budget Discretionary Spending.” Whack! Whack!
Feel good at saving some money? Well, you shouldn’t. Yes, while we have cut out these large chunks of money which might even include some valid government functions all we have done is reduce the federal deficit from $525 billion to just a hair over $434 billion. That, again, I remind you is in a normal year. In a bad year where government only were to bring in $2.1 trillion in receipts, as I previously pointed out, total spending still puts us well behind the eight ball. And that doesn’t even consider the lunacy of the last year and this year where government deficits are even bigger!
Ok, so let the whacking resume! Let’s get rid of the Department of Housing and Urban Development ($35.2 billion), the Department of Energy ($34.3 billion), the Department of Agriculture ($20.2 billion) and the Department of Transportation ($12.1 billion). And what the heck, for good measure let’s also throw into the old wood chipper the Department of Labor ($10.6 billion). Can you hear all the screaming?
Now, what have we got? Well, we still have a yearly debt of almost $322 billion in a year where government revenues meet 2008 standards and other expenditures are at 2008 levels.
OK, so time to sharpen the axe a little more. It is time to drop the Department of Health and Human Services ($69.3 billion) and the Department of Education ($56 billion).
Whew! Those are some big numbers right? We have to be getting close! Well, we are getting closer to a balanced budget but we are still $196 billion in the red.
So let’s give every liberal their wildest dreams. We will hack out the money for the “Global War on Terror” because every erudite on the left knows that America is the source of all evil in the world. Whack! There goes $145 billion and we are now just a tick over $50 billion in the red.
But what to do now? Well it is time to keep going if we want to get into the black. Time to take out the line item “Department of State and Other International Programs” ($35 billion) and the National Aeronautics and Space Administration ($17.3 billion). And when we do that, guess what? We are now officially in the black!
Yeah it is only by $1.5 billion and it would take 8,000 years to pay down the debt at that rate but you could feel good about yourself if you were looking at ways to balance the budget based on 2008 numbers. Oh but I should not neglect to mention that much to the chagrin of people that want government to both spend and tax less, that taxes would have to be kept level in order for this to be reality. What’s the old saying about not being able to have your cake and eat it too? Now while I personally believe that we could raise more revenues if we cut taxes and made America more business friendly on a federal level, there are 50 individual states that would have to follow suit as well to make that a true reality. So for the sake of simplicity let's just go with what we know and that is how much we collect based on current tax rates and not get involved in predicting all these other variables.
But what if we really want to pay down the debt? And what if, at the same time, we want to make sure that we have enough money for the lean years? Well, to get to the $2.1 trillion dollar mark which would allow us to pay off the current debt in a more reasonable timeframe and be covered if the economy were to hit a bump, further whacking is indeed necessary.
And unfortunately most what is left are actually Constitutional functions of our government. But oh well! Whack goes the Department of Treasury ($12.1 Billion). Whack goes the Department of Justice ($20.2 Billion). Whack goes the Department of Homeland Security ($34.3 Billion). Whack goes the Department of Veteran’s Affairs ($39.4 Billion). And last but not least, whack goes the entire Department of Defense ($481.4 Billion).
The result? A budget surplus of nearly $589 billion in a good year and enough to have a hundred billion or two left over in the lean years. We now have a payback period of roughly 20 years. Very reasonable if you ask me.
And all it took, for those of you that want so desperately to protect your little piece of the welfare pie, is cutting out everything except your welfare programs. Well, the big ones anyway. Sure we are left with no federal courts, no military to defend us from invasion, no intelligence agencies to keep an eye on our enemies, no nothing except your oh so important welfare programs.
So there you have it; the third of the five unthinkable options. A good option? Not by a long shot. But it is an option nonetheless. I hope that this little experiment today for you who think that government welfare spending isn’t the problem have had your eyes opened just a little bit. Because the numbers clearly show that the deficit will not be going anywhere anytime soon if you insist on having your hand in the cookie jar and increasing year after year the number of cookies you believe you are entitled to receive.
Next week it will be unthinkable option number four; let’s just hack and slash everything! Yep, I said everything. Oh, this is going to be quite illustrative as well. I guarantee it!
Copyright ©2010 J.J. Jackson