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View Full Version : How The Govt Spends Your Money



Gerry Clinchy
02-19-2010, 02:26 PM
From The Motley Fool
http://www.fool.com/investing/general/2010/02/17/how-the-government-spends-your-money.aspx



To address where exactly the government spends your money, I pulled numbers from the Office of Management and Budget showing total federal spending over the past two fiscal years. Have a look:
Total Federal Spending (in Billions)

Segment
2008
2009
Percentage
of 2009 Total Spending
Social Security
$617
$683
19.4%
Defense
$616
$661
18.8%
Income Security*
$431
$533
15.2%
Medicare
$391
$430
12.2%
Health (Medicaid)
$281
$334
9.5%
Net Interest
$253
$187
5.3%
Education/Training
$91
$80
2.3%
Veterans Benefits
$85
$95
2.7%
Transportation
$78
$84
2.4%
Justice
$47
$52
1.5%
Natural Resources/Environment
$32
$36
1.0%
International Affairs
$29
$38
1.1%
Commerce and Housing
$28
$292**
8.3%
Science/Space/Technology
$28
$29
0.8%
Community/Regional Development
$24
$28
0.8%
General Government
$20
$22
0.6%
Agriculture
$18
$22
0.6%
Energy
$1
$5
0.1%
Undistributed Offsetting Receipts
($86)
($93)
-2.6%
Total
$2.98 trillion
$3.52 trillion
100%

Source: OMB.
*Unemployment benefits, food stamps, child tax credits, etc.
**One-year swing attributable to 2009 stimulus.

Focus on what matters
The main cause of current deficits (http://www.fool.com/investing/general/2010/02/09/sick-of-the-budget-deficit-read-this.aspx) is a catastrophic decline in revenue. But let's just look at the expenditure side of the equation here.
Government spending is obnoxiously huge. Given. But this point can't be repeated enough: High spending has little to do with earmarks, foreign aid, or bridges to nowhere. Social Security, Medicare, Medicaid, defense spending, income security, and interest make up more than 80% of federal spending. Every other individual segment is virtually irrelevant to the big picture. Entitlements and defense spending alone consume almost 60% of the bill. Unless you're willing to take a chainsaw to these two programs, it's a bit rich to protest the profligacy.

But very few are willing. Especially those who count -- politicians. Cutting defense spending seems off limits because it rattles the lobbying arms of Raytheon (NYSE: RTN (http://caps.fool.com/Ticker/RTN.aspx?source=isssitthv0000001)), Lockheed Martin (NYSE: LMT (http://caps.fool.com/Ticker/LMT.aspx?source=isssitthv0000001)), et al. and brings charges that you're a terrorism softy. Slashing entitlement spending is a PR no-no because no politician (from either party) dares to run on the "I'll force Grandma to live on cat food" platform. Cut income security? Good luck getting the "let the hungry kids starve" campaign buttons to fly.

These programs need reform. Oh man, do they ever. But that won't happen without cuts affecting those who qualify for entitlements, which is to say all of us. You. Me. Everyone. Even the most fanatical spending hawks, though, squirm when you start cutting their benefits. Spending cuts always seem vital so long as they don't hit you ... or your constituents.

That's what makes the government spending issue such a swamp. So many want spending slashed, but what needs to be cut in order to make a dent is realistically off limits. Areas where we are willing to make sacrifices -- say, NASA's budget -- make rounding-error differences at best.

YardleyLabs
02-19-2010, 02:38 PM
With respect to Social Security and Medicare, this assessments does not address the fact that these programs are supported by dedicated tax revenues. In fact, for the years shown, Social Security revenues exceed benefits paid by more than $180 billion, which has been used to offset the deficits from other areas. Going forward, an increase of 10% in social security taxes (either rates increases or increases in the taxation cap) or a decrease of 13% in social security benefits would fund the cost of benefits indefinitely into the future assuming that these revenues are not then diverted to support general costs (or pay for general tax reductions).

subroc
02-19-2010, 03:54 PM
...Going forward, an increase of 10% in social security taxes (either rates increases or increases in the taxation cap) or a decrease of 13% in social security benefits would fund the cost of benefits indefinitely into the future assuming that these revenues are not then diverted to support general costs (or pay for general tax reductions).

and what historic practice leads one to believe that any increases will "not then diverted to support general costs?"

YardleyLabs
02-19-2010, 04:05 PM
and what historic practice leads one to believe that any increases will "not then diverted to support general costs?"

Certainly nothing done by Reagan, GWB, or Obama to date. Prior to that, the track record was pretty good. The big culprit has actually been tax cuts without offsetting spending cuts, not spending increases, although Obama may do it through overspending.

Gerry Clinchy
02-19-2010, 05:27 PM
The fact remains that Congress raided the SS funding to use the money for other things; and gave the SS fund IOUs that aren't worth much.

They weren't supposed to be able to do that then, but they did anyhow. Maybe the populace knows better now & wouldn't let them do that again ... if there is any way for the voters to actually know when such action is taken.

Sabireley
02-20-2010, 06:43 AM
Hmm. I though the SS funds were supposed to be in a "lock box"

Roger Perry
02-20-2010, 08:40 AM
Hmm. I though the SS funds were supposed to be in a "lock box"

One President wanted the SS funds to be invested into the stock market.

subroc
02-20-2010, 10:12 AM
One President wanted the SS funds to be invested into the stock market.

Not true. Two presidents wanted to give all citizens some control of how a portion of "their" money gets invested with the stock market being but one possibility.

Truth in advertising or education of the uninformed.

Marvin S
02-20-2010, 10:20 AM
One President wanted the SS funds to be invested into the stock market.

Woger,

I don't know what you use as your frame of reference, but I happen to know just a little bit about the market, & happen to believe that would have been a very good idea.

Everyone would have been responsible for their own investment decisions - can't beat that!!! :cool:

Illinois Bob
02-20-2010, 10:41 AM
"Areas where we are willing to make sacrifices -- say, NASA's budget..."



Who is we? I can give you a list of around 200+ contracters in 32 states and 10 NASA centers where you will find alot of people who are not part of the "we".It probably won't matter what anybody's views are towards NASA anyway after Obamas budget proposals destroy it.I think what he is doing with the cancellation of Constellation is stupid.He will be putting tens of thousands of good people out of work and end our country's space program and use the money instead to waste it on companies that are 40 years behind where NASA already is.In the mean time we can spend 50+ million a seat from the Russians to give us a ride to our space station.After our space program is destroyed we can watch China,India,Russia,etc celebrate the 50th anniversery of our moon landing from here while they are all on the moon and beyond.It all comes down to what you want to spend your money on.I think there are alot of benefits from NASA to justify the spending there.There is far more to benefit from spending with NASA than I have seen in many of the wasteful projects in the Recovery Act,Auto and Bank bailouts,Cash for Clunkers,etc.The amount of money used for NASA is a very small part of that budget too.I think less than 1% of it.Nasa at least produces something and creates actual jobs and is something our country can be proud of.I think there are alot of places to cut waste before wiping out our space program.Just my opinion.I'm not part of the "we".

K G
02-20-2010, 01:27 PM
One President wanted the SS funds to be invested into the stock market.

One President deposited his "funds" on a blue dress.....:rolleyes:

kg

YardleyLabs
02-20-2010, 02:28 PM
One President deposited his "funds" on a blue dress.....:rolleyes:

kg
For a President with the guts to run a surplus when the economy is growing, I would happily buy both the cigars and the blue dresses. Let the President's spouse worry about the sex life; I couldn't care less.

M&K's Retrievers
02-20-2010, 03:23 PM
For a President with the guts to run a surplus when the economy is growing, I would happily buy both the cigars and the blue dresses. Let the President's spouse worry about the sex life; I couldn't care less.

Some disagree ; www.craigsteiner.us/articles/16

YardleyLabs
02-20-2010, 06:53 PM
Some disagree ; www.craigsteiner.us/articles/16 (http://www.craigsteiner.us/articles/16)
There are different ways of counting. The numbers always used by the GWB administration, for example, usually cited the budget deficit rather than the total deficit since the budget excluded war costs. Their second favorite number was the total difference between revenues and outlays, exclusive of interfund charges (that is, transfers of funds from trust accounts to support the general budget deficit). The final approach is to look at net deficit or change in national debt not as a number, but as a percentage of GDP.Both parties tend to like this approach since even a growing national debt can look smaller in the face of a more rapidly growing economy.

Under Clinton, the total deficit -- that is, total revenues less total outlays -- was $290 billion in fiscal 1992 (the last full fiscal year under President Bush (41). It was a surplus of $236 billion in 1992, the last full fiscal year under Clinton. During the seven fiscal years that were fully under the Clinton administration, total outlays increased 29% while total revenues increased 86%. The increase in revenues was caused by overall growth in GDP of 48%, combined with progressive tax rates that result in a higher percentage of income being taxed as income grows, plus significant increases in revenues for social security and Medicare. Total receipts actually increased from 17.5% of GDP to 20.6% of GDP from fiscal 1992 to fiscal 2000.

Under President Bush(43), GDP grew from 37% from $10.5 trillion to $14.4 trillion between fiscal 2002 (the first fiscal year completely under his administration) and fiscal 2008, the last fiscal year fully under his administration. In the same period, total receipts increased 36% and total outlays increased 48%. Thus, under GWB, GDP grew much more slowly than under Clinton, while expenditures grew much faster and revenues grew much slower than GDP and less than half the rate as under Clinton. From a deficit perspective, the impact was simple. We went from surplus to deficit, virtually bankrupting our country, while experiencing slowed economic growth.

It is premature to do a similar analysis for Obama since he has not yet had even one fiscal year under his administration. However, the biggest impacts are already apparent. First, total revenues have decreased 17% as a consequence of the economic collapse and the back end weighting of many of the Bush tax cuts. That is a fact worth considering as discussions proceed on the "need" for tax cuts to stimulate the economy. Outlays are estimated to increase by 25% in the fiscal 2010 budget as compared with Bush's fiscal 2008 budget. However, the increase from Bush's fiscal 2008 budget to Bush's fiscal 2009 budget, as modified by the TARP -- requested by Bush -- and the stimulus program -- requested by Obama, was 18%. The 7% growth in Obama's estimated for 2010 is equal to the average annual growth in Federal outlays under Bush during the period 2002-2008. The biggest factor affecting this increase in the last two thirds of the stimulus program, which had not actually been spent as of the beginning of fiscal 2010. The real test for Obama will come with the 2011 budget. In theory, this should actually decline because of the expiration of the stimulus program. At the same time, revenues should grow dramatically because of the economic recovery and because of the expiration of some of the 2001 and 2003 tax cuts. However, no such decline is evident on projections by the administration, which makes me very nervous. The primary source of growth is attributable to increased debt service costs and increased health care expenditures (not assuming any new health bills).

K G
02-20-2010, 10:07 PM
For a President with the guts to run a surplus when the economy is growing, I would happily buy both the cigars and the blue dresses. Let the President's spouse worry about the sex life; I couldn't care less.

Exactly what I would expect you to say, Jeff...had he gotten bin Laden when he had the chance, his priorities might be less of a concern to some...

kg

YardleyLabs
02-21-2010, 05:32 AM
Exactly what I would expect you to say, Jeff...had he gotten bin Laden when he had the chance, his priorities might be less of a concern to some...

kg
Actually, I think his priority at that time was an impeachment process that never should have started.

Hew
02-21-2010, 06:20 AM
Not so much:



"At the time, 1996, he had committed no crime against America so I did not bring him here because we had no basis on which to hold him, though we knew he wanted to commit crimes against America.

"So I pleaded with the Saudis to take him, 'cause they could have," Clinton explained. "But they thought it was a hot potato and they didn't and that's how he wound up in Afghanistan."

Hew
02-21-2010, 06:33 AM
It's easy to dig Clinton for not grabbing bin Laden when he had the chance because hindsight's 20/20 (and because he invites it when he pretends that bin Laden was a priority and he was doing everything he could to get bin Laden). But in 1996 we were operating under the old, pre-911 paradigm...terrorism should be treated as a law enforcement problem; not a national security problem. Post-911, we know better than to go at it from a law enforcement angle. Bush knew better. Obama is slipping right back into the old thinking...the kind of thinking that left Clinton scratching his head about what to do with a bloodthirsty killer when his head is presented to you on a silver platter.

If another major terrorist event happens in this country Obama and the Democrats will face the wrath of the American people. From the war that Pelosi began against the CIA, to the nixing of enhanced interrogation techniques, to closing Gitmo, to civil trials for 911 plotter who've already confessed, to reading an airplane bomber his rights to remain silent...the Democrats and Obama prove why many/most Americans don't trust their judgement when it comes to naional security.

K G
02-21-2010, 02:00 PM
Whatever happens HEW, and it will happen, it will be Bush 43's fault...bet on it...;-)

k g

Uncle Bill
02-22-2010, 03:17 PM
For a President with the guts to run a surplus when the economy is growing, I would happily buy both the cigars and the blue dresses. Let the President's spouse worry about the sex life; I couldn't care less.


Another view from a 'blind' socialist. Had Newt and Mr. Armey not developed the Contract for America, and changed the entire complextion of the Republic, your Lewinsky Lover would have done to this nation just what your present messiah is attempting to do.

If you can't see what Pelosi, Reed, and Obama are in the process of foisting on this nation, you are as blind as you were in the Clinton years.

UB