October 16 2012

It is Impossible to Balance the Budget Given the Current Levels of Spending

Gayle Trotter

 

Why is it that any mother understands a basic concept that our federal government does not? 

The idea is weaning. In 2011, federal entitlement spending alone exceeded all federal tax revenue.

Burp.

Hal Mason explains the federal budget dilemma in revealing terms. Why doesn’t the federal government reduce spending and balance the budget? (Note: While Hal should have used 2011 numbers, Hal hit the target.)

“The answer will shock you,” Mason says. “They can’t — not even if they remove every department, employee as well as the military.”

Say that again?

And yet it’s true. Our federal government spent $3.6 trillion and collected $2.3 trillion in taxes, resulting in a deficit of $1.3 trillion. 

That amount — the shortfall — exceeds the total appropriation necessary to run the entire federal government other than federal entitlement programs (mandatory spending).

This means that, in 2012, before the first highway was built, before the first park ranger was paid, before the first Coast Guard helicopter was purchased, every dime of our federal tax dollars was already spent to cover entitlements.

Before the first dollar was spent to pay for running the federal government itself, every taxpayer dollar was already gone.

Hard to believe, but don’t just take my word for it. You can see these facts and figures on page 210 of the official 2013 federal budget.

The federal budget can be divided into three categories.  The first category, the interest on the national debt, must be paid, and is $230 billion.

The second category, so-called mandatory programs, is $2.1 trillion.  The federal government has promised to pay for these programs, which include: Social Security, Medicare, Medicaid, unemployment, and federal pension benefits.

The third category is the actual federal government, $1.3 trillion.  This category comprises security and non-security expenditures.  Security encompasses our military services, and non-security involves things like the Department of Education.

Federal entitlement spending completely swamps all federal government revenue.  The 2011 budget deficit exceeded the amount needed to fund the entire federal government. 

Mind you, that’s not a one-time expense, but a recurring phenomenon that piles on to the national debt each year.  Of course, that increases the interest due on the debt each year, doubling down on the negative effect.

The frightening truth is that it is impossible to balance the budget given the current levels of entitlement spending because the entitlements alone exceed total revenue, before we spend our first dollar on running the federal government.

The way to solve our fiscal catastrophe is, first, to grow our economy and, second, to increase opportunities for people to work and earn.

Right now, the primary job of our federal legislators should be to grow our economy and provide incentives for employers to start hiring and others to start businesses. 

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