A Visualization On The Difficulty of Balancing the Federal Budget.

[CoffeeTiger 5,185]

https://www.washingtonpost.com/politics/2023/01/26/house-republicans-spending-debt-ceiling/

...It’s easy to pick a few places to cut back in your own budget because your budget includes relatively few discrete items. Ax Netflix and you can keep your subscription to The Washington Post, a good trade-off. That sort of thing.

 

But the federal government has many very large buckets of spending and, in those buckets, millions of individual line items. What’s more, many of those buckets are ones that politicians are wary of talking about as potential targets for reduction. Even if there are valid places to reduce expenses on defense, for example, the politics of “cut spending on defense” introduces a friction that makes that difficult. I mean, this is a political world in which an increase to military spending last year was cast as a reduction simply because the increase was considered insufficiently large.

The Committee for a Responsible Federal Budget (CRFB) produced an interesting analysis this month looking at how moving certain buckets out of consideration for reductions made the challenge of cutting spending that much more difficult. To balance the budget without increasing revenue — mostly meaning taxes — you’d need to trim the federal budget by 26 percent over the next decade. If you exclude defense or veterans programs from cuts, you need to eliminate a third of what’s left. Take out Social Security and Medicare, too, and suddenly you have to cut basically everything.

That chart is pretty clear, but it’s worth looking at the budgetary picture with a bit more specificity.

So, using projections from the White House Office of Management and Budget, here’s where the federal government was expected to spend money this year.

Immediately, you can see that five things eat up a lot of it: defense, Social Security, health, income security and Medicare. Combined, those account for 77 percent of all federal spending.

But, again, the government isn’t projected to raise enough to cover all of that spending. The gap between expected receipts and outlays (as the vernacular has it) is here: The black section shows how much of the full pie isn’t covered with incoming revenue.

Again, this doesn’t mean you have to cut spending if you want to balance the budget! You can raise revenue as well, but since we’re talking about the politics of all of this (and a Republican House!), let’s just consider that question alone.

Following the CRFB’s estimates, then, let’s declare some things off limits: no cuts to Medicare, Social Security, defense or veterans. I also included interest payments here (from which I subtracted offsets in the OMB data) since that interest on loan debt will need to be paid. Now we have a blue, don’t-touch section and an orange, cuttable one.

And then we overlay that black slice.

The buckets of spending are arrayed randomly, but you get the point: Only the unobscured part of the orange section would survive these budget cuts.

 

There have been rumblings among House Republicans that perhaps Social Security and Medicare aren’t as sacrosanct as our assumptions above would suggest. But it is unquestionably much harder for Republicans to talk about cutting those programs than it used to be because so much of the party is in line to receive their benefits.

According to Washington Post analysis of voter registration data, nearly two-thirds of Republicans are at least 50 years old, with almost a third already at retirement age. Is this a constituency that’s going to be eager to see reductions in Social Security?

Again, it’s not that there are necessarily no viable cuts to be made in Social Security, things that don’t affect what’s received by program participants at the back end. But, politically, a call to “cut Social Security spending” is potent, particularly among the older Americans who make up much of the GOP electorate.

 

And again, this is a task that House Republicans have already brought on themselves. They could raise revenue; they could simply let the government continue to operate at a deficit (as they were content to do under Republican President Donald Trump).

Instead, they’ve decided to begin discussing the herculean task of trimming spending in places that won’t provoke a backlash and will eliminate nearly 25 cents of every federal spending dollar — a concept that, when considering one dollar, might seem approachable.

But when considering that it is, instead, $5,792,048,000,000? Our brains have an unfortunate habit of breaking.

 

[AU9377 5,051]

On 1/26/2023 at 2:16 PM, CoffeeTiger said:

https://www.washingtonpost.com/politics/2023/01/26/house-republicans-spending-debt-ceiling/

...It’s easy to pick a few places to cut back in your own budget because your budget includes relatively few discrete items. Ax Netflix and you can keep your subscription to The Washington Post, a good trade-off. That sort of thing.

 

But the federal government has many very large buckets of spending and, in those buckets, millions of individual line items. What’s more, many of those buckets are ones that politicians are wary of talking about as potential targets for reduction. Even if there are valid places to reduce expenses on defense, for example, the politics of “cut spending on defense” introduces a friction that makes that difficult. I mean, this is a political world in which an increase to military spending last year was cast as a reduction simply because the increase was considered insufficiently large.

The Committee for a Responsible Federal Budget (CRFB) produced an interesting analysis this month looking at how moving certain buckets out of consideration for reductions made the challenge of cutting spending that much more difficult. To balance the budget without increasing revenue — mostly meaning taxes — you’d need to trim the federal budget by 26 percent over the next decade. If you exclude defense or veterans programs from cuts, you need to eliminate a third of what’s left. Take out Social Security and Medicare, too, and suddenly you have to cut basically everything.

That chart is pretty clear, but it’s worth looking at the budgetary picture with a bit more specificity.

So, using projections from the White House Office of Management and Budget, here’s where the federal government was expected to spend money this year.

Immediately, you can see that five things eat up a lot of it: defense, Social Security, health, income security and Medicare. Combined, those account for 77 percent of all federal spending.

But, again, the government isn’t projected to raise enough to cover all of that spending. The gap between expected receipts and outlays (as the vernacular has it) is here: The black section shows how much of the full pie isn’t covered with incoming revenue.

Again, this doesn’t mean you have to cut spending if you want to balance the budget! You can raise revenue as well, but since we’re talking about the politics of all of this (and a Republican House!), let’s just consider that question alone.

Following the CRFB’s estimates, then, let’s declare some things off limits: no cuts to Medicare, Social Security, defense or veterans. I also included interest payments here (from which I subtracted offsets in the OMB data) since that interest on loan debt will need to be paid. Now we have a blue, don’t-touch section and an orange, cuttable one.

And then we overlay that black slice.

The buckets of spending are arrayed randomly, but you get the point: Only the unobscured part of the orange section would survive these budget cuts.

 

There have been rumblings among House Republicans that perhaps Social Security and Medicare aren’t as sacrosanct as our assumptions above would suggest. But it is unquestionably much harder for Republicans to talk about cutting those programs than it used to be because so much of the party is in line to receive their benefits.

According to Washington Post analysis of voter registration data, nearly two-thirds of Republicans are at least 50 years old, with almost a third already at retirement age. Is this a constituency that’s going to be eager to see reductions in Social Security?

Again, it’s not that there are necessarily no viable cuts to be made in Social Security, things that don’t affect what’s received by program participants at the back end. But, politically, a call to “cut Social Security spending” is potent, particularly among the older Americans who make up much of the GOP electorate.

 

And again, this is a task that House Republicans have already brought on themselves. They could raise revenue; they could simply let the government continue to operate at a deficit (as they were content to do under Republican President Donald Trump).

Instead, they’ve decided to begin discussing the herculean task of trimming spending in places that won’t provoke a backlash and will eliminate nearly 25 cents of every federal spending dollar — a concept that, when considering one dollar, might seem approachable.

But when considering that it is, instead, $5,792,048,000,000? Our brains have an unfortunate habit of breaking.

 

I believe the first mistake is to make any program off limits.  When we do that, we tell providers involved with those programs that they can charge anything they want for whatever service is provided.  I believe that we can provide the services without the costs being what they currently are. 

I look to all healthcare spending as an example.  As a country, we spend more per citizen on health care than any other country on the planet, all while not providing basic healthcare like every other first world country.

[homersapien 11,460]

1 hour ago, AU9377 said:

I believe the first mistake is to make any program off limits.  When we do that, we tell providers involved with those programs that they can charge anything they want for whatever service is provided.  I believe that we can provide the services without the costs being what they currently are. 

I look to all healthcare spending as an example.  As a country, we spend more per citizen on health care than any other country on the planet, all while not providing basic healthcare like every other first world country.

Excellent point!

The question is: do we have a government capable of rationalizing expenditures in such a program?

I suspect not. 

I keep gravitating back to the more fundamental issues that first require changing to transform our government to be more effective, starting with money and influence in politics.

Edited February 10, 2023 by homersapien

[Cardin Drake 1,857]

Bet on inflation. If the fed (a) allows market interest rates to return, interest expense will be unsustainable, and deficits will soar, creating inflation.  If they (b) return to their policy of subsidizing interest rates with Q.E (also known as printing money and/or welfare for billionaire's), that too will create inflation. My money is on b. The one thing I ask of my government at this point is fiscal responsibility. It's the one thing I will never get, no matter who is in charge.

[AuburnNTexas 7,179]

Here is the main reason it is becoming imperative that we find a way no matter how difficult to balance the budget. In the middle of the chart is Interest while no where near the largest spent we are having a double hit because of inflation. Just like when you buy a house part of the payment goes to principal and part goes to interest. Older bonds that were at low interest rates are being paid off but as our debt grows we are borrowing against new bonds at much higher interest rates.  I can't remember where  I read it but right now about 6.5% goes to paying interest with higher interest rates because of Fed trying to stop inflation it is expected to grow to close to 10% or more in a few years. 

 

https://www.cbo.gov/publication/56542

In the above report interest in 2023 is expected to be 271 Billion dollars in 2030 it is expected to be 664 Billion. In the last ten years we have gotten away with excess spending because interest rates were so low but starting with Pandemic spending under Trump and continuing under Biden our debt has grown dramatically. With higher interest rates we are fast approaching the point where we will have to cut important programs to allow us to make debt payments.

 

The longer we wait the worse it will get. It is unrealistic to think we can balance the budget overnight but we have to start and make some tough decisions.

Social Security and Medicare need to be propped up by adding to the amount that is paid in each year. Currently we pay 6.2% to SS and 1.45% for Medicare which is matched by our company.  Those percentages need to increase, we can look at adding a year to retirement age and top end of when no longer pay into Social Security needs to be increased.  Let the accountant types figure out the exact figures that would allow Social Security and Medicare to be solvent long term. If we do this now we won't have to cut benefits later. By putting more money into Social Security and Medicare by increasing percentage we and our company pay into these programs we would also be lowering the amount of new debt each year.

Another person said all programs should be on the table. I agree to an extent. Every program needs to cut out waste and programs that are not needed. I am a big proponent of Defense spending especially in a world as dangerous as ours has become with Russia, China, Iran, North Korea, etc. but there is no doubt in my mind that there is waste in our defense budget as in other large government budgets. I am for line item vetoes for the President.  Congress has to go back to having individual budget bills instead of goliath omnibus spending bills that are so large nobody knows everything that is in them and that Pork is added by special Interests on both sides of the aisle.

If you look at the chart it is divided into areas National Defense, Education and Training, Medicare, Social Security, etc. The way the system was originally designed each area was supposed to have it's own spending bill or series of spending bills that were supposed to be voted on individually.  If we go back to original plan we have smaller bills designed only for the area that they are designed for and that should be a more streamlined and efficient system that should allow the oversight to help cut out spending that is not required or needed. 

It won't be easy but it needs to start this year especially with Social Security and Medicare.

Edited February 16, 2023 by AuburnNTexas

[icanthearyou 4,463]

Anything but taxing the over class.

[DKW 86 7,450]

On 2/10/2023 at 1:14 PM, homersapien said:

Excellent point!

The question is: do we have a government capable of rationalizing expenditures in such a program?

I suspect not. 

I keep gravitating back to the more fundamental issues that first require changing to transform our government to be more effective, starting with money and influence in politics.

That is a great exercise and need....that will get you nowhere. The parties are far far far too corrupt to make the changes needed. They both are 100% committed, soldout to the grift.

[DKW 86 7,450]

On 2/15/2023 at 10:13 PM, AuburnNTexas said:

Here is the main reason it is becoming imperative that we find a way no matter how difficult to balance the budget. In the middle of the chart is Interest while no where near the largest spent we are having a double hit because of inflation. Just like when you buy a house part of the payment goes to principal and part goes to interest. Older bonds that were at low interest rates are being paid off but as our debt grows we are borrowing against new bonds at much higher interest rates.  I can't remember where  I read it but right now about 6.5% goes to paying interest with higher interest rates because of Fed trying to stop inflation it is expected to grow to close to 10% or more in a few years. 

https://www.cbo.gov/publication/56542

In the above report interest in 2023 is expected to be 271 Billion dollars in 2030 it is expected to be 664 Billion. In the last ten years we have gotten away with excess spending because interest rates were so low but starting with Pandemic spending under Trump and continuing under Biden our debt has grown dramatically. With higher interest rates we are fast approaching the point where we will have to cut important programs to allow us to make debt payments.

We have been pointing at this for 40 years or more. No one in either party is listening one bit to this. They arent and never will.

The longer we wait the worse it will get. It is unrealistic to think we can balance the budget overnight but we have to start and make some tough decisions.

Social Security and Medicare need to be propped up by adding to the amount that is paid in each year. Currently we pay 6.2% to SS and 1.45% for Medicare which is matched by our company.  Those percentages need to increase, we can look at adding a year to retirement age and top end of when no longer pay into Social Security needs to be increased.  Let the accountant types figure out the exact figures that would allow Social Security and Medicare to be solvent long term. If we do this now we won't have to cut benefits later. By putting more money into Social Security and Medicare by increasing percentage we and our company pay into these programs we would also be lowering the amount of new debt each year.

Wow, we have tried AND FAILED at this several times already and got here anyway. Congress will then immediately borrow from these new revenue sources to spend. In fact I would bet the house, pension, and 401K on them actually INCREASING TOTAL SPENDING BY MORE THAN THE REVENUE INCREASES as they have done every time in the past. 

Another person said all programs should be on the table. I agree to an extent. Every program needs to cut out waste and programs that are not needed. I am a big proponent of Defense spending especially in a world as dangerous as ours has become with Russia, China, Iran, North Korea, etc. but there is no doubt in my mind that there is waste in our defense budget as in other large government budgets. I am for line item vetoes for the President.  Congress has to go back to having individual budget bills instead of goliath omnibus spending bills that are so large nobody knows everything that is in them and that Pork is added by special Interests on both sides of the aisle.

Program cost saving will have to start in Defense. There is no other choice.

If you look at the chart it is divided into areas National Defense, Education and Training, Medicare, Social Security, etc. The way the system was originally designed each area was supposed to have it's own spending bill or series of spending bills that were supposed to be voted on individually.  If we go back to original plan we have smaller bills designed only for the area that they are designed for and that should be a more streamlined and efficient system that should allow the oversight to help cut out spending that is not required or needed. 

Great idea that is never going to happen. The parties know how to carve out their donors and constituents. They will never allow the individual parts to be separated and carved up. THIS IS CRAZY TALK. IT  WILL NEVER HAPPEN.

It won't be easy but it needs to start this year especially with Social Security and Medicare.

AND you just went off the crazy train here. This will never happen. People are not going to work all their lives for a dog food retirement and then be asked to give it up. This is just as unfair as it can get. This should never even be talked about. It is obscene. 

Look, you have some good ideas, but they are never going to work even 5% because Washington has already built the Walls, Fences, Pillboxes, Artillery, Tanks, Bombers, etc to nuke all this. The only thing going to correct this is taxing the wealthy and they OWN every square inch of Congress as it sits now. They own everyone in both parties. EVERYONE IN BOTH PARTIES. Let that sink in for a long while. 

Cur Social Security and Medicare?