Free Markets, Free People

Federal Budget


Simple Math

Let’s take a minute and look at some simple math about the Federal Budget. Just as a mental exercise to keep some things in mind as we approach the fiscal cliff.

The 2012 Federal budget—a word I use very advisedly, since there wasn’t an actual, you know, budget—as enacted, spent a total of $3.59 trillion.  Of that amount, total mandatory spending was $2.252 trillion. Discretionary spending, i.e., those things in the federal budget that can be arbitrarily changed without changing federal law, was $1.338 trillion. So, 63% of expenditures is mandatory spending which can’t be touched without changing Federal law.

On the revenue side, when you tote up all the taxes, excises, fees, etc., the Federal government collected $2.469 trillion. So, in 2012, once mandatory entitlements were covered, there was a grand total of $217 billion to fund the entirety of the remaining Federal government. The result was a deficit of $1.1 trillion.

So, to boil it down to the simplest terms, our current revenue is just enough to cover our mandatory spending, and about 1/3 of the defense budget. Everything else is funded solely through deficit spending.

When the Bush-era tax rates are raised in January, we will finally stick it to those rich SOBs and get the money they owe us. That will provide a massive influx of tax revenue in the amount of…uh…$42 billion in 2013. By the Democrats’ estimate. Which means the deficit will be slashed from $1.1 trillion to $1.058 trillion.

Ta da!

Every little bit helps, I guess.

Assuming the economy grows, and revenue keeps pace with the increases in mandatory spending. Which I’m not sure I’d bet a lot of money on.

~
Dale Franks
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The Tea Party downgrade

“Look at the history of this – the fact of the matter is that this is essentially a Tea Party downgrade. The Tea Party brought us to the brink of a default.” –David Axelrod, top political consultant to President Obama, in an appearance on “Face the Nation”, Sunday, 7 August, 2011

Damn those Tea Partiers, and their rigid insistence on slashing the Federal budget. If only they were more flexible on spending and increased taxes, we’d be just fine. Their demand that we substantially cut federal spending, balance the budget, and pay down the debt without significant tax increases has now caused S&P to conclude that we aren’t serious about getting debt under control.

That’s the Democrats’ argument anyway. And they’re sticking to it.

I will defer to Protein Wisdom’s Jeff Goldstein for his response:

For all those — both left and (establishment) right — inclined to excuse their own complicity and try to scapegoat the TEA Party, which remains the one faction who actively pushed for serious, actual debt reduction and a return to fiscal sanity, take note here: we recognize that it’s been your strategy since the downgrade to seize on the warnings against “political gridlock” in order to insist that a failure to “compromise” on the part of the TEA Party supporters is what led to the downgrade. We also recognize the dishonesty and cynicism of such a strategy: as has been noted time and again, Cut Cap and Balance was the compromise, with the vast majority of TEA Party supporters in the House voting for the bill, which gave the President his debt ceiling increase in exchange for both real cuts and a mechanism by which to control future deficit spending and debt.

Who didn’t compromise — and whose political intransigence is at the heart of the downgrade — is the Democrats, who refused to come up with their own plan, and who then refused to even allow CC&B come up for a vote. This faction — along with the go along/get along GOP establishment — is now looking to pass blame for their own willingness to block compromise onto the TEA Party.

It won’t work. 66% of the population backed CC&B; 75% backed a Balanced Budget Amendment. What they got instead was more spending (the single largest increase in history) for more empty promises of future cuts in the rate of spending.

This didn’t come anywhere near to what the credit agencies demanded, and it is not lost on us, no matter how feverishly you wish to spin it, that what is missing from any plan but those pushed by the TEA Party is any “‘stabilization and eventual decline’ of the federal debt as a share of the economy,” something that simply won’t happen without real cuts. Raising taxes on “millionaires and billionaires,” even were you to confiscate all their wealth by taxing them at 100%, would run this government for less than a year. And once you confiscated it all, you’d have to then look elsewhere for new “revenues” to keep the government running.

The political class is unwilling to accept a simple premise: They’ve looted the system.  And they’ve looted it to such an extent that some notional increase in revenues obtained by taxing the "rich" can never make up for the spending.

Blaming the downgrade—or anything else—on the only group in America who are willing to fix the problem, rather than kicking it down the road as far as they can, is just a non-starter.

Or, it would be, if there weren’t so many people who weren’t so desperate to believe the gravy train can roll forever.

~
Dale Franks
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Observations: The QandO Podcast for 03 Apr 11

In this podcast, Bruce, Michael, and Dale discuss the Koran-burning pastor in Florida, the public union struggle in Wisconsin, and the Federal budget.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Observations: The QandO Podcast for 23 Jan 11

In this podcast, Bruce, Michael, and Dale discuss the sudden end of Kieth Olberman’s “Countdown”, the Republicans’ proposals to cut government spending, state bankrupties, and much more.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.