According to Wikipedia the estimated revenue for the 2010 Federal budget is $2,381 trillion (down 11% compared with 2009). Mandatory spending (such as Social Security, Medicare, Medicaid, interest on the national debt) is $2,184 trillion, an increase of 15.6%. Discretionary spending is $1.368 trillion, an increase of 13.1%.
Fox News reported on February 1st that the 2011 budget will include total spending of $3.834 trillion (an increase of about 8% over the figures above), with discretionary spending at $1.415 trillion (up 3.4%). The projected deficit is $1,267 trillion which means revenue is projected to be up nearly 8%.
The obvious question is why is spending increasing so much in 2010 and 2011 especially when revenue is expected to decrease compared with 2009. We know that we can't do that at home other than by running up our credit card debt.
Politicians are reluctant to state what spending would be cut. Mandatory spending can't be cut without changing the laws. That leaves discretionary spending. In our homes we always have the option of reducing discretionary spending.
Again going back to Wikipedia, the major items listed as discretionary spending are the following departments (the percentages are the increases over 2009): Defense $663.7 billion (+12.7%), Health and Human Services $78.7 billion (-1.7%), Transportation $72.5 billion (+2.8%), Veterans Affairs $52.5 billion (+10.3%), State plus international programs $51.7 billion (+40.9%), Housing and Urban Development $47.5 billion (+18.5%), Education $46.7% (+12.8%), Homeland Security $42.7 billion (+1.2%), Energy $26.3 billion (-0.4%), Agriculture $26 billion (+8.8%).
(1) Obviously we can't cut discretionary spending ($1.368 trillion) by the projected deficit ($1.17 trillion) without, among other things, leaving us defenseless.
Three other things stand out. (2) Defense spending is a whopping portion of "discretionary" spending. I don't think any Americans really think of defense as discretionary. Which is not to say some cuts won't have to happen there. (3) Balancing the budget can't occur solely by income tax increases. The revenue from income taxes is projected to be $1.283 billion. Tax revenues would have to more than double. (4) Eventually mandatory spending is going to have to be reduced.
It seems obvious that cuts in both mandatory and discretionary spending and increases in taxes will be required. It will be worth looking more carefully at the items of discretionary spending and also at the effects of continuing/ending/modifying the "Bush tax cuts".
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