Federal Spending – And Opportunities For Savings

Whenever I hear debates about reducing the federal deficit, I think of the saying “penny wise and pound foolish”. It means making efforts to save pennies without watching the larger amounts — someone who drives a H2 fifty miles to work each day but foregoes a cup of coffee to save a buck.

We want to reduce the federal deficit; but we cannot touch military or social security and Medicare spending. And Medicare is 15% of that 28% for “Health And Human Services”. If we start our savings plan by declaring over 50% of our spending off-limits, we are either looking at HUGE cuts in the remaining not-quite 50% or we’re going to fail before we’ve even started.

We could abolish entire departments — say HUD, EPA, NASA, Education, and Labor — and eliminate all foreign aid and only reduce our total federal spending by 9%. Now 9% of 3.4 trillion dollars is still a lot of money (although an interesting academic experiment is to get a group of people together and discuss what you’ll cut in the federal budget. You may find yourself saying, with all seriousness, that we’re only looking at ten million dollars. It isn’t worth the time we’re taking to discuss it.).  But we could reduce Health & Human Services, Social Security, and Defense by 3% each and save the same 9%.

Looking at discretionary spending, the picture becomes even sillier. This means we’re ignoring obligatory payments like social security and Medicare. Defense and homeland security is 54% unto itself!

Whenever someone tells me they won’t cut entitlement programs and won’t touch military spending (or will increase it!), but they’re still going to balance the budget without raising taxes … I assume they are outright lying. Wishful thinking that incomes will increase and thus increase government revenue is sound budget planning. I know the Republicans dislike the CBO because they don’t include “revenue increases we think will happen” as income … but until you start to see those returns, I don’t think you can stake your financial solvency on them.

Leave a Reply

Your email address will not be published. Required fields are marked *