Solving the US Debt Problem
72I'm going to get right to the point. I constantly see articles, hubs, and talking heads explain the dire need to control our budget and reduce our debt. I agree with them. How many times has John “I can’t stop crying” Boehner said “we need to have a serious conversation with the American people to discuss reducing our debt…” or something like that. Where is the real plan to get this done? Sorry Republicans but you are the most guilty of doing this. Recently the GOP and the Dems fought over 60 billion in cuts. This bothers me immensely, more on why in a minute.
Anyone reading this that makes money and pays bills knows that if you spend more than you make, you are in going into debt. Even kids know this and tests show that squirrels will gather more acorns than they eat to avoid running into ‘acorn deficits.’ Ok, I have not verified the last statement but I’m sure the squirrels that I see running around like maniacs collecting nuts could probably testify to the validity of that statement.
So how much money did the US Federal government collect last year? From all of our taxes on personal incomes, businesses, payroll taxes, etc, we collected $2.38 Trillion dollars.
How much are we currently spending?
- $695 billion - Social Security
- $663.7 billion - Department of Defense (including Overseas Contingency Operations)
- $571 billion is lumped into a group called “Other mandatory programs” which include money for unemployment, child tax credits, student loans, retirement programs for military, food stamps, programs for the blind and disabled, etc. It is important to note that that program tripled in size under the Republicans and President Bush.
- $453 billion– Medicare
- $290 billion– Medicaid
- $164 billion– Interest on National Debt
Ok, there are many others but I’m stopping here. Why? As some of you are probably already aware, we have spent way more than our 2.38 trillion dollars. Ok, knowing that the $571 billion “other” spending is important to both Republicans and Democrats, we know that it can not be eliminated. Let’s for arguments sake say that we could cut this spending in half (which is highly unlikely to happen).
So now under this scenario, we’ve spent 2.55 trillion and are still 170 billion dollars in debt.
Ok, here is the tricky part…I’ve only given you a few of the programs. We still have more than $1 trillion more in spending. Really? Yes Really.
Here is my point. For those in congress or for those of you reading this who say we can’t touch Defense spending because it ‘weakens our country’ and we can’t touch ‘Social Security’ or ‘Medicare,’ tell me how can we even come close to balancing our budget?
Earlier I told you the argument to cut $60 billion dollars from our budget bothered me immensely, in fact, it makes me squirrelly. Why? We currently spend 1.4 trillion dollars more than we have (that is a lot of acorns). If we passed the 60 billion in cuts, are deficit goes to 1.34 trillion dollars. Let’s just round up for argument sake and say that it reduces the deficit to 1.4 trillion. See what I’m getting at?
Extreme conservatives like Newt Gingrich and Sarah Palin are calling for ending the EPA. I wonder if they realize that the EPA was actually created by a Republican? In either case, I can make a lot of arguments against doing that but let’s say we did. Our 1.4 trillion dollar deficit minus 10 billion is now ….(Drum roll please) 1.39 trillion dollars, or rounded up, 1.4 trillion dollars. In a recent study, 9 out of 10 squirrels said Sarah Palin was nuts.
What is congress doing about this? In the last election, Republicans regained some power in congress on promises of restoring fiscal sanity. That group is hard at work and just passed a bill in the house to defund NPR. This will surely be a battle in the Senate and will take time to debate from both sides. Republicans say that this is not about ideals but it is about "making tough fiscal choices" to "balance our budget." NPR is mostly listener funded, they received about $5 million dollars in federal funds. Let me spell this out for everyone. If we subtract 5 million from 1.4 trillion deficit, we get a deficit of: 1,399,995,000,000. Does anyone want to guess what that amount equals when you round it up?
Look, as tough as this is, we need to make changes/cuts to entitlement programs. Further, people need to encourage their lawmakers to reduce defensive spending. We spend almost 2 billion dollars a day on Defense! If it took you 5 minutes to read this hub, in that same amount of time, we have already spent $6+ Million on Defense. That is more than we give NPR in an entire year. You can cut defense without weakening a country. Do we need to spy on Sweden? How about building planes that will never fly because the DOD does not want them?
If anyone wants to take a shot at making cuts to balance the budget, below is remaining budget spending for 2010. Just remember, there is certainly waste in all of these programs but they are there for a reason. Even if you make cuts, there has to be cuts to the larger programs above.
- $78.7 billion– Department of Health and Human Services
- $72.5 billion– Department of Transportation
- $52.5 billion– Department of Veterans Affairs
- $51.7 billion– Department of State and Other International Programs
- $47.5 billion– Department of Housing and Urban Development
- $46.7 billion– Department of Education
- $42.7 billion– Department of Homeland Security
- $26.3 billion– Department of Energy
- $26.0 billion– Department of Agriculture
- $23.9 billion– Department of Justice
- $18.7 billion– National Aeronautics and Space Administration
- $13.8 billion– Department of Commerce
- $13.3 billion– Department of Labor
- $13.3 billion– Department of the Treasury
- $12.0 billion– Department of the Interior
- $11 billion– Potential disaster costs
- $10.5 billion– Environmental Protection Agency
- $9.7 billion– Social Security Administration
- $7.0 billion– National Science Foundation
- $5.1 billion– Corps of Engineers
- $5.0 billion– National Infrastructure Bank
- $1.1 billion– Corporation for National and Community Service
- $0.7 billion – Small Business Administration
- $0.6 billion– General Services Administration
- $19.8 billion– Other Agencies
- $105 billion – Other
AS ALWAYS, I LOVE TO HEAR FROM YOU AND WELCOME ALL COMMENTS.
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Great job with extensive research and facts. I am far from an expert but have a few questions and comments.
$46.7 billion– Department of Education-We spend this much money and have sunk to #25 in the world ranking on education. Seems we may not be getting our money's worth.
$42.7 billion– Department of Homeland Security - Our borders are still full of holes and we are losing this battle.
$72.5 billion– Department of Transportation - We are pushing for construction of high speed rail systems that few if any citizens even want.
$52.5 billion– Department of Veterans Affairs - In my opinion, this number needs to be increased drastically. We owe what is left of our freedom to these veterans and we treat them like crap.
$26.0 billion– Department of Agriculture - Don't we still pay farmers for NOT GROWING crops? Perhaps we should take another look at this program.
$10.5 billion– Environmental Protection Agency - This agency now wants to be involved in Milk Spills. Seems they may not have enough to do to keep all of their employees on the payroll?
$13.3 billion– Department of the Treasury - Is this for ink and paper to print more money?
$0.7 billion – Small Business Administration - No longer does much to help new business starts or existing business.
$9.7 billion– Social Security Administration - We still pay into this program, and as an employer I match my employees contribution dollar for dollar. Had this system been managed properly it would not be in trouble today.
We are fully aware of Medicare fraud that is costing us billions of dollars, but do nothing to stop it.
We still give billions in foreign aid to country's who hate us and who's leaders just pocket most of the money.
We need to keep in mind that government is nothing but overhead and doesn't bring anything to our economy. Many companies have failed because they got top heavy with management and ignored the worker bees. Our government is increasing in size daily and so are the expenses.
Many of the departments you named I have no idea what they do for us. I'm fairly certain we have departments working against each other rather than for a common goal.
To survive we need to shrink government, not continue this insane growth and expense.
Just my thoughts and sorry for the long comment.
HSchneider - all good points, it is absolutely political pandering. The tax cuts were Obama's attempt to gain back the independent voter at the expense of everyone. We can't afford them.
@ Old Poolman - I love the lengthy posts, some great comments in there. I am in agreement that the govt needs to decrease in size. I also agree with some of your comments. The Dept of Ed has seen an increase in spending under Clinton, Bush, and now Obama yet our success in schools continues to decline. Throwing more money at the problem is obviously not solving it.
LRC - You could also cut the 150 Billion appropriated for Obamacare. But yepper we also need to address Social Security, Medicare and Medicaid. If you figure there's 10% waste fraud and abuse in the entitlement area, we could save 266 Billion there, even before changing the systems. Would be a good place to start. I talked about options about entitlements a couple months ago and left and right hubbers attempted to hand me my head.
So good luck on getting the conversation going. Might be a good time for the President to show a bit of Leadership on that but I am not about to hold my breath waiting for any of them, but am likely to vote for those who actually take the risk and the lead on doing something. Great Hub my friend.
Hi LRCBlogger, I really enjoyed this article and although I know it is not about Sarah Palin, I especially liked the part where you said, "In a recent study, 9 out of 10 squirrels said Sarah Palin was nuts." On a more serious note. There are no easy solutions, but in my opinion giving huge tax breaks to mega corporations and to the rich must stop, and after that I think all military personnel need to be brought back to America and we should fire the private contract soldiers who make 3 times what their military couterparts make. America cannot afford to be the watchdog for the world, and I believe we stir up more animosity than we have ever made in good will, by doing what we do.
Up/Funny/Useful
Watching the news this morning I learned that foreign aid is all lumped together under one package. In other words, the amounts may vary, but once a country is on the list they continue to receive their "allowance" no matter how much they hate us, or try to destroy us. I think the number was 158 countries, including Russia, but I may be wrong on that. Perhaps we should consider scratching a few names off this list for budget cuts before we look at social security and medicare?
Poolman, I absolutely agree with you.
Dear LRC,
The budget looks quite different when it is broken down. Great job! Will be referring to this article and may need to use it (and of course give credit to the esteemed author!)in the future! I feel like a Congressman, now! Someone else has done all my work for me!
I think we all have pet peeves when it comes to the budget, but must agree with HSchneider in regards to the extension of almost $1 Trillion in tax cuts. Obviously, the old argument that these are the people that create jobs doesn't seem to fly anymore, hence, where are the jobs?
I am NOT talking about tax cuts to small businesses. They do need tax credits, etc. I refer to the multi-national corporations, some of whom effectively pay no taxes.
I am tired of the Defense Budget, that includes private contractors. Our troops do need to come home!
The problem with Congress is that they are concentrating on the little picture, each determined to cut their enemies' favored social, cultural, pet programs. It reminds me of schoolyard fighting.
Thank you so much for one of the most fact-filled articles that I have seen in a while!
When are you announcing your run for Presidency? I would consider placing my vote!
You guys need to watch Bill Maher's Real Time show. LRC, you are dead on--and you're saying the same thing as Maher.
Medicare, Medicaid and SS are ridiculous lumbering monsters of money.
America doesn't have to worry about building walls...like between Mexico and Canada...that's just stupid.
North America is isolated from the rest of the planet, but the propaganda from the US has been so ludicrous, for so long, it's time to let some fresh ideas about democracy, social reform, accountable representation, etc, etc--in to the closed American loft.
Stop going to war...first...send the troops home...let them protect US soil--for a change. There is no need for a wall, or walls.
Stop food stamps, and get verification of welfare recipients.
Stop paying politicians any kind of salary--room and board--and that's it. Serve the people, not the politicians.
Quit borrowing money--pay the debt.
Stop giving money to national defence and NASA. The space dream is wasted money--the universe will always be there. America has the greatest military on the face of the planet, now just defend our island. Forget about the rest of the planet, which includes Berlin, Japan, Philippines, Grenada, Iraq, Afghanistan, etc, etc.
Quit giving tax breaks to wealthy individuals and corporations--what? They can't afford to give a little?
Great hub.
The stark reality reaches well beyond what one sees on paper as a budget. The National Debt Clock tell a much more telling story as it also includes unfunded liabilities. The link is below for those who want to see the cash flow on the whole story.
Good article.
Some terrific comments. Here are a few thoughts back to everyone:
@ Hmrjmr1 & oldpoolman - you both seem to be saying the same thing which is cut waste, fraud, and abuse, THEN look at making tougher decisions on cutting benefits. I agree completely.
@CreatePerfection - everything you said I have been saying the exact same things. I'm glad to here someone echo my own thoughts.
@ Jillian Barclay - excellent point on congress, how about they stop playing blame games in order to get re-elected and actually work together. There are conservatives and liberals commenting on this hub and many of them have a lot of common interests!
@ Jeremey - thanks for stopping by, POTUS is the craziest job in the world!
@ randslam - did you know the average salary for a member of the House is $168,000. Not bad but did you know how much tax payer money they get for their office and expenses? You're going to choke...$1.5 Million dollars.
@ The Frog Prince - you are 100% correct, I was going to go down that road but that is a whole other chapter. Thanks for pointing out.
Excellent article LRC, but the deficit is not the problem. When Reagan left office the deficit was $2.6 trillion; that would be $4.5 trillion today. According to the Treasury Dept. at the end of Bush's term, the deficit was $1.43 trillion. At the end of President Obama's first year the deficit went down to $1.29 trillion. Revenue increased. The deficit has since gone up again. It's not the deficit...it's the debt.
Are we broke? Compared to what and whom? The whole world is broke. Are we broke like the banks were broke or Wall Street? Can a sovereign nation really go broke? You own your own printing press and keep your own books. I think about the complaints about how China devalues their money.
Everyone wonders how they can get away with that...it's their money. How were corporations stockpiling money when everyone else was going broke? Good old government contracts. Follow the bouncing ball...who's getting all the tax breaks...who's paying? That isn't to say we don't need to make some cuts (that's an entire blog)...just some food for thought.
BTW, each Congressional member has an expense budget that ranges from $1.5 million to $4 million. Don't quote me, but I think the budget for Congress is just over $5 billion.
Voted up and very useful
FAY, thanks for the info and I agree with you. It is the debt, not the deficit. However, to reduce the debt, we first need to balance our budget.
Thank you for this hub LRCBlogger. We just cannot get it done with the top heavy lawyers on top. Will never happen. God bless you.
I disagree. One very important point. All the figures are meaningless because it doesn't fix the problem. Why?
The fiqures do not take into account the future worth of the dollar. It's not your fault because many do not think or include that. Neither does the FED or government.
The dollar is worthless and losing value every day therefore the debt gets inflated as each month passes for payment.
IRS take in less than reported because they include taxes from government workers who are paid by what else -- taxes. An those taxes don't add to the governments income because it's only a give back.
Otherwise - nice job:)
Hi Joer, I'm sure you are just trying to make your point regarding the US dollar. I think both of us agree that the amount of debt the US has accumulated is devaluing our currency. However, obviously, the dollar is not 'worthless.' In a philosphical debate, I could agree that all money is useless and only holds weight in 'faith.' However, as you probably know, the dollar is still the world's benchmark and the most stable investment for most world governments to put their money.
I'm not sure where you were going with your point but I do appreciate you stopping by.
The dollar is currently worth about .394 cents. It fluctuates daily.
The feds printing of money devalues it. There are too many dollars on the market.
Nothing holds weight on faith - that's why there are contracts and currency used is in the contract. Read one some time. A better argument is that contracts are based on distrust.
If the dollar continues to devalue it will no longer be the world currency. Study British history and the Sterling 1945 - 1970.
The point is it takes more money to pay off the same amount of debt. The interest is adjusted for currency fluctuations. This is why (one reason) interest goes up on adjustable mortgages.
It's a very important concept (and factor) especially in this economy with the high domestic and foreign debt.
Joer, your comments are not adding up. When you say $1 is worth $.394 cents, are you referring to some type of gold standard? (As you probably know, we left that decades ago)
The value of a dollar is determined by current exchange rates. EVERYTHING holds weight on faith. The actual value of currency is zero. It is just paper. It is faith that the paper can be used in exchange for goods and services that keeps money valuable. WE BOTH AGREE that the dollar is losing value, not a doubt about it. I'm just not understanding the .394 cents you are referring to.
If you measure the dollar by exchange rate, you will see the Canadian, Australian, Euro currencies have all strenghtened verse the dollar. I remember when $1USD bought you 1.33 Canadian dollars. Now it is less than 1 to 1.
Inflation and market value. The dollar can only buy .394 cents of product. For every dollar you spend yet get .394 cents of product in return.
In the 1960s a 16 oz. bottle of coke cost about 10 or 12 cents. Today you can pay over a dollar for 12 oz. can. Less product and cheaper packaging.
Worth can only be determined by assests vs. liabilities. Economics 101.
Joer, still not buying into the .394 cents because along with inflation has come higher salaries. Yes coke used to cost $.10 cents but the average yearly salary was $7000.
However, I appreciate your comments and the spirited debate. I think we're on the same page more than you think. The bottom line is that we both agree the US is trashing our currency by overspending which forces the gov to print more and more money. (Money that is owned by foreign governments!)
Yes - we bicker around trying to find some way our neighbor has too much of an advantage, say Union Wages, or whatever. That is not going to solve the deficit problem. No one that wanted an extension of the Bush Tax cuts for the SUPER CLASS has any moral right to complain about the deficit! No one that thinks it is justifiable for Corporations to pay ZERO DOLLARS in taxes has the moral right to complain about spending on Planned Parenthood or EPA or Head Start. No one that is more interested in bombers than education has the moral right to bitch about spending on Health Care. No one smoking TEA has the right to home school children. That is the blind leading the blind!
On the Dept of Ed., a lot of that money is Pell Grant money to give poor students a chance to go to college. Not sure if the subsidized part of the Stafford Loans is in there too,but my guess would be yes. The funding to education has increased and I do like the competitve process under Race to the Top that Obama/Arne Duncan have created. This is relatively new and we will see if it works well. But, when we increase funding, we are talking about Title 1 funding. This money goes to schools with the greatest number of students with Free and Reduced Lunch (USDA program to give poor students free or cheap lunches and breakfast). The average schools really do not see too much federal money. At a typical school, I think 15% of the budget, if that, is federal dough. Furthermoe, when schools receive extra fed cash, the states or local sources seem to withhold $ so the amount the school works with is roughly the same. Finally, educators often deal with unfunded or underfunded mandates such as IDEA (Special Education Act).
So, I guess my point is that I am not sure we can conclude that the raise in $$$ to schools with little gain needs to be questioned because as a whole, it is a very small part of the equation.
vettergt, interesting insight, thanks for sharing.
Excellent hub LRC ....I guess it's way too late to get the budget balanced in any country except maybe Germany.
Hi One2get2no, sadly that is true. It could be years or even decades before we see a balanced budget in the US. Scary to think what might happen if our politicians don't get serious.
HSchneider Level 6 Commenter 14 months ago
Excellent Hub LRCBlogger. The GOP's eliminating NPR and Planned Parenthood is political pandering to their base and not serious budget cutting. Defense and entitlements should be cut but why weren't the Bush tax cuts allowed to expire. Allowing them to expire would have gone a long way to balancing the budget. They were irresponsible in 2001 and much more so in 2010. It is simply pandering to the GOP's base which is the wealthy class.