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Hello everyone, welcome back! As we continue our journey into the secretive world of federal budgeting. That same federal budget that is available to all in painstaking detail on the internet for all to see (or download). If you’re like me, just having thousands of pages containing more numbers than imaginable is absolutely heaven, and it’s FREE!

 So as we move further into the budget I wanted to refresh everyone on just one chart from last week. Below is the budget at its highest level; receipts or revenues, and outlays or spending.

Intro

You must enter an Intro for your Diary Entry between 300 and 1150 characters long (that's approximately 50-175 words without any html or formatting markup).

Let’s move to both sides of this chart and fill in a bit more detail starting on the right side, with receipts. I selected to start here because receipts come mainly from you and me in the form of income taxes. Here is the breakdown of the government’s receipts for 2011.


Looking at the top, you can see it contains the total 2,304B for 2011 receipts. This number is made up of all the below breakouts. Notice one labeled EEGt&CD, what is that you ask?  I wanted to condense the categories so that later they will fit better on some charts you will see further down. I took; Excise tax, Estate & Gift tax, and Customs Duties and made a new category labeled EEGt&CD = Estate Excise Gift Tax & Custom Duties. Why did I call it that, well because I can, it’s my chart. The category Social Insurance is broken into two categories; “Social Insurance" On-Budget, and “Social Security" Off –Budget. This will come in handy when we discuss Social Security, a request brought up by MarshWiggle.

Briefly, Social Security is an “Off Budget” trust fund, refers to transactions of the Federal
Government that would be treated as budgetary had the Congress not designated them by statute as “off-budget”. Since 1990 and the enactment of Omnibus Budget Reconciliation Act (OBRA) and a subsection of that called the Budget Enforcement Act (BEA) stipulated that the two Social Security Trust Funds (which make up Social Security) and Postal Operations are formally considered “Off-Budget”.

One interesting fact is that all the administrative costs for running the Social Security program come from the discretionary part of outlays. In 2011 the Govt. spent 5.9B administrating the program. For our purposes it is included in our totals and I will expand on Social security in the future. (I can’t wait!)

Here are our 2011 Government receipts in one chart.

 

Let’s move on to our outlays.

I decided to make these figures negative as I wanted to present the receipts and outlays in the form of a checkbook. Displaying them this way is much more eye pleasing than gigantic accounting spreadsheets. Of course I love those sheets but I realize most people shudder at the sight of them.

You will also notice a dotted line with the terms discretionary and mandatory at the bottom. These are terms that describe two forms of government spending, they are defined as follows.

Discretionary spending - means budgetary resources (except those provided to fund mandatory spending programs) provided in appropriations acts. (From the OMB)

Mandatory spending - means spending controlled by laws other than appropriations acts (including spending for entitlement programs) and spending for the food stamp program. (From the OMB)

To put this in normal speak, when you hear Congress arguing about spending every year (Defense, NPR, EPA, etc…) these discretionary spending amounts are set yearly. Mandatory programs – for the most part – are on auto pilot. Meaning spending levels are set forever -- and depending on how good the original law was – may only need to be tweaked every so often. The Republicans dislike mandatory spending and would prefer everything was under the discretionary label. Could you imagine the gridlock if Congress had to agree on spending levels for mandatory programs (Medicare, Medicaid, Unemployment Insurance, etc…) every year? It would chaos.

So under discretionary we have Defense and Other, what’s in “Other”? Well everything the Government does is in there.

Some subcategories are;

•    Agriculture                                           6.4B
•    Transportation (water, air, ground)        91.0B
•    Education                                           91.9B
•    Veterans Services                                56.7B
•    Administration of Justice                       54.3B
•    General Government                             19.8B
•    Natural resources and Environment        43.6B
•    General Science, Space and Technology   29.4B

Just to break out a few.

On the mandatory side you see all the categories are pretty self-explanatory. I have broken them out a little showing unemployment insurance, veteran retirement, and federal retirement.
You see Veteran benefits on both sides above. One is veterans retirement benefits (Mandatory) and the other is Veteran services (under Discretionary Other) such as medical, employment assistance, and housing that all our Veterans have earned and most definitely deserve.
I’m going to simplify the outlays a bit by putting Veteran retirement, unemployment, and federal retirement back into the “Other mandatory category.

Looking at the total outlays, and to borrow from Paul Krugman (one of my idols), the government is basically a large health insurance/retirement fund, that just happens to have an Army.


Let’s look at the Whole Ball of Wax (as they say) whoever they are…  
 
Now let’s add in one more piece of eye candy, a figure called the deficit. As explained last week, the deficit is the yearly shortfall not like the Debt, which is made from all years.
There it all is!! Now where would you cut or add?? Remember you can reduce the deficit in two ways on the above chart, by increasing receipts (increase taxes) and/or by reducing outlays (decrease spending). Couple of reminders, Social Security is a separate self-funding trust that is not adding one penny to the deficit. Also, you have to pay yearly interest on all those past debt obligations, so mandatory interest payments are off the table. This one chart shows just how irresponsible the previous administration was. Wow! Look at the size of that yearly deficit, it amazes me everytime I see it.

If we were going to fix this through congressional annual appropriations -- which are the only spending they can change on a yearly basis – all they have is the discretionary items. That means defense and other categories; I showed you some of what makes up the “other” items above. The Republicans refuse to cut defense spending, even though in 2001 the defense spending was 306B. That means it has more than doubled in ten years, granted there are inflation calculations that need to be added in, but roughly doubled. So they can’t really fix this by decreasing the discretionary other spending, can they?’

President Obama wants to add revenues and subtract spending for a balanced approach. I think that is the most sensible solution.

The Republicans refuse to raise anything on the receipt side (Grover’s Pledge) and will not touch defense spending, what does that leave. Well the chart below shows what they are willing to sacrifice.

That pretty much is all the outlays that help the poor, the elderly, the sick, children, and our veterans. They have got quite a soft spot, don’t they?

Thanx for playing “Fun with numbers” today! In the future we will continue our journey by going through our Debt and the Social Security Trusts.

Correct answer of last weeks poll is Mandatory Spending. I think after the above you all can clearly see that.

Extended (Optional)

Originally posted to simple serf on Sat Dec 08, 2012 at 01:42 PM PST.

Also republished by Community Spotlight.

Poll

How much of our total Debt obligation is owned by China?

61%60 votes
27%27 votes
6%6 votes
2%2 votes
2%2 votes

| 97 votes | Vote | Results

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