Let’s take a journey together, a journey of numbers. I love numbers, so much so that I pretty much live in Excel. I thoroughly enjoy calculating and charting data of all types. As part of my (soon to be former) job, the Federal Budget – in particular the Defense Budget – is my main analysis area. It’s amazing when I talk to people, read articles, or listen to pundits the amount of mistakes made when referring to certain aspects of the US budget or budget process.

I want to simply put some information out there on the government budget to help everyone understand it and the many terms associated with it. All this information is available on line at the Office of Management and Budget. President Obama submits his budget to congress (and on-line) every year during the first week of February. So, all that talk from the Right insinuating that President Obama has no plan or no budget is pretty much non-sense.

Let's start with the highest level possible, The Federal Budget. Two things make up the Federal budget at its highest level; they are Receipts, and Outlays. Receipts are what the government takes in yearly, sometimes also referred to as revenues. Outlays are what the Government sends back out yearly sometimes also referred to as spending. A simple flow chart of this is below.

Now the first thing most people notice is that the outlays are higher than the receipts. This is the definition of a deficit. A deficit is defined as the difference in government receipts minus government outlays.

In the above year (2011) that formula produces a deficit of;
When you hear people speaking of the deficit or deficit spending they are hopefully referring to this yearly figure. Unfortunately I have seen many confuse this figure with our next term which is debt.

The US debt is a figure that is made up by adding up all the yearly deficits so you could think of it like this;

The US Debt is a combination of all the deficits from every year the US Government ran a deficit. Of course the opposite of a deficit is a surplus. If you have a surplus (Take in more receipts than outlays) then you can pay the debt down.
Let's just look at US Government Receipts and Outlays for the last 48 years. The chart below shows the yearly government total receipts and outlays starting in 2011 and going back to 1964.
I have also annotated the Outlay, Receipts, and Deficit totals for 2011. Looking at the chart you can see that the US has pretty much run deficits for most of the years depicted. This is shown by the blue color being visible. A deficit for any given year is the distance between the blue and the green lines. You will notice that starting in 1998 we (the US Govt.) ran a surplus for a few years. This was of course during the last years of President Clinton. I see the story of our spending in this chart. Let's zoom in on the last twenty or so years. I'll add in some notable outlay/spending increases and receipt/revenue cuts on top of this chart for you.
This is the story I see in this chart. We have been running deficits for a very long time. The economy tanked (2008) and our receipts dropped precipitously (green). Spending increased to help save the economy and provide aide to the increasing numbers of unemployed/poor (blue). Because of this double whammy of larger outlays and reduced receipts the US has been running large deficits.

What president Obama is proposing to do is lower outlays/spending (blue) while at the same time increasing receipts/revenue (green).

The Republicans have so far refused to raise the green and will only agree to reduce the blue. This is also referred to as "Starving the Beast" with the Beast in this case being the federal government. Grover Norquist comes into the picture here with his Pledge (I will not link to it). The sole purpose of this pledge is to bully anyone signing it into never, never ever raising the green. Deficits should be corrected by only reducing the blue. Although I have noticed as of late that Grover is shifting his interpretation of the pledge.

So President Obama's proposed solution seems like a reasonable approach given how we got here.

Next week we will look at the make-up of the two colors above by breaking out the receipts/revenues and outlays/spending. Then in following weeks, I will lay out a time line of when budgets get created and the not so strict timelines involved in approval through Congress. From there we will dive headlong into the Defense budget (yeah!), I think you will be amazed at what we actually spend that >\$600B on.

Finally, I wanted to say thanx for following along, I know you are all as excited about these numbers as I am.

Until next week...Cheers

*note* re-released to fix some spelling typos...opps

Tags

EMAIL TO A FRIEND X
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
 Unpublish Diary (The diary will be removed from the site and returned to your drafts for further editing.) Delete Diary (The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

• Looking forward to your series(9+ / 0-)

Thanks for taking the time to write.

"A liberal is a man or a woman or a child who looks forward to a better day, a more tranquil night, and a bright, infinite future." - Leonard Bernstein

• thanks for this post.(4+ / 0-)
Recommended by:

You put a lot of work into this and it boils down a complex situation into an easy to understand story---

I didn't vote against anybody - I voted for Barack Obama!

• Really like your visual,(3+ / 0-)
Recommended by:
DRo, Lujane, splashy

and your explanation.  The reinforcement each gives the other is great.

Time is a long river.

• Good post, but you might want to correct the(2+ / 0-)
Recommended by:
simple serf, Lujane

spelling of financial on your chart.  Your's says "finacial".

• Thnax for the typo catch..(1+ / 0-)
Recommended by:
Lujane

As I said I love numbers...words on the other hand...sigh

• thanx fixed that too(1+ / 0-)
Recommended by:
Lujane

what can I say...when I see charts I see numbers...
thank you!!

• Excellent. I'm a bookkeeper. I like wonky(10+ / 0-)

economic charts and videos too.

check this out. I have permission to post

After all is said and done, a lot more is said than done.

• Thanx for that!!!(3+ / 0-)
Recommended by:

That was great!! I appreciate the post...

• I followed you back because I want to read(1+ / 0-)
Recommended by:
Lujane

the follow-up diaries. You do such a nice job.

After all is said and done, a lot more is said than done.

[ Parent ]

• nice(0+ / 0-)

Thanks

-5.38, -2.97
Romney went to France instead of serving in our military, got rich chop-shopping US businesses and eliminating US jobs, off-shored his money in the Cayman Islands, and now tells us to "Believe in America."

[ Parent ]

• The two wars on the dept(4+ / 0-)
Recommended by:

Could you please show a graph on how the two wars added to the debt. An, are still adding to the debt.
I want to thank you for your explanation of the government's debt, so even I could understand it.

• Here is a link to a good chart that shows what is(1+ / 0-)
Recommended by:
splashy

contributing to our debt

Basically this report was completed in 2009-10, but for the most part it goes like this...

Of the above 1,300B added to the US Debt in 2011

Economic Downturn = 400B
Bank Bailout (TARP) = 22B
Stimulus/recovery    = 176B
Bush tax cuts I & II  = 295B
War Costs                = 193B
Other                       = 213B

As I said this report was completed in 2009-10 and I believe the "War Costs" and the "Economic Downturn" are most likely reduced due to Defense Cuts  and the nascent "Economic Recovery"

Here is a link to the report with a great chart a little down on the page that has been widely shown all over.

http://www.cbpp.org/...

hope this helps
cheers

• Thanks for the summary of that long article.(0+ / 0-)

I'll send it to someone who blames President Obama for all the debt.

The spirit of liberty is the spirit which is not too sure that it is right. -- Judge Learned Hand, May 21, 1944

[ Parent ]

• Great Post(3+ / 0-)
Recommended by:

Very clear.

• These are useful. Thanks!(4+ / 0-)
Recommended by:
demdoc, Lujane, ahumbleopinion, splashy

One other point to be made about "starve the beast" is that Republicans deliberately ran up deficits during the Bush years in hopes of creating a situation that would force cutbacks. Before Bush, Republicans had always been the ones crying about the deficit, but when Bush was president they were happy to embrace it.

As a young person, I wish both parties would do more to pay down the debt so that my generation is not stuck paying off ridiculous interest on it. But I also recognize the dangers of trying to balance the budget when the country is just coming out of recession. I am really angry at the GOP who let it get so out of control during the Bush years so that now we have no good choices.

• Thanks for this diary. I'm a bus rider (5+ / 0-)
Recommended by:
DRo, Lujane, simple serf, ybruti, splashy

and love to conduct my own surveys using bus passengers as the base.  I ask 25 people – “What is the difference between the deficit and the debt.”  Four of the people I ask, knew, and 21 people had no clue.
I have been trying to find the answer as to how much Medicare is costing the General Fund annually.  Rough number will do.  That is total cost less the amount of individual premiums paid.  Please – anyone.

• Thanks for the clarity(3+ / 0-)
Recommended by:
Lujane, simple serf, splashy

Visuals are always good and am looking forward to your other diaries.

• Great explanation!(0+ / 0-)

I look forward to more. Thanks!!!

Be the change you want to see in the world. -Gandhi

• expenditures: health and war industries(0+ / 0-)

i would appreciate how the us numbers would look if our gdp% of health expenditures would match the europeans and our war expenditures matched the chinese.

thank you.

• While this is a good explanation(1+ / 0-)
Recommended by:
ybruti

I think it would also be important to distinguish between raw debt/deficit and debt/deficit as a percentage of the GDP. This site has a very good explanation of the history of the debt and the impact Reaganomics has had on it: http://zfacts.com/...

Republicans are far more socialist than Democrats. Just because they want to redistribute the wealth upwards does not make it any better.

• This is a very useful article(0+ / 0-)

and chart.  Thanks. I've been looking for the historical record.

The spirit of liberty is the spirit which is not too sure that it is right. -- Judge Learned Hand, May 21, 1944

[ Parent ]

• Really looking forward to the (0+ / 0-)

series. I'm especially curious to see current expenses, by category, and how that balance has changed over the years.

You've done a nice job of explaining, and I'm looking forward to the rest of your series.

-5.38, -2.97
Romney went to France instead of serving in our military, got rich chop-shopping US businesses and eliminating US jobs, off-shored his money in the Cayman Islands, and now tells us to "Believe in America."

• This is so cool.(2+ / 0-)
Recommended by:
ybruti, splashy

I know few people who are familiar with this topic.  I have a professional interest in it because I have to answer questions about it sometimes.  I download and study the federal budget and occasionally other budget proposals too.  I'll look forward to what you have to say about defense spending.  Recently, I downloaded the sequestration transparency report (OMB Report Pursuant to the  Sequestration Transparency Act of 2012) from the White House website or OMB.  It has a lot of information about the mandatory and discretionary portions of the budget and the dollar amounts that are sequestrable or exempt.  It's too bad the salaries of the Republicans in Congress can't be added to the sequestrable items.  For some reason the thought of that makes me smile but I know it isn't possible.

"Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

• Social Security budget vs. 'Federal Budget'(2+ / 0-)
Recommended by:
splashy, Ironic Chef

I like your presentation and look forward to more. One point of information might be useful. Before 1968, the Social Security income and expenses were "off budget"; they were presented separately. There were other trust funds too, but Soc Sec was the biggest.

Pres Lyndon Johnson formed a commission to make all the budgets clearer to present. However, as a young man in the 1960s, his other goal was to show that defense and Vietnam war were not the huge percent of the budget that they actually were! It was a canny manipulation during the big arguments of "guns or butter", meaning do we sacrifice comforts at home for the war effort? Johnson knew that Americans would sour faster on Vietnam if they had to sacrifice. By lumping Soc Sec with the regular Federal budget, suddenly the percentage being spent on defense and war would go down.

The result of Johnson's change has been, of course, to make Soc Sec revenues look like "revenues we can use anywhere" which they are not. But it's been very much part of right-wing propaganda that Soc Sec can be on the table.

So a request: as you do these diaries and show the numbers, I would really like to see them done in parallel with Soc Sec broken out so there would be two big buckets of revenue-vs.-spending: Soc Sec and then "everything else".

Thanks for the great diary so far!

See this for much more detail: http://www.ssa.gov/...

• Yes Off-budget and On-budget (0+ / 0-)

is a slippery slope or accounting widget

When looking into off-budget there really is SS, SS disability, and the postal service.

You make a great point and I have saved your comment and will incorporate it into that section ---when we get there

Thanx for the suggestion!!
Cheers

• This is one of the most understandable(0+ / 0-)

Ways to explain the Federal budget that I have seen.

Well done!

Women create the entire labor force. ---------------------------------------------------------------------------------------- Sympathy is the strongest instinct in human nature. - Charles Darwin

• Thanks for the great charts.(0+ / 0-)

I sure hope it is okay that I "borrow" them.  (with attribution, of course!)

• Absolutely!!(0+ / 0-)

And if you need any other custom charts for a specific display/story I'd be happy to help

Cheers

Subscribe or Donate to support Daily Kos.