Thursday, September 9, 2010
What Do You See?
The picture above (larger version here) is a pie chart of the 2010 United States federal budget, as proposed by President Obama.
When you look at the picture, what do you notice immediately? I assume you noticed the five largest "slices", as I did. Those five slices, constituting 75% of the federal budget, represent proposed spending for the following (by order of size):
1. Department of Defense (dark blue);
2. Social Security (rust);
3. Federal welfare programs (olive green);
4. Medicare (purple);
5. Medicaid (light blue).
The other 25% (all of the other, smaller slices) represent all other federal spending, including the sixth-largest slice (dark tan) representing interest payments on the national debt.
Look at this another way: 55% of the federal budget is spent on entitlement programs!, 20% on national defense, 5% on interest on the national debt, and 20% on everything else.
By the way- this budget is 3.55 trillion dollars, whereas the projected federal reciepts for FY 2010 were 2.38 trillion dollars. In other words, President Obama proposed a budget with a structural (known) deficit of 1.17 trillion dollars (and God-only-knows-how much unpredicted deficit spending).
Let's use personal budgeting to put this in perspective: Imagine you make $24,000 dollars per year (projected reciepts), but spend $35,000 per year (federal budget), including giving $19,000 each year to charity (welfare), knowing that you will accumulate $11,000 each year in new credit card debt (borrow from China), in addition to unforseen expenses- like car repairs- which you also borrow (from China) to pay, and your total credit card debt is $140,000 (national debt). You'd have to be insane! YET, if you add eight zeros to each of these numbers, you have a pretty good approximation of our federal spending.
It gets worse: the expenditure for interest payments on the national debt (note that there are no principal payments on the debt in this budget, as- shocker- we can't afford them) does not reflect interest payments on new debt acquired through borrowing for bailout programs. By 2012, when interest begins to accumulate on that debt, our total debt interest will be an estimated $600 billion annually, equivalent to our total defense spending (the biggest slice of the pie above)! This figure comes from Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff, who now considers our national debt "the greatest risk to our national security".
Lesson: It is WELFARE spending which is breaking us!