Quick Hit: Facts Are Stubborn Things! Obama Vs Deficit

“Facts are stubborn things.” Ronald Reagan, father of Modern Conservatism.

FACT: Under President Obama, the deficit is coming down faster than at any time since WWII:

"Spending is the Problem", Not totally True on Closer Inspection!

I am starting to believe John Boehner is ‘stuck on “we have a spending problem lie” for sake of his Speakership and for that reason only. (linked)

 In June 2012, Fact Check Dot Org published a piece related to Mitt Romney’s claims about Obama’s spending “inferno”.  The piece is typically Fact Check long and detailed, but relevant in looking at spending going back (to the 1940s) and forward to the president’s “big” spending initiatives   In terms of Boehner and the GOP rhetoric, we continue to exclaim, “poppycock.”  I am posting a linked the the piece, here. Now, a few excerpts fro the Fact Check piece.

Fact Check   Excerpt I

Summary Is President Obama’s spending an “inferno,” as Mitt Romney claims, or a binge that “never happened” as an analysis touted by the White House concluded? We judge that both of those claims are wrong on the facts.  The truth is that the nearly 18 percent spike in spending in fiscal 2009 — for which the president is sometimes blamed entirely — was mostly due to appropriations and policies that were already in place when Obama took office.  That includes spending for the bank bailout legislation approved by President Bush. Annual increases in amounts actually spent since fiscal 2009 have been relatively modest. In fact, spending for the first seven months of the current fiscal year is running slightly below the same period last year, and below projections.  Since pictures can convey information more efficiently than words, we’ll sum up the official spending figures in this chart. It also reflects our finding that Obama increased fiscal 2009 spending by at most $203 billion, accounting for well under half the huge increase that year.  So if current spending is an “inferno,” it’s one that Bush (and Congress) is mostly responsible for starting. But it’s also true that Obama has done little to put it out.

The Summary also addresses Obama’s spending regarding Obamacare and other initiatives. (See Link above) Fact Check is apropos in pointing out that Obama has done little to shut-off the spending increases from the Bush Era. Factually correct, but I ask,”..should the president elected in 2008 and inaugurated in 2009 have spent his entire first term ONLY fighting the Bush Era governing malfeasance?” Additionally, with a inauguration day ‘obstruction meeting‘ and Mitch McConnell declaring to the nation GOP intent to obstruct the newly elected president in every way, how ridiculous is it to think Obama should have been a first term “FIREMAN” against the Bush inferno? The GOP was hell-bent on obstruction even if Obama had “stayed in his lane” and only work to relieve the nation of Bush deficit spending.

Spending in the US is a concern and must be addressed.  Hence, Obama’s frequent comments to his base that modifications must take place and many will not like the modifications to current programs: Pew States Dot Org (Subsidyscope nine charts).  The president is a realist in working to fix deficit issues as well as strategically looking forward for a good path to prosperity.

The GOP wants to cut spending  Hasn’t the Euro Nation’s (and the UK) proven ‘austerity” is not the way out of economic crisis. an international crisis in part  brought on by Bush and GOP economic incompetence.  Boehner speaks of a “spending problem” and walks away from the microphone like an angry child. 

Paul Krugman Nobel Prize winner (Economics) consistently addresses GOP “spending” rhetoric and does so very effectively 

Bush and company placed the nation in a position of fighting for our economic lives. Shouldn’t we work to establish life before addressing problems that can be fixed after life is handed-back to us? I posit , yes!

Fact Check reported that President Obama has worked to reduce the deficit, but has not done enough for major reductions.  We suggest reductions are reductions while looking through a glass half-full.  We do so knowing the half-empty glass is no reductions with continuation of spending.  “Spending is a must,” as posited by Krugman.  

Boehner speaks for his tea party conference with the aid of an actual chart (a real rarity in GOP circles).  Did Boehner say, “put together by Paul Ryan?’  Paul Ryan has proven two things for certain int he past two years. First, he is bound and determined to get his hands on Social Security and Medicare.  Second, the man is a pathological liar.  

According to Boehner the nation’s entire economic and fiscal issues rotate around spending.  These are the very same people who had Mitt Romney and Paul Ryan redecorating offices in the White House weeks before their lose in 2012.  Many of the same legislators that supported 99% of everything Bush.  The same Boehner who in 2011, after signing the agreement to sequester, proclaimed he got “98% of what he wanted.”  I must ask,  does any of the previous speak to GOP competence and credibility? 

Fact Check Excerpt II

Analysis Mitt Romney claims President Barack Obama’s spending amounts to an “inferno.” But who is really responsible for the huge jump that took place in fiscal 2009? Here are some undisputed facts:  Fiscal 2009 began Oct. 1, 2008. That was before Obama was elected, and nearly four months before he took office on Jan. 20, 2009.  President Bush signed the massive spending bill under which the government was operating when Obama took office. That was Sept. 30, 2008. As The Associated Press noted, it combined “a record Pentagon budget with aid for automakers and natural disaster victims, and increased health care funding for veterans returning from Iraq and Afghanistan.”  Bush also signed, on Oct. 3, 2008, a bank bailout bill that authorized another $700 billion to avert a looming financial collapse (though not all of that would end up being spent in fiscal 2009, and Obama later signed a measure reducing total authorized bailout spending to $475 billion).  On Jan. 7, 2009 — two weeks before Obama took office — the nonpartisan Congressional Budget Office issued its regular budget outlook, stating: “CBO projects that the deficit this year will total $1.2 trillion. CBO attributed the rapid rise in spending to the bank bailout and the federal takeover of Fannie Mae and Freddie Mac – plus rising costs for unemployment insurance and other factors driven by the collapsing economy (which shed 818,000 jobs in January alone).  Another factor beyond Obama’s control was an automatic 5.8 percent cost of living increase announced in October 2008 and given to Social Security beneficiaries in January 2009. It was the largest since 1982. Social Security spending alone rose $66 billion in fiscal 2009, and Medicare spending, driven by rising medical costs, rose $39 billion.  How Much Did Obama Add?  But it’s also true that Obama signed a number of appropriations bills, plus other legislation and executive orders, that raised spending for the remainder of fiscal 2009 even above the path set by Bush. By our calculations, Obama can be fairly assigned responsibility for a maximum of $203 billion in additional spending for that year.

Fact Check indicates Obama added $203 billion to the nations deficit crisis.  Let’s see how Fact Fact Check lays out those expenditures   We are ever mindful, spending must be addressed, but like Krugman we feel addressed in priority order.  The GOP wants to continue to wound the /democrats as we move towards 2014 and 2016.

Fact Check Excerpt III

Here’s how we arrived at our $203 billion total: We combed through all the appropriations bills signed by Obama for 2009, plus other legislation that CBO said also resulted in increased spending. We also examined the budget effects of Obama’s decision to bail out General Motors and Chrysler using funds previously appropriated under TARP. And here’s what we found: $2 billion for children’s health insurance. On Feb. 4, Obama signed a bill expanding the Children’s Health Insurance Program, covering millions of additional children (a Democratic bill Bush had vetoed in the previous Congress). “CBO estimates that the act will increase mandatory outlays by $2 billion in 2009,” CBO later stated (page 5). $114 billion in stimulus spending. Obama signed the stimulus bill Feb. 17. While headlines proclaimed a $787 billion price tag, about 27 percent of the total was actually for tax cuts, not spending. And most of the spending didn’t take place until after fiscal 2009. CBO initially put the total spent in fiscal 2009 at $107.8 billion, but the following year it revised the figure upward to $114 billion, in a report issued in August 2010 (page 13). $32 billion of the “omnibus” spending bill Obama signed on March 11, 2009, to keep the agencies that Bush had not fully funded running through the remainder of the fiscal year. The $410 billion measure included $32 billion more than had been spent the previous year, according to a floor statement by Rep. Jerry Lewis of California, the top-ranking Republican on the Appropriations Committee. (See page H2790 in the Congressional Record.) “An 8 percent—or a $32 billion—increase in 1 year on top of the stimulus package is simply unnecessary and unsustainable,” he declared. A case can be made that Obama shouldn’t be held responsible for the entire $32 billion increase. The $410 billion was only $20 billion more than Bush had requested, according to Rep. David Obey of Wisconsin, the appropriations chairman. (See page H2800.) And CBO later figured the increase amounted to only $9 billion over what it was projecting on the assumption that the levels Bush approved for the first part of the year would be extended for the entire year (page 5). But it was Obama who signed the bill, so we assign responsibility for the full annual increase to him, not Bush. $2 billion for deposit insurance. The “Helping Families Save Their Homes Act” that Obama signed May 20 had among its many provisions some changes to the federal program that insures bank deposits. CBO later estimated that would increase fiscal 2009 outlays by $2 billion (page 54). $31 billion in “supplemental” spending for the military and other purposes. Obama pushed forand signed on June 24 another spending measure. The press dubbed it a “war funding” bill, but it actually contained $26 billion for non-defense measures (including funding for flu vaccine against the H1N1 virus, and for the International Monetary Fund) in addition to $80 billion for the military. Only a portion of the total $106 billion it authorized would actually be spent during the remaining three months of fiscal 2009, however. Sen. Kent Conrad, chairman of the Appropriations Committee, stated on June 18: “ The conference report includes $105.9 billion in discretionary budget authority for fiscal year 2009, which will result in outlays in 2009 of $30.5 billion.” (See page S6776.) Here again, a case can be made that Obama isn’t responsible for the entire $31 billion. Economist Mitchell argues that $25 billion in military spending should be assigned to Bush, because “Bush surely would have asked for at least that much extra spending.” But he didn’t. So rather than speculate, we’ll assign it all to Obama, who asked for it. $2 billion in additional “Cash for Clunkers” funding. Obama signed this measure Aug. 7, providing “emergency supplemental” funding for a stimulus program that offered $3,500 to $4,500 to car owners who traded in an old car for a new one with higher fuel economy. Nearly all was spent in fiscal 2009. (See page 959.) $20 billion for GM and Chrysler bailouts. At one point the government had paid out nearly $80 billion to support the automakers. But some of this was Bush’s doing, and much has been repaid and will be in the future. Here’s how we arrived at our $20 billion figure for Obama: By the time Obama took office, Bush already had loaned nearly $21 billion to the two automakers from funds appropriated originally for the Troubled Asset Relief Program, and had committed the government to lend $4 billion more. But Bush left decisions on further aid to Obama, who poured in additional billions. By the end of the fiscal year, the Treasury had made approximately $76 billion in loans and equity investments to GM, Chrysler and their respective financing entities (some had already been repaid). But for budget accounting purposes, not all of this was counted as federal spending under the TARP law. That’s because the government stood to receive loan repayments with interest, and held nearly 61 percent of the stock of the reorganized General Motors. What was counted as spending was — in rough terms — the difference between the estimated future value of those assets to taxpayers and their initial cost. Treasury put the net cost of the GM and Chrysler support during fiscal 2009 at $45 billion (see page 110, the “Total subsidy cost” line under the heading “AIFP,” for Automotive Industry Financing Program). That’s the amount officially booked as a federal outlay for fiscal 2009. We assume — we think reasonably — that the $25 billion committed under Bush would have been lost had Obama done nothing. So we subtract the full amount of Bush’s commitment from the net total of $45 billion that Treasury initially estimated for fiscal 2009. For the record, the ultimate total cost of the auto bailout is now estimated to be lower than initially expected. It is put at $21 billion by the Treasury Department (see page 5) and and only $19 billion by CBO (see Table 3). But those lowered estimates don’t affect what was booked as spending in fiscal 2009. Other big domestic programs that don’t require yearly appropriations, including Social Security and Medicare, continued to operate as they had under Bush. One big fiscal 2009 spending increase resulted from an unusually large 5.8 percent cost of living increase that took effect just before Obama took office. That was an anomaly, as we explained in “Social Security COLA,” posted Sept. 23, 2009, and there would be no COLA at all for the next two years. The same 5.8 percent COLA also was given in 2009 to millions of federal retirees, military retirees and disabled veterans and their survivors. So by our calculations, Obama can fairly be assigned responsibility for — at most — 5.8 percent of the $3.5 trillion that the federal government actually spent in fiscal 2009, which was 17.9 percent higher than fiscal 2008.

If Fact Check is accurate, and the generally are accurate, Boehner and company should join the president via working towards a balanced approach to deficit reduction.  Boehner and his tea party continue to practice “shut-er-down” strategies and they do so for sake of political gain and protectionism for the nation’ wealthy.

The spending problem in the US did not start with Obama. We will join others in stating increased during Obama’s early years (in office) as he fought Bush ERA failure.

 A Gallery of Spending

Additional Sources related to Deficit Reduction

Usgovernmentspending.com  (This site offers a complete ‘candy store’ of spending information;  sample by clicking a category in the chart below.

Total Budgeted¹ 2013 Government Spending

Total

Federal

State

State & Local

Local

$ billion nom$ trillion nom$ million nom$ bln 2005$2005 per cappercent GDPpct federalpct state totalpct total179218001810182018301840185018601870188018901900191019201930194019501960197019801990200020012002200320042005200620072008200920102011201220132014201520162017full screen

Total 2013 Spending by Function

Function -yr 2013 +yr Total Spending $6.3 trillion Pensions $1.1 trillion Health Care $1.2 trillion Education $0.8 trillion Defense $0.9 trillion Welfare $0.6 trillion Spending: guesstimated2

Click chart for table of Spending or click: 2011 2012 2013 2014 2015

Note: 1. Federal spending after 2011 is budgeted. 2. State spending after 2011 and local spending after 2010 are “guesstimated” by projecting the latest change in reported spending forward to future years Data Sources: GDP: US Gov. Budget: Hist. Table 10.1 Federal: US Gov. Budget: Hist. Tables 3.2 and 7.1 State and Local: State and Local Gov. Finances “Guesstimated” by projecting the latest change in reported spending forward to future year

Talking Points Memo

Madvilltimes.com

The nation has been duped by the GOP into thinking it is the party of the fiscally conscience. From years of obscene spending under Reagan and Bush II, through giving GM and Chrysler the finger, to September of 2008 with, ” our economy is fundamentally sound”, haven’t we follow the GOP down the wrong path all too often.

And now, the sequester is all Obama’s problem! The Facts just+ do not match the rhetoric.

GOP Talking-Points Still Prevail

During the 2012 Marhsa Blackburn (R) TN.  appeared on CNN and Fox News and rambled through interviews like a talking machine missing a “stop for a moment” gear.   I rarely saw the congresswoman on MSNBC, but when she did appear the interview was almost impossible to sit through.  She spewed GOP talking points like a piston while refusing to respond to questions from news show moderator.

Exhibit: With Chris Matthews. It appears Matthews has Blackburn on camera on Election Day 2010.  A day in infamy as the American voter sent Tea Party operatives to the House Of Representative to masquerade as legislators   After about one year and congressional approval ratings dropped to well below 15 percent. Fortunately, prior to the 2012 elections, some voters awakened to their historic electoral mistake.   The Congresswoman’s level of robotic spewing talking-points does not allow her to venture into any form of cogent interview.

2:31 minutes

Exhibit:  During Hurricane Sandy in October of this year, a Blackburn classic interview on Jansing and Company.  Listen to the questions from the interviewer (Jansing) and listen to the responses from the Congresswoman.  At the 1:00 mark you will find the most telling of all Blackburn’s communication roboticism. She mentions American Motors. American Motors has been defunct for well of 30 years.  And, there-in lies the problem with GOP talking machines.  It is amazing and were it not for the heavy Tennessee accent, it is possible to close one’s eyes and imagine Sarah Palin answering questions in the segment.

2:42 minutes

Exhibit: Yesterday on the MSNBC Show Fiscal Cliffhangers

At the 1:25 mark the insanity starts and runs through the full 4:54 minutes.

LINKED The dotted line in the chart should be taken as an indication of the lagging affect of presidential administration’s on the next administration. The point is clearly visible as the line shows an exponential jump in spending from Bush to Obama. Anyone with any degree of intellect and who is unencumbered with bias against President Obama knows why the dotted line appears as it shows in the chart. 

Moreover, the bars in the chart do not seem to support Blackurn false claims of reduction in spending under Reagan. 

 Joshua Kennon LINKED

I am still not finding Blackburn’s Reagan “dip”.   I will try one more chart.

OOPS!

While Blackburn certainly indicated spending has been a shred problem since the 1970s.  It appears, again, the Democrats just did not get their share of the spending.

Blackburn also seemed to tie Matthews into a bit of a knot on discretionary spending  She and Matthews seemed to have agreed that Discretionary spending excluded defense spending.  Well, if I heard them accurately, there is a problem with Blackburn’s adamant refusal to consider reductions in defense spending. She joins every Republican I have seen or heard over the past few years in flat denial of defense spending cuts.

National Priorities Dot Org

Defense Spending by Country

April 17, 2011 by Norbert Haupt

This list is based on the Stockholm International Peace Research Institute(SIPRI) Military Expenditure Database which calculates military expenditure data for 2009 (in constant 2008 US$).

Looking at it another way for the top five defense spenders:

Republicans rail about cutting spending, as well they should. We are spending far more than we are producing in revenue.  While a serous problem, the fact the GOP has historically shown over-the-top denial of an thought of reducing defense spending.  And at the same time the GOP circles the wagons against any consideration of raise tax rates on the nation’s wealthy.

Blackburn mentions entrepreneurs. The GOP is learning to avoid the often used mantra “Job Creators“. They  haven’t  created jobs!

Any mention of increasing taxes by the Administration is accompanied by the facts that 97% of job creators earn under $250,000 per year. The level at which the Obama Administration wants to protect from tax rate increases.

The Job Creators??????

Her use of the word “entrepreneurs” is false rhetoric, plain and simple. 

Let’s assume the wealthy also invest in the market.

Why would MSNBC book Marsha Blackburn  allow the spewing of venomous and false talking-points, and simply sing-off with a thank you?  News producers have to know her modus operandi, why not do better for viewers via asking for validation of at least one lie?  But, of course, when tough questions are posed, Blackburn runs to talking-points and simple evasion.

Spending Is Keeping The Nation Alive!

Enjoy while the caffeine kicks-in!!!!!

A morning report to go along with your Sumatra, Kenya AA, Tanzanian, French Roast, Kona Coast, Jamaica Blue Mountain, Ethiopian Yirgacheffe, Costa Rican, Espresso,  Moyobama Peruvian Organic, Indonesian Blend, Coffee Latte, Kauai Blend (often bitter), Colombian Red Lips, or your Folgers 100% Colombian.

Stimulus enacted February 2009………… Did it work?

We understand that conservatism has an endemic paradigm related to spending.  If one is a conservative one of the first words to come from the mouth when asked about government programs is, “where do we get the money, or how do we pay for it”.  It is as trite a response as listening to Sarah Palin try to tell Katie Kouric what she reads.  They say ‘pay for it without’ ever thinking about trimming the 58% of discretionary spending we spend on Defense. Or, eliminating  oil industry subsides as those corporations earns billions quarterly.

Forbes

“The summary of oil-related subsidies in the U.S. for 2010 totals $4.5 billion. That is a number often put forward; $4 billion a year or so in support for those greedy oil companies.”

The GOP and the nations conservatives want to stop spending at the very time that spending has proven to have reverse the Great (Bush) Recession. Spending has also sustained a slow struggle back to future prosperity.  The Party on the right should be smart enough to consider economic woes in the European Union as empirical evidence of the failures of austerity programs.   Factually,  Think Progress reports Europe is looking at a second recession that some economist lay squarely on austerity.   

Ed Schultz MSNBC, The Ed Show. Pay close attention to the closing remarks in this segment.

The GOP has been wrong about all matters related to the US economy for over 40 years.  From the days of Ronald Reagan’s “trickle-down” economics to the full collapse of the Bush economic “bubble”, the GOP has been well-off from economically adroit.

And, they expect the informed in the nation to again follow them down a path towards recession with economic depression peeping around the next corner.

A Mid Week Visual Journey Into Spending (Defense)

Mitt Romney: ‘I Will Not Cut The Military Budget‘

Some special watched over the nation on November 6th the leading up to the Vote.  Now only would Romney not cut military budget he spoke of new aircraft carriers, more surface ships, 100,000 more troops and he hedged on comment about coming out of Afghanistan.

But, this work is not about the some to be forgotten Mitt Romney, it is about Defense spending without all the verbiage.  Just allow the images to sink-in.

Tell us about ‘hands off defense cuts”



How about a look back to 2009




And we have members of Congress who will rail about entitlement programs vs defense spending! 


OK what is wrong with this picture. These troops are not in the state of Texas!


The ridiculousness of it all!

‘My Resident Conservative’ and his Tea Party`

 

I have been known to mention ‘my resident republican’ who sits in an office next to my office.

Something very interesting happened on yesterday. We had undertaken our almost daily (five minutes) of political ‘verbal-a-cuffs’ when I mentioned that the Tea Party has his party by the ……. (collar). For the first time every he recoiled in embarrassment and said to me, “they are not republicans”. The comment was so surprising to me that I almost allowed him to see the surprise. Alas, and never to fail I did not allow that peep into my just tweaked psyche, I chose the ‘low road’ and dug-in deeper.

After a few minutes the conversation waned as usual and he walked off ‘bloodied and unfulfilled’.

Fiscal FactCheck – Long but Historically Relevant

 Of course, you know that I am a devoted fan of FactCheck.org and specifically a fan of their author/investigator and contributor Brooks Jackson.

 

The following information was delivered to my email box and probably delivered to yours as well.  Yet,  there are many who do not subscribe to FactCheck updates, so I am posting the article.  Again, I tried to cut parts of the material and supplant it with links to the original article. You have the original article linked below but I refuse to dissect this work; it is far too relevant and I posit will become part of a national archive of the Obama Administration.

 

I have retained the original font from the article to simply save space on this web page.

 

  Fiscal FactCheck

Does Washington have a spending problem or an income problem? We offer some key facts.

July 15, 2011

Summary

Washington’s spending has recently been higher as a percentage of the nation’s economic output than at any time since World War II. But by the same measure, Washington’s revenues are the lowest in more than 60 years.

So does the U.S. have “a spending problem,” as Republicans keep repeating in the current debate over how to reduce the nation’s record deficits? Or is the problem that taxes are not high enough? Those questions frame a long-running partisan debate, and as usual we won’t offer an opinion one way or the other. But for those seeking their own answers, we can offer some fiscal history and factual context.
Some key facts we think are worth considering:

• Federal spending (“outlays” in budget jargon) is expected to equal 24.1 percent of the nation’s gross domestic product in the current fiscal year, which ends Sept. 30. The figure was 25 percent in fiscal year 2009, highest since 1945.

• On the other hand, federal revenues are expected to drop to 14.8 percent of GDP this year, lower even than the 14.9 percent attained in both 2009 and 2010. There has been only one year since World War II when revenues have been as low as in any of these years: 1950, when the figure was 14.4 percent.

• These historically high rates of spending and low rates of taxation have combined to produce a chain of deficits that are also the highest since WWII. The deficit was 10.0 percent of GDP in fiscal 2009. It declined to 8.9 percent last year as the economy started to recover, but is projected to go up to over 9 percent this year. Each of these deficits is larger than in any year since 1945, measured as a percentage of GDP.

• The U.S. is borrowing about 36 cents of every dollar spent so far this year. It borrowed 37 cents on the dollar last year, and 40 cents in fiscal 2009.

• The largest components of federal spending are Social Security and Medicare programs for the elderly (33.5 percent of total outlays in 2010) and national defense (20.1 percent). Interest payments on the federal debt alone accounted for 5.7 percent of all federal spending, and that percentage is rising.

• The federal income tax accounted for 41.5 percent of federal receipts in 2010 (down from 49.6 percent prior to the Bush tax cuts of 2001 – 2003). Corporate taxes brought in only 8.9 percent, also down sharply since the recent recession. Payroll taxes and other “social insurance” payments accounted for 40 percent of total receipts in 2010.
   

It’s easy to argue one side or the other by just citing facts that support a particular view, and omitting others. In the Analysis that follows, we offer some graphics, details and documentation in an attempt to give our readers a quick look at the entire picture — both where the money goes, and where it comes from.

Analysis

 

A glance at this chart quickly puts our current fiscal mess in historical context. We created it using historical budget data from the federal Office of Management and Budget, updated with the most recent estimates of the current fiscal year’s outlays and receipts from the nonpartisan Congressional Budget Office, issued June 22 as part of CBO’s 2011 long-term budget outlook.

Not since the enormous effort required to defeat Nazi Germany and Japan in WWII has the gap between Washington’s spending and its revenues been so large, as a portion of the economy. Then, taxes were increased sharply to pay for the war, but spending increased even faster. In recent years, Washington has increased spending while cutting taxes.

The current situation is a marked change from the booming 1990s. In those years revenues increased, due to a 1993 tax increase, which fell most heavily on those making more than $200,000 a year. Meanwhile spending decreased relative to the rapidly growing economy, partly because of an absolute decline in military spending following the collapse of the Soviet Union in 1991. Deficits were erased, and the government posted surpluses in fiscal 1998, 1999, 2000 and 2001.

But then a string of deficits began in the fiscal year 2002, and there is no end in sight. For the current year, the administration originally projected in February a deficit equal to 10.9 percent, a new postwar record. The Congressional Budget Office in April, using different economic assumptions, projected that enacting the president’s budget would produce a deficit of 9.5 percent of GDP, and that making no changes to current law would result in a deficit of 9.3 percent of GDP.

• Income-tax receipts are down sharply since the Bush tax cuts. In fiscal 2000, the year before the cuts began to take effect, receipts from the federal income tax on individuals amounted to 10.2 percent of GDP. That figure was down to 6.2 percent of GDP last year.

• Spending for the military and for homeland security has risen substantially since the attacks of Sept. 11, 2001. Spending for national defense rose from 3.0 percent of GDP that year to 4.8 percent last year.

• Non-military spending also has continued to rise. President George W. Bush pushed through an expensive prescription drug benefit for seniors in 2003, the largest expansion of Medicare in its history. In the financial crisis of 2008, Bush also pushed for and signed for a massive banking bailout. In early 2009, President Barack Obama pushed for and signed an expensive stimulus measure, and after a long fight in Congress he signed another expensive plan, the health care law, in March of last year, aimed at expanding coverage for millions who lack health insurance.

• Two economic recessions have had their effect. The recession of 2001 began in March and lasted until November. And the worst downturn since the Great Depression began in December 2007 and continued until June 2009. In both cases unemployment remained high for long after business activity began to recover, holding back both wages and the taxes that jobless workers would have paid on them.

We won’t attempt to assign blame to one party or the other for the deficits. There is plenty of blame to go around, some of which rests with an American public that won’t accept cuts in the largest categories of public spending, and also resists tax increases on anybody but “the rich.”

Where Does It Go?

The biggest share of federal spending now goes for Social Security (20.4 percent in 2010) and Medicare (13.1 percent), the two entitlement programs that big majorities of Americans want to protect from any reductions, according to a recent poll. Together these two programs for senior citizens consume more than one-third of spending, far more than national defense, which accounts for just 20.1 percent, despite the increases of recent years.

Some categories that are unpopular with much of the public turn out to represent a fairly small part of total spending. Foreign aid, for example, amounts to less than 1 percent of the entire budget — even counting in military assistance to Israel, Egypt, Iraq and Afghanistan. All agriculture programs — including farm subsidies — make up just over one-half of 1 percent.

Where Did It Go? Major components of the $3.5 trillion spent in fiscal 2010
Social Security	20.4%
National Defense	20.1%
Medicare	13.1%
Medicaid/CHIP	8.1%
Interest	5.7%
Low-Income Assistance	5.3%
Unemployment Compensation	4.6%
Education & Training	3.7%
Federal Employee Retirement	3.5%
Veterans	3.1%
Transportation	2.7%
Other health care	2.6%
Parks & natural resources	1.3%
Space/Science	0.9%
Foreign aid	0.9%
Agriculture	0.6%
Everything else	3.5%

The wildly unpopular TARP program, used to finance banks, a big insurance company and two U.S. auto companies, is now actually bringing billions back into the Treasury, as old loans are repaid and government-owned stock is sold to the public. The nonprofit investigative project Pro Publica figures that $322 billion has now flowed back into the Treasury, of the $573 billion loaned, invested or spent originally. And even the Obama administration’s $787 billion stimulus program, so excoriated by Republicans, has nearly run its course. It was enacted in 2009, and according to the official Recovery.gov website, had spent 84 percent of the total as of June 30. That included 90 percent of the tax benefits, 83 percent of entitlements, and 78 percent of contracts, grants and loans.

Borrowing 36 Cents on the Dollar

The current gap between tax revenue and congressionally approved spending is so great that so far this fiscal year the federal government has borrowed an average of 36 cents of every dollar paid out. According to the most recent “Monthly Budget Review,” issued by the Congressional Budget Office on July 8, the total spent through the end of June (the first nine months of the current fiscal year) was estimated at $2.705 trillion. But government receipts fell $973 billion short of spending, CBO estimates.
The good news — if it can be called that — is that the huge deficit is running at $31 billion lower than last year at this time. Spending is higher (Medicaid is up 6 percent over last year, for example), but federal income tax receipts are running higher as well. CBO credited “higher wages and more employment” than last year for the increase in tax revenue. And borrowing 36 cents on the dollar is an improvement of sorts. For all of fiscal 2009, the deficit amounted to 40 cents of every dollar spent, and it was 37 cents in fiscal 2010.

Where the Money Comes From

Taxes make up the vast bulk of federal revenues, of course. Individual income-tax payers supplied 41.5 percent of all federal revenues in fiscal 2010, but Social Security and Medicare payroll taxes paid both by workers and their employers made up nearly as much. Combined with federal unemployment insurance taxes and a few others, these social insurance taxes made up 40 percent of revenues. The income tax on corporations brought in just under 9 percent, while excise taxes, on such things as gasoline and diesel fuel, alcoholic beverages and telecommunications services, brought in just over 3 percent.

We found a surprising bit of news buried in the “other” category, which made up 6.5 percent of all revenue.

Breakdown of “other” in 2010
(Percent of total revenues)
Federal Reserve	3.5%
Customs	1.2%
Misc	1.0%
Estate & Gift	0.9%
Total “Other”	6.5%

It turns out that in 2010, more than half of that category came from profits made by the Federal Reserve System, whose lending operations expanded dramatically to address the financial crisis that started in 2007. The Fed’s payments to the Treasury made up 3.5 percent of all federal revenue in 2010 — nearly $76 billion. The rest of the “other” category is made up of customs duties (1.2 percent of all revenue), federal estate and gift taxes (0.9 percent), and miscellaneous sources.

Who Pays?

Who pays all of these taxes? The best information on that comes from the Congressional Budget Office, which has tracked the tax burden for many years. The most recent complete data cover 2007. CBO figured in that year more than half of all federal taxes was paid by the top 10 percent of income earners. They paid 55 percent of all federal taxes in 2007, CBO said.

That’s a comprehensive figure, counting the income tax, payroll taxes, excise taxes and even the corporate income tax (borne by stockholders in the form of reduced dividends and appreciation). And perhaps surprisingly, the top 10 percent of earners pay a greater share of federal taxes now than they did before the Bush tax cuts, which Democrats constantly criticize as a giveaway to “the rich.” The top 10 percent paid 50 percent of all federal taxes in 2001.

However, that comes in spite of lower tax rates at the top, not because of it. The reason the most affluent 10 percent pay a greater share of taxes is that they are getting a greater share of all income. Their share of all pre-tax income went from 37.5 percent in 2001 to 42 percent in 2007.

One figure that gets a lot of attention is the percentage of individuals and married couples who pay zero federal income taxes. Those figures come from the nonpartisan Tax Policy Center. The TPC’s most recent report was released June 14, and it shows that this year 46.4 percent of “tax units” (individuals or married couples) had zero federal income tax liability. That’s because of various exemptions and tax credits aimed at reducing the income-tax burden on lower-income workers and families with children. The figure is down from 2008 and 2009, when the percentage topped out at 50.8 percent.

But practically all workers (and their employers) pay Medicare taxes on every dollar of wages, and Social Security taxes on every dollar of wages up to $106,800. Consequently, those who pay no federal income or payroll taxes at all amount to only 18.1 percent this year, the Tax Policy Center figures.

There’s plenty more where these figures came from. We could focus more closely on what was paid and earned by the top 1 percent, for example. Or we could zoom in to examine the role of rising medical and drug costs in pushing up spending for Medicare and Medicaid. We may well visit those subjects in future articles. For now, we’ve tried to give a quick, accurate and balanced look at the big picture: Both where Washington spends, and where its money comes from.
– by Brooks Jackson

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