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Kimberly Amadeo

Obama Budget - Where Is the Money Going?

By February 2, 2010

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President Obama's $3.8 trillion budget for FY 2011 will create an unnecessary $1.3 trillion deficit that will ultimately harm the economy. Deficit spending of $1.4 trillion in FY 2009 and $1.6 trillion in FY 2010 was needed to boost the economy out of recession. But Fiscal Year 2011 doesn't start until October 2010. Most economists agree that the economy will be out of serious danger by then, and some even think the Fed might raise interest rates.

What It Means to You

Much of the increased spending is for defense-related security ($895 billion), Medicare ($491 billion) and Medicaid ($297 billion). Despite the press, stimulus spending is not the lions' share, at only $136 billion. However, now that the economy is getting back on its feet, is it even necessary? By adding to the staggering $12 trillion debt, it could actually put a drag on the economy, especially in the long term. That's because it acts like a tax on future generations.

Where Does the $3.8 Trillion Go?

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