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Kimberly Amadeo

How to Balance the Budget

By March 1, 2011

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President Obama's $3.7 trillion budget for Fiscal Year 2012 will create an unnecessary $1 trillion deficit that will ultimately harm the economy. Deficit spending of $1.3 trillion or more was needed in FY 2009-2011 to boost the economy out of recession. But FY 2012 doesn't start until October 2011. Although unemployment will probably remain around 9% until then, consumer confidence is returning as economic growth improves. What exactly is the money -- YOUR money -- being spent on?

What It Means to You

Much of the increased spending is for defense-related security ($881 billion), Social Security ($761 billion) and Medicare/Medicaid ($737 billion). Why is no one looking at cutting these behemoths - especially defense spending? Republicans criticize Obama's budget, but they are only looking at cutting non-defense discretionary spending - a paltry (by comparison)  $491 billion.  Even if you cut the entire amount, you'd still have a $509 billion deficit.

Hello? Is anybody listening? Deeper cuts must be made to Defense spending, or it will come out of our Social Security and Medicare benefits - which we've already paid for.

By adding to the staggering $14 trillion debt, the $1 trillion deficit is dragging down the economy, and it will only get worse as time goes on. That's because it acts like a tax on future generations.

Where Does the $3.7 Trillion Go?

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Comments

March 1, 2011 at 6:27 pm
(1) pieniaszek says:

You are so correct that it hurts me and should do the same for everyone who has children and grandchildren.

As a retired member of the military and retired from a DoD Contractor, I am appalled by the fact that the GAO (Dec 2010) has reported that the DoD budgets are “unauditable”. In asking the GAO for details, I discover that Congress has been told repeatedly that the DoD financial management system is in disarray. BUT THEY DO NOTHING!

How can that subservient elected group of people repeatedly ignore an agency’s reports which provide details to Congress.

March 1, 2011 at 7:12 pm
(2) John Russell says:

All these programs need to be rebuilt. The times of having an existing “black budget” in the military need to end. There is probably so much money being awarded in no-bid contracts that are wastefully fulfilled that is is ridiculous. I’d would even bet that there is a good amount of money not being spent on defense..that is allocated as defense spending so it does not have to be justified to anyone.

Social Security and Medicare need to be completely rebuilt. There is wasteful spending there as well. Both programs are being used in ways that were never intended. This is why the government needs to get out of things more, because they are terribly inefficient at everything. They also need to be barred from being able to borrow(steal) from social security funds just to use them for general fund purposes, that should be outright illegal.

If Republicans, really if anyone in congress wants to live up to their duty, they will FORCE an audit of everything, and start cutting where appropriate. It must be done, the can cannot be kicked down the road any further. I’ve explained to my preteen kids that the government is charging up debt for them everyday that they will have to pay, and they can’t even vote on it.

People need to really care and not just vote people in that say things to get elected, but also follow up and harass them to live up to their promises.

March 8, 2011 at 12:05 pm
(3) Jim Wygand says:

A budget is nothing less than a cash flow. When you spend more cash than you take in you must either take more in or shell less out (or do a bit of both). It makes no sense to impose a tax cut and keep it in place during a period of high deficit. Nor does it make sense to continue spending as before. In short, selected expense reductions and a tax increase are called for. The structure of US taxes is currently inequitable. The link between tax rates and income levels has been changed. Restore it, and the deficit will improve.

March 8, 2011 at 12:13 pm
(4) clarence swinney says:

In 2009, the Fed govt took 17.5% of our total income.
Lowest of any Rich nation.

We pay our way Rich-Ultra Rich must pay Fair share of “Total” Income.

It is not the usual game of Rich pay greatest part. It is how much of their total.

Minimum wage earner pays 6.2% of total income in payrolll tax. Fortune 400 largest incomes pay 1% and less.

Largest income in 2010 paid 1/100th of 1%.

In 2008 top 20% paid 30%– middle 20% paid 28.5% of Total Income. Almost same. In fed-state-local income taxes.

Bottom 20% paid a larger percent of Total Income in Payroll tax than top 20%.

$1000 is more important in a $10,000 income than
$50,000 in a $1,000,000 income.

FAIR What percent of Total do you give?

Exxon paid 0 in 2009 on billions of profits.
In fact, they got a Refund. Ouch!
Boeing paid 0 over three years on 10B in profits.

Dishwasher pays 6.2% of Total Income in taxes. Exxon pays 10%. Which Standard of Living is hurt the most??

400 top income get more than bottom 50%
400 get more than 60,000,000.
A Christ-Like Nation?
Like these bananas?
Cliff ahead!
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