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The City Café

For those interested in sharing ideas and perspectives regarding local government.

DOUG MACDONALD

The chart above illustrates the difficulty in cutting $200 billion or $400 billion per year from the federal budget.  But there are some tips for analyzing the process.

  1. The top four areas (Health Care, National Defense, Income Security, Social Security and Net Interest) comprise 77% of the budget.
  2. More than half of the talk-show rhetoric abused programs are in the smaller budgets, which comprise 17% of the budget.
  3. The top 4 programs have significant constituents and lobbies.  For example, the 19% spent by the Defense Department hire contractors, some of which are the biggest corporations in the country.  Second, people more than 65 (years of age) vigorously support the Social Security (20%) and the Medicare program (13%, within the Health Care slice of the pie).

Rule #1 in federal budgeting:  Most program costs are often cited run over a10 year period, so divide by 10 to ascertain the annual cost.  Politicians like the bigger numbers because they get attention and headlines.  We are not saying that presenting fiscal notes over a ten-year period is misleading, it is necessary, but when people look at annual revenue and hear trillion dollar impacts there can be a disconnect.

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