Will the US Government Ever Balance the Budget?

Will the U.S. Government Ever Balance the Budget? "The causes [of the roughly projected $1.5 trillion budget deficit for 2010] are many: falling tax receipts in a severe recession, two long wars, tax cuts for everyone, emergency relief for financial markets and the jobless, stimulus spending on infrastructure, and more.The more pressing issue is how to bring revenues and expenses back into balance. Whatever is done on the revenue side - raising taxes, holding them at current levels or cutting them - must be accompanied by spending restraint. And that's something Congress has never been good at. Members of Congress get elected by saying yes, not no." -Kiplinger.com Why is it so hard to cut spending? Approximately 57% of Obama's $3.8 trillion 2011 budget comes in direct payments to individual Americans or is spent on their personal behalf. Here's a breakdown of what the government has earmarked for the American people: Social Security recipients: 19% Federal Civilian and Military Retirees combined: 3.2% Pensions: 22.2% Unemployment benefits: 2.8% Food stamps and other 2.7% nutrition programs for the poor Health care: 23.8% Housing subsidies for the poor: 1.7% Cash payments to the disabled and poor: 1.3% General Senior Population: 13% Poor: 7.8% Low-income tax credit •(direct payment to the lowest earners): 1.2% Veterans: 3% Cash welfare for poor mothers with children: 0.8% College-tuition aid (not including GI bill): 0.5% Crop subsidies: 0.3% So Why Can't We Trim This 57% Allocation? • Entitlements are not subject to freezing or trimming - unless Congress changes the authorizing laws. The lobbies for every entitlement are immensely powerful, and they remind Congress that transfer payments are spent almost immediately, supporting consumer demand across the nation. Discretionary Spending Military operations and hardware Almost 1/5 of next year's budget Defense is the third-largest 1.Healtheare federal expenditure by function, after health care and pensions. - 19.6% 2.Pensions of Total Federal Spending 3.Defense Obama and Congress are eyeing major cuts in armament programs, but defense contractors will remind the voters of how many manufacturing jobs they support in the U.S. All other discretionary spending • Transportation • Education • Public Health • Medical Research • Foreign Aid • Diplomacy • Trade Promotion • Homeland Security • Disaster Relief • Law-enforcement Aid to State and Local Governments 16% • Alternative-energy Research and Subsidies • Enviromental Protection • National Parks Basic Science Research Space Exploration • And More. of Total Federal Spending Not one of these functions gets even 3% of the budget, and many are well under 1%. They are the scraps and crumbs on Washington's dinner table - even if a 1% share equals $38 billion in a federal budget of $3.8 trillion. The Future of Our Deficit CBO's Reestimate According to the Congressional Budget Office, under Obama's plan deficits would never shrink below 1,400 of the President's Budget 1,200 4% of the economy between now and 2020. 1,000 Boo The cumulative deficits between now and 2020 would total $9.76 trillion, and debt held by the public would amount to 90% of the nation's gross domestic product. 600 400 (s in billions) o The Biggest Stuff is Hardest To Cut Aside from direct payments and military operations & hardware, literally uncuttable are the interest payments Washington must make every year - half of the total to foreign creditors - on the accumulated deficits of past years. Interest is now 7% of the budget and climbing. Kiplinger Sources: Kiplinger, CBO