Your Opinion: Reducing spending by the numbers
Tuesday, June 4, 2013
What advice would you give a family whose budget showed an annual income of $245,000 (this is the most money they have ever made), annual expenses of $353,700 (an additional $108,700 of debt) and who already is $1,676,000 in debt? Add seven zeros to the above numbers and they apply to our federal government. (I massaged the numbers from a John Stossel presentation.)
The question that should be asked is how do we get spending back to historic levels of 17-20 percent of GDP, instead of the current 22.7 percent. At that point we can begin the discussion about the “fairness” of our tax system.
In 1991, prior to the start of the first war with Iraq, military spending was $466,573 million (2013 dollars). It consumed 20.6 percent of the federal budget and 4.6 percent of GDP. In 2005, during the midst of the wars in Iraq and Afghanistan, military spending was $589,731 (2013 dollars). It consumed 20 percent of the federal budget and 4 percent of GDP.
Defense spending projections for 2013 are $660,037, 17.9 percent of the federal budget and 4.4 percent of GDP. Even though defense spending is consuming a smaller percent of the federal budget than it has in the past, I think it is clear that, since we are no longer fighting wars in Iraq and Afghanistan, it should be significantly lower.
The real growth in the federal budget has been welfare spending. In the past 40 years, after adjusting for inflation, it has grown tenfold, even though the population has only doubled. The Congressional Research Service says that in 2011 the federal government spent over one trillion dollars on means tested welfare programs. Means tested welfare is spending based on income levels, it does not include programs such as Social Security or Medicare.
This equates to $60,000 per year for every US household with an income below the poverty level. If you divided it equally between all households with incomes below $38,520, 40 percent of all households, it would still average an annual welfare payment of over $22,000 per household.
Means tested welfare now consumes nearly 30 percent of the federal budget.
Perhaps if some of the 12 million illegal aliens in our country were sent home, and able bodied recipients of welfare were told to get a job or go hungry, we could start the process of reducing federal spending.
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