4. Our annual budget is significantly out of balance:Defense. the major federal entitlements, and interest on the current debt are about 80% of federal spending. Completely eliminating nondefense discretionary spending---everything the federal government does except the military, Social Security, health care for old people and poor people, and paying its credit card bills---would only reduce the current deficit by about half. So, we could stop building highways, let everyone out of federal prison, eliminate NPR, stop arts funding for homoerotic photography, quit giving poor kids school lunches, ban all earmarks, etc., etc., and still only be halfway done.
a. Spending is about $3.8 trillion.5. The big buckets of spending are pretty clearly separable:
b. Revenue is about $2.5 trillion.
c. This leaves a deficit of about $1.3 trillion.
a. Defense—about $900 billion.
b. Social Security—$730 billion.
c. Medicare—$490 billion.
d. Medicaid—$300 billion.
e. Interest—$250 billion.
f. Nondefense discretionary—$610 billion.
To balance the budget, there have to be major cuts to defense, entitlements, and, probably, tax increases.
I say Spitzer has half a point because his critique of Republican intransigence on the deficit goes just as much, if not more so, for Democrats who seem to have no serious deficit reduction plans above and beyond increasing the top marginal income tax rate.
The problems are huge, however, the solutions are as painfully obvious as they are painful. Retirement ages must be raised and benefits for future retirees must be reduced. Medicare and Medicaid eligibility have to be tightened and benefits capped. Defense spending has to be cut. Sadly, it is also likely that taxes will have to be raised, at least in the short term, to payoff the over-commitments we have previously made to current retirees in terms of benefits and medical coverage.
There are, however, absolutely no grown-ups in charge of our national government.
Neither the President nor congressional leaders have bothered to explain any of this to the country in plain language. Neither the President nor congressional leaders have bothered to make plans to actually deal with this problem. Instead, both the President and congressional leaders are content to continue their bipartisan aversion to problem-solving as our nation digs itself deeper and deeper into a fiscal crisis. Both the President and congressional leaders are content to let things get worse before they get better, to kick the problem down the road to someone else at some other time to deal with, and to work hard together to hoist the anvil that will eventually crash down on our heads, Wile E. Coyote-style, to ever greater heights.