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How Uncle Sam Spends Your Taxes Jerry Idaszak Friday, February 25, 2011
Almost everyone agrees that the federal deficit is a ticking bomb. But few can agree on how to defuse it. Ideas run the gamut from raising taxes to the wholesale elimination of scores of government programs. Some are contradictory. All are controversial. When you take a look at where the money actually goes, it's easy to see why it's hard to balance the budget.
Social Security, the Big Enchilada -- 20.6%
Many folks think that Social Security shouldn't be counted in the federal budget at all, because they contribute to the retirement fund with each paycheck. Actually, though, taxes paid in by today's workers aren't socked away for their future retirement, but are used for benefits for today's retirees -- an estimated $760 billion worth of them in fiscal year 2012. What's more, the so-called trust fund -- where payroll taxes not needed for current payouts are stashed -- consists of $2.6 trillion in IOUs from the U.S. Treasury. The funds have been borrowed over the past two decades to pay for other federal programs.
Big, Bad Defense -- 20%
Nearly 20% of President Obama's proposed FY 2012 budget is for defense spending. It includes funds for military operations in Afghanistan, Iraq and South Korea as well as for 760 bases scattered across the U.S. and abroad. The $738 billion tab also pays for research, construction, family housing and myriad defense-related items. About 25% of the total goes to personnel costs, and the figure doesn't include veterans' pensions and health care. With the winding down of operations in Iraq, Obama's budget has defense outlays for FY 2012 at about $35 billion less than a year ago.
Medicare and Medicaid: Greedy Twins -- 13.2% and 7.2%
Combined, these two national health care programs rival defense and Social Security as Uncle Sam's biggest expenses. While the White House and Congress talk a lot about cutting these health care costs, lawmakers have avoided taking the tough -- and extremely unpopular -- actions needed.
Help for Low-Incomers -- 9%
In addition to Medicaid, about 9% of the total federal budget is dedicated to assistance for the needy. The total -- about $297 billion for FY 2012 -- includes funds for housing subsidies, food stamps, school lunch and other nutrition programs, aid to families with dependent children (welfare) and other aid, plus the earned income tax credit.
In addition, unemployment insurance will account for a bit less than $100 billion -- and about 2.6% of the budget -- in FY 2012. With the economy improving, that's down from the $160 billion doled out in 2010 and the expected $135-billion tab this fiscal year.
Net Interest on the Federal Debt -- 6.5%
Next fiscal year, Uncle Sam is expected to shell out a whopping $242 billion in interest to the owners of U.S. Treasuries, here and abroad. For the past few years, low interest rates have helped keep a lid on this category. But interest rates are rising and so is the accumulated national debt.
The White House estimates that debt held by the public will approach $12 trillion in FY 2012. If you include intragovernment payments -- by the Treasury to funds such as Social Security, for example -- the nation's total gross debt will approach $17 trillion. In coming years, interest payments will gobble up even more.
And Everything Else -- 23.5%
The biggest five items in the federal budget -- Social Security, defense, Medicare, Medicaid and net interest on the debt -- account for about two-thirds of the total. Everything from transportation (3.3%), education (1.9%), federal employees' and military retirement (3.3%) to science and space (0.9%) and homeland security (1.3%) comes out of what's left. International aid -- frequently mentioned as a potential source of savings -- accounts for just 1.7% of spending, and half of that is for humanitarian assistance. All environmental and natural resource programs, 0.6%. Help for low-incomers, which we have already discussed, is an amalgam of programs whose total adds up to 9% of federal spending.
Untouchables in the U.S. Budget
Only about a third of the federal budget actually falls under congressional control on an annual basis, and much of that is for defense spending -- mostly off-limits for political reasons. About three-fifths of the budget is dedicated to programs such as Social Security, Medicare, Medicaid, food stamps, crop subsidies and other programs for which spending is automatic -- controlled by formulas. Add interest payments to the list of uncontrollables and untouchables, and the share of spending Washington can actually manipulate from year to year is about 16%.
If that entire 16% -- encompassing programs as diverse and as popular as medical and scientific research, space exploration, maintenance of national parks, repairing roads and bridges -- were eliminated, it would reduce the federal deficit only by less than half. Individually, these programs amount to crumbs on Washington's dinner table, where $37 billion is just 1% of the main course.
Direct Payments to Your Fellow Americans
Looked at a different way, about 58% of all government spending consists of direct payments from Uncle Sam to individuals. Retirees get Social Security payments, veterans' pensions and Medicare benefits. Students get tuition assistance. Payments are made to farmers to idle erosion-prone land. Victims of natural disasters get a helping hand to rebuild their homes, businesses and lives.
Lobbies for many of these programs are immensely powerful and usually able to deflect attempts to trim spending. And while nearly everyone agrees that belt-tightening is needed, few are willing to cinch in their own waistlines.
Looked at a different way, about 58% of all government spending consists of direct payments from Uncle Sam to individuals. Retirees get Social Security payments, veterans' pensions and Medicare benefits. Students get tuition assistance. Payments are made to farmers to idle erosion-prone land. Victims of natural disasters get a helping hand to rebuild their homes, businesses and lives.
-------------------- jordan Posts: 5812 | From: st paul,mn | Registered: Feb 2004
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posted
And why do we need to keep raising taxes again? Oh yes because the pig is hungry.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so. Posts: 6949 | Registered: Apr 2004
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quote:Originally posted by CashCowMoo: And why do we need to keep raising taxes again? Oh yes because the pig is hungry.
BTW? taxes have not been "raised again" yet. In fact they are a 60 year low compared to income.
we have bills to pay. Alot of bills to pay. You might want to review the actual history, Bush and the GOP run Congress went on a spending spree while they cut taxes, and they claimed that cutting taxes would stimulate the economy and increase revenues. In fact Bush and the gOP run Congress increased the size of the Govt more than anybody else in history (including Obama). Even all this complaiing about Obama increasing thedefict by more than Bush is almost entirely due to the fact that revenues DECREASED when Obama took office, his and the Dems STIMULUS plan was half tax cuts too.... look it up.
Instead of stimulating the economy? We are in more debt than ever.
I am not for increasing spending, in fact i am for cutting spending and especially cutting waste. However, every job cut from the Govt is ANOTHER job lost, and we already have lost too many jobs. Cut more jobs while 10 million people are job hunting, and another 15 million are underemployed? Think that's smart? Seems that the TParty does.
Cutting taxes has not been successful at stimulating the economy, why does everyone ignore that simple fact?
The current paln that is in place and will continue to be in place (because there is no alternative that is politically feasible) is to make the debt we already have seem like a pittance by increasing the money suply causing steady and high inflation. That way in five years it will be easier to pay off.
You can call it "pig"if you like or you can call it whatever, but the situation we have placed ourselves in is mostly because very few people are willing to face the truth, and nobody can get elected telling the truth.
Unions? The "conervaitves" are running around trying to destroy them, but the tax laws we have in place, and the SPENDING primarily benefits big business. People calim we have th highes tbusiness tax rates, but when you actually look at how much the businesses pay? You find we are one of the lowest, because of all the "loopholes"
0224-Boeing 35 billion dollar Air Force tanker contract win no surprise
but look again:
Despite reporting nearly $10 billion in domestic pre-tax profits between 2008 and 2010, the Boeing Corporation, which was granted a contract worth as much as $35 billion to build airplanes for the federal government earlier this week, did not pay a dime of U.S. federal corporate income taxes during this three-year period.
For example:
In 2009, Boeing reported $1.5 billion in pre-tax profits, but didn’t pay any federal income tax at all on those profits. Instead, the company claimed an outright tax rebate of $132 million.
i'm not against Boeing, we actually need those refuelers. we can't do without, so we pay Boeing simply to exist.... but you have to understand what's really going on if you wnat to fix the problem, and the problem is not enough money is coming into the Govt and everybody sorta needs the Govt to do it's job.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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