What is in the Federal Budget?

What, exactly, do we spend money on? Many people float from paycheck to paycheck having little idea where their money goes, while others can tell you to the penny exactly where the money goes and when it goes there. What about the Federal government? If you ask most people what we spend money on as a country, you'll find a mixed bag. So just in case you didn't know, here's a breakdown of the 2010 Federal budget.

Here are the top 10 spending categories in the 2010 budget, according to Wikipedia:

1. Social Security: 19.6%
2. Dept. of Defense: 18.7%
3. Unemployment and welfare benefits: 16.1%
4. Medicare: 12.8%
5. Medicaid: 8.2%
6. Interest on the National debt: 4.6%
7. Dept. of Health and Human Services: 2.2%
8. Dept. of Transportation: 2.0%
9. Dept. of Veterans Affairs: 1.5%
10. State Department: 1.5%

In theory, Social Security should be a self-funding system (it's not in reality, but let's pretend for a moment), so we can debate whether or not to include it in the list. If we choose to leave it off, then #10 becomes the Dept. of Housing and Urban Development at 1.3%.

That up there is $3.5 trillion. Most people can't really wrap their brain around a number like that. The exact number is about $3,552,000,000,000.00. Powerball can't touch that. The Federal income for the same period was about $2.4 trillion. So that's a deficit of $1.1 trillion. We overdrew our bank account by frickin' 60 percent.

How on earth are we supposed to balance that?

Well, for starters, we need to plug the holes in the tax code that permit immensely profitable corporations like GE to receive tax credits of $3.2 billion and simultaneously paying $0.00 tax on their yearly profit of $5.1 billion. That's $8.3 billion in profit, then, actually. If we did that with 1000 corporations, we would balance the budget. I'm *not* proposing raising taxes, or even permitting past tax cuts to lapse. I'm talking about just plugging the loopholes that GE's nearly 1000-employee tax department mines to enrich itself. Of course, GE is extraordinary. Most companies in fact don't make off like bandits that badly. But the bottom line is that if you made a profit, you had better not have gotten back more than you paid in. And I'm specifically not proposing to *cut* taxes. Look: $14 trillion. That's our debt. The majority of it is held by China. Think about that.

Tax credits must go. I'm not talking about tax deductions, which are more like not adding insult to injury. You needed to spend some money on important things, and the government decided not to tax that amount. Tax deductions are okay. Tax credits, on the other hand, are simply bribes from the Feds to induce particular behavior they wish to have occur. I've received tax credits of $1200 for my family to spend to stimulate the economy. Granted, that's money I probably would not have spent otherwise. But that's not always the case. I got $400 back on my taxes because I had to buy new garage doors last summer. They cost $1500 and I would have bought the $1500 doors regardless of whether or not the Feds paid me for it. I also got some money for going to grad school, which again, was money that would have been spent anyway. Yes, I took the tax credits. Nearly all people who are offered them will take them. Corporations will certainly take them.

Some people took the money and put it in savings. Some people took the money and spent it on idiotic things. Corporations do the same thing, but since they have paid lobbyists and know how to work Congress, they can persuade Congress to pass laws that grant tax credits that just happen to be what corporations are already doing, except now they get money from the Feds instead of having to spend their own money, which improves their bottom line to the stockholders. Unfortunately, I can't find a figure for total tax credits paid out to individuals and corporations.

Obviously, there will need to be cuts in unemployment and welfare benefits. There will need to be cuts in Medicare and Medicaid. It will hurt people, but there's simply no alternative. We must also cut the military and defense spending, homeland security, and the War on Drugs. This will also hurt people. There is no way to get through this mess without hurting people. Because if we ever default on our debt, things will get much, much, much worse than they have been and are now, and many, many more people will be hurt.

In reality, every single part of the Federal government will need to be cut. But it needs to be done evenly and without the vindictive "social riders" that advance narrow moral agendas. If we're going to eliminate funding for Planned Parenthood and PBS, we also need to eliminate funding for the DEA. If we're going to defund the EPA, we need to defund the ATF too. And we will need to do this for an extended period of time. We can't be permitted to just reduce the deficit. That's not good enough. We can't congratulate ourselves with just balancing the budget. We would need to run a $100 billion surplus for over 140 years in order to pay down the Federal debt.

And that's just the Federal government's debt. That's not counting state and local debts. We've wanted the government to give us stuff to make our lives easier, to soften the blow of bad things happening, or to impose our morality on others. That stuff doesn't come free. But I'm afraid we're all still so deeply in denial that the Federal debt debacle can only end in complete, unmitigated disaster, because we are unwilling to do what it takes to live within our means.