Traveling Lands Beyond

As 2012 is a presidential election year, it’s a pretty good bet that for the next several months we’ll hear a lot of heated discussion about government spending, one of the central ideological wedges that separate Democrats and Republicans. It is very easy to get caught up in speeches, editorials, and personal biases, leading you to form opinions without a solid basis. I think the correct starting point in these matters is to read the headline numbers from the latest 2012 federal budget summary tables (found at the end of the document in the link) to get a big-picture sense of the absolute and relative magnitudes of the figures involved.

The 2012 federal budget is the White House’s plan for government spending in 2012 and a request for funds, and was released in February 2011 and updated in September 2011 (the link in the first paragraph is the update). The White House submits the budget to Congress, Congress votes on appropriations bills, and the President signs or vetoes it as with other bills (and can have his veto overridden by a two-thirds congressional majority, as with other bills). The amount requested in the budget may or may not be the actual amount spent in 2012; nevertheless, digesting the figures does give you perspective on how much money is involved in running the various branches of the US federal government.

The importance of reading the budget summary sounds obvious, but I don’t think many people do it, and unfortunately until recently I would have to have included myself in that crowd. The full budget report is daunting in length and includes a lot of commentary. I am not an expert on the subject at all, but I think reading the summary tables alone will probably cover the most important parts and is a task of manageable size for the everyday concerned citizen.

I think the following four figures are the most important ones to know. (I’ll write all numbers in billions; changing your units between millions, billions, and trillions can generate misleading comparisons.)

• The 2012 federal spending budget is $3,670 billion
• This would produce a projected deficit in 2012 of $956 billion
• Debt held by the public by the end of 2012 is projected at $10,264 billion
• Projected US GDP in 2012 by the White House is $15,673 billion

Once you have seen and understood the numerical picture, you are in a much better position to evaluate claims by politicians, candidates, and pundits. And if you are interested in learning more about a particular policy, you can drill down into the appropriate section of the full budget report to give yourself an even sharper picture. I recommend reading tables S-1 and S-4 in the September budget revision, which contain top-level summaries of receipts and outlays (including the four numbers above), and table S-11 in the original February 2011 budget summary tables, which contains budgeted discretionary expenditure by government branch.

The most useful things I learned from looking at some of the details were:

• We spend a lot of money on health care and retirees. As of the September 2011 revision, Social Security is budgeted at $768 billion, and Medicare is budgeted at $478 billion, and Medicaid is budgeted at $266 billion.
• We also spend a lot of money on national security. On the February 2011 budget, the Department of Defense is budgeted for $553 billion, easily the most of any government branch. The combined “security” expenditures (also including State, Homeland Security, parts of Energy, and Veterans Affairs) plus overseas contingency operations (anti-terrorism spending) are budgeted for $846 billion.
• We don’t spend that much money on anything else. Health and Human Services and Education are the two non-security departments with the biggest budgets and they are, respectively, $82 billion and $79 billion. A lot of other branches that I personally feel are bandied about in the news as targets of spending cuts, such as Interior, Commerce, and NASA, are drops in the bucket by comparison (NASA is the biggest of these three at $19 billion).

Clearly costs are only one side of the story; even large expenditures can be justified by worthy causes and even small wastes should be cut. But if I were tackling the problem of US deficits and I looked at this data, the first two places I would look to improve efficiency would be in health care/retiree spending and defense spending. Policies that save a mere 1% on our national security budget or our Social Security/Medicare budget would pay for most of an entire year’s worth of spending for many other government agencies. Conversely, draconian cuts in these small-budget agencies would have little impact on the big-picture problem of deficits.