Last week, Obama presented a $3.7 trillion budget. While this is enormous, it actually is a cut (for following years) – $33 billion cut in 2012 and about a trillion dollars over the next decade. Roughly two-thirds of the reduced cost over the next decade comes from spending cuts and freezes – such as the five-year freeze on discretionary spending.
However, despite these cuts, our debt is projected to rise by over $7 trillion in the next decade, and the deficit is projected to never fall below $600 billion. Deficits this year are expected to hit $1.6 trillion.
According to Obama, the savings would bring the share of discretionary spending to its lowest level since Dwight Eisenhower was president. However, discretionary spending is only a small portion of what the government spends. If one excludes military spending (as Obama is doing) discretionary spending accounts for less than 20 percent of the budget.
The vast majority of spending can be attributed to non-discretionary things, such as defense spending (the military), entitlements (Social Security and Medicare) and the interest the government pays on our debt.
The 2011 budget includes $740 billion for Defense, $740 billion for Social Security, $500 billion for Medicare and $250 billion in interest on our national debt. These four items alone account for over $2.2 trillion of the budget – almost two thirds of it.
If this budget were deficit neutral, that is to say, the government didn’t have to borrow any money, these four items would take up all of it, leaving out things such as spending on education, infrastructure and many other things.
Republicans and Tea Party members alike are quite displeased with this large budget. They propose further cuts to discretionary spending.
“This is a punt,” Republican and House Budget Committee Chairman Paul Ryan said. “You cannot borrow, tax and spend your way to fiscal responsibility, but that’s exactly what the president is trying to do.”
However, they too are being hesitant in addressing entitlement and defense spending. Republicans’ proposal currently cuts an additional $60 billion or so from Obama’s budget for this fiscal year.
If we take a look at the numbers, it seems as if members of both parties are “punting” – avoiding the inevitable change that needs to be made to our entitlements as Americans live longer and grow older.
In December, a bi-partisan commission recommended large spending cuts and tax raises to bring our bloated budget under control. However, as of now, it seems as if neither party has the stomach to do what is necessary. Republicans refuse to raise taxes (as we saw when they forced the continuation of tax cuts, costing the government around a trillion dollars over the next decade) and Democrats refuse to cut enough.
It seems as if all we can do now is hope that Obama and the Republicans manage to force enough compromise in the right direction from each other to fix the government, rather than allowing the Republicans to lower taxes, the Democrats to spend more, and the nation to go broke.