United States Federal Budget

 

United States federal budget

1

United States federal budget The Budget of the United States Government

is

the

President's

proposal to the U.S. Congress which recommends funding levels for the next fiscal year, beginning October 1. Congressional decisions are governed by rules and legislation regarding the federal

budget

process.

Budget

committees set spending limits for the House and Senate committees and for Appropriations subcommittees, which then approve individual appropriations bills to allocate funding to various federal programs. After

Congress

approves

an

appropriations bill, it is sent to the

Fiscal Year 2010 U.S. Federal Spending Projections- Cash or Budget Basis.

President, who may sign it into law, or may veto it. A vetoed bill is sent back  to Congress, which can pass it into law with a two-thirds majority in each chamber. Congress may also combine all or some appropriations bills into an omnibus

reconciliation

bill.

In

addition, the president may request and the Congress may pass supplemental appropriations

bills

or

emergency

supplemental appropriations bills. Several government agencies provide budget

data

and

analysis.

These

include the Government Accountability Office (GAO), Congressional

Budget

Office,

the

Office of Management and Budget (OMB)

and

the

U.S.

Fiscal Year 2010 U.S. Federal Receipts.

Treasury

Department. These agencies have reported that the federal government is facing a series of important financing challenges. In the short-run, tax revenues have declined significantly due to a severe recession and expenditures have expanded dramatically for stimulus and bailout measures. In the long-run, expenditures related to entitlement programs such as Social Security, Medicare and Medicaid are growing considerably faster than the economy overall [1] [2]

as the population matures.  

 

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Budget principles The U.S. Constitution (Article I, section 9, clause 7) states that "[n]o money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of  all public Money shall be published from time to time." Each year, the President of the United States submits his budget request to Congress for the following fiscal year as required by the Budget and Accounting Act of 1921. Current law (31 U.S.C. § 1105

[3]

(a)) requires the president to

submit a budget no earlier than the first Monday in January, and no later than the first Monday in February. Typically, presidents submit budgets on the first Monday in February. The budget submission has been delayed, however, in some new presidents' first year when previous president belonged to a different party. The federal budget is calculated largely on a cash basis. That is, revenues and outlays are recognized when transactions are made. Therefore, the full long-term costs of entitlement programs such as Medicare, Social Security, and the federal portion of Medicaid are not reflected in the federal budget. By contrast, many businesses and some foreign governments have adopted forms of accrual accounting, which recognizes obligations and revenues when they are incurred. The costs of some federal credit and loan programs, according to provisions of the Federal Credit Reform Act of 1990, are calculated on a net present value basis.

[4]

Federal agencies cannot spend money unless funds are authorized and appropriated. Typically, separate Congressional committees have jurisdiction over authorization and appropriations. The House and Senate Appropriations Committees currently have 12 subcommittees, which are responsible for drafting the 12 regular appropriations bills that determine amounts of discretionary spending for various federal programs. Appropriations bills must pass both [5]the House and Senate and then be signed by the president in order to give federal agencies legal authority to spend. In many recent years, regular appropriations bills have been combined into "omnibus" bills. Congress may also pass "special" or "emergency" appropriations. Spending that is deemed an "emergency" is exempt from certain Congressional budget enforcement rules. Funds for disaster relief have sometimes come from supplemental appropriations, such as after Hurricane Katrina. In other cases, funds included in emergency supplemental appropriations bills support activities not obviously related to actual emergencies, such as parts of the 2000 Census of Population and Housing. Special appropriations have been used to fund most of the costs of war and occupation in Iraq and Afghanistan so far. Budget resolutions and appropriations bills, which reflect spending priorities of Congress, will usually differ from funding levels in the president's budget. The president, however, retains substantial influence over the budget process through his veto power and through his congressional allies when his party has a majority in Congress.

Federal budget data Several government agencies provide budget data. These include the Government Accountability Office (GAO), the Congressional Budget Office, the Office of Management and Budget (OMB) and the U.S. Treasury Department. CBO publishes The Budget and Economic Outlook in January, which is typically updated in August. It also publishes a  Monthly Budget Review. OMB, which is responsible for organizing the President's budget presented in February, typically issues a budget update in July. GAO and Treasury issue  Financial Statements of the U.S. Government , usually in the December following the close of the federal fiscal year, which occurs September 30. There is a corresponding Citizen's Guide, a short summary. The Treasury Department also produces a Combined Statement of   Receipts, Outlays, and Balances each December for the preceding fiscal year, which provides detailed data on

federal financial activities. Historical tables within the President's Budget (OMB) provides a wide range of data on Federal Government finances. Many of the data series begin in 1940 and include estimates of the President’s Budget for 2009 – 2014. 2014.  – 

Additionally, Table 1.1 provides data on receipts, outlays, and surpluses or deficits for 1901 1939 and for earlier multi-year periods. This document is composed of 17 sections, each of which has one or more tables. Each section

 

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covers a common theme. Section 1, for example, provides an overview of the budget and off-budget totals; Section 2 provides tables on receipts by source; and Section 3 shows outlays by function. When a section contains several tables, the general rule is to start with tables showing the broadest overview data and then work down to more detailed tables. The purpose of these tables is to present a broad range of historical budgetary data in one convenient reference source and to provide relevant comparisons likely to be most useful. The most common comparisons are in terms of proportions (e.g., each major receipt category as a percentage of total receipts and of the gross domestic [6]

product).

Federal budget projections CBO calculates 35-year baseline projections, which are used extensively in the budget process. Baseline projections are intended to reflect spending under current law, and are not intended as predictions of the most likely path of the economy. During the George W. Bush Administration, OMB presented 5-year projections, but presented 45-year projections in the FY2010 budget submission. CBO and GAO issue long-term projections from time to time.

Major receipt categories During FY 2010, the federal government collected approximately $2.16 trillion in tax revenue. Primary receipt categories included individual income taxes (42%), Social Security/Social Insurance taxes (40%), and corporate [7]

taxes (9%).

Other types included excise, estate and gift taxes.

Tax revenues have averaged approximately 18.3% of gross domestic product (GDP) over the 1970-2009 period, generally ranging plus or minus 2% from that level. Tax revenues are significantly affected by the economy. Recessions typically reduce government tax collections as economic activity slows. For example, during both FY2009 and FY2010, the U.S. government collected about $400 billion less than FY2008 revenues of $2.5 trillion. During 2009, individual income taxes declined 20%, while corporate taxes declined 50%. At 14.9% of GDP, the 2009 and 2010 collections were the lowest level of the past 50 years.

[8]

Tax policy The appropriate level and distribution of  federal taxes has long been a controversial topic. Since the 1970s, some "supply side" economists have contended that lowering taxes could stimulate economic growth to such a degree that tax revenues could rise, other factors being held constant. However, economic models and econometric analysis have found weak support for the "supply side" theory. The Center on Budget and Policy Priorities (CBPP) summarized a variety of studies done by economists across the political spectrum that indicated tax cuts do not pay for themselves and increase [9]

deficits.

Studies by the CBO and the U.S.

Revenue and Expense as % GDP.

Treasury also indicated that tax cuts do not pay

for

themselves.

[10]

 

[11]

 

[12]

 

[13]

In

2003,

450

economists,

including

ten

Nobel

Prize

 

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laureate, signed the Economists' statement opposing the Bush tax cuts, sent to President Bush stating that "these tax cuts will worsen the long-term budget outlook... will reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research... [and] generate further inequalities in after-tax [14]

income."

Economist Paul Krugman wrote in 2007: "Supply

side

doctrine,

which

claimed

without evidence that tax cuts would pay for themselves, never got any traction in the world of professional economic research, even among conservatives."

[15]

Estimated Funding Gaps in Medicare and Social Security.

Economist

Nouriel Roubini wrote in October 2010 that the Republican Party was "trapped in a belief in voodoo economics, the economic equivalent of creationism" while the Democratic administration was unwilling to improve the tax system via a carbon tax or value-added tax.

[16]

  Warren Buffett wrote in 2003: "When you listen to tax-cut rhetoric,

remember that giving one class of taxpayer a 'break' requires -- now or down the line -- that an equivalent burden be imposed on other parties. In other words, if I get a break, someone else pays. Government can't deliver a free lunch to the country as a whole."

[17]

Former Comptroller General of the United States David Walker stated during January

2009: "You can't have guns, butter and tax cuts. The numbers just don't add up."

[18]

Francis Fukuyama summarized these concepts: "Prior to the 1980s, conservatives were fiscally conservative — that is, they were unwilling to spend more than they collected in taxes. But Reaganomics introduced the idea that virtually any tax cut would so stimulate growth that the government would end up taking in more revenue in the end (the so-called Laffer curve). In fact, the traditional view was correct: if you cut taxes without cutting spending, you end up with a damaging deficit. Thus the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax increases of the 1990s produced a surplus; and the Bush tax cuts of the early 21st century produced an even larger [19]

deficit."

Economist Bruce Bartlett wrote in 2009 that without benefit cuts in Medicare and Social Security, federal taxes would have [20]to increase by 8.1% of GDP now and forever to cover estimated program shortfalls, while avoiding debt increases. The 30-year historical average federal tax receipts are 18.4% of GDP, so this would represent an enormous tax increase.

[21]

Tax expenditures

The term "tax expenditures" refers to income exemptions or deductions that reduce the tax collections that would be made applying a particular tax rate alone. In November 2009, The Economist estimated the additional federal tax revenue generated from eliminating certain tax expenditures, for the 2013-2014 period. These included: income exemptions for employer-provided health insurance ($215 billion); and various income deductions such as mortgage interest ($147B), state & local taxes ($65B), capital gains on homes ($60B), property taxes ($33B) and municipal bond interest ($37B). These total $557 billion. All of these steps together would reduce the projected deficit at that time by nearly half.

[22]

 

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U.S. taxes relative to foreign countries

Comparison of tax rates around the world is difficult and somewhat subjective. Tax laws in most countries are extremely complex, and tax burden falls differently on different groups in each country and sub-national units (states, counties and municipalities) and the types of services rendered through those taxes are also different. One way to measure the overall tax burden is by looking at it as a percentage of the overall economy in terms of  GDP. The Tax Policy Center wrote: "U.S. taxes are low relative to those in other developed countries. In 2006 U.S. taxes at all levels of government claimed 28 percent of GDP, compared with an average of 36 percent of GDP ffor or the 30 member countries of the Organization for Economic Co-operation and Development (OECD)."

[23]

Economist

Simon Johnson wrote in 2010: "The U.S. government doesn ’t take in much tax revenue -- at least 10 percentage points of GDP less than comparable developed economies -- and it also doesn ’t spend much except on the military, [24]

Social Security and Medicare."

In comparing corporate taxes, the Congressional Budget Office found in 2005 that the top statutory tax rate was the third highest among OECD countries behind Japan and Germany. However, the U.S. ranked 27th lowest of 30 OECD countries in its collection of corporate taxes relative to GDP, at 1.8% vs. the average 2.5%.

[25]

A comparison

of taxation on individuals amongst OECD countries shows that the U.S. tax burden is just slightly below the average tax for middle income earners.

[26]

Major expenditure categories The federal government's expenditures include Medicare & Medicaid ($793B or 23%), Social Security ($701B or 20%), Defense Department ($689B or 20%), and non-defense discretionary ($660B or 19%). Expenditures are classified as mandatory, with payments required by specific laws, or discretionary, with payment amounts renewed annually as part of the budget process. During FY 2010, the federal government spent $3.46 trillion on a budget or cash basis, down 2% vs. FY 2009 but up 16% versus FY2008 spend of $2.97 trillion.

Mandatory spending and entitlements Social Security, Medicare, and Medicaid expenditures are funded by permanent appropriations

and

so

are

considered

mandatory spending. Social Security and Medicare

are

sometimes

"entitlements," because

people

called meeting

relevant eligibility requirements are legally entitled to benefits, although most pay taxes into

these

programs

throughout

their

working lives. Some programs, such as Food Stamps, are appropriated entitlements. Some

mandatory

spending,

such

as

Congressional salaries, is not part of any entitlement program. Mandatory spending accounted for 53% of total federal outlays in FY2008,

with

net

interest

accounting for an additional 8.5%.

Entitlement Spending Risks

payments [27]

Mandatory spending is expected to increase as a share of GDP. This is due to demographic trends, as the number of workers continues declining relative to those receiving benefits. For example, the number of workers per retiree was [28] 5.1 in 1960; this declined to 3.3 in 2007 and is projected to decline to 2.1 by 2040. These programs are also

 

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affected by per-person costs, which are also expected to increase at a rate significantly higher than the economy. This unfavorable combination of demographics and per-capita rate increases is expected to drive both Social Security and Medicare into large deficits during the 21st century. Unless these long-term fiscal imbalances are addressed by reforms to these programs, raising taxes or drastic cuts in discretionary programs, the federal government will at some point be unable to pay its obligations without significant risk to the value of the dollar (inflation).

[29] [30]

 

• Medicare was established in 1965 and expanded thereafter. In 2009, the program covered an estimated 45 million persons (38 million aged and 7 million disabled). It consists of four distinct parts which are funded differently: Hospital Insurance, mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between employers and workers; Supplementary Medical Insurance, funded through beneficiary premiums (set at 25% of  estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%); Medicare Advantage, a private plan option for beneficiaries, funded through the Hospital Insurance and Supplementary Medical Insurance trust funds; and the "Part D" prescription drug benefits, for which funding is included in the Supplementary Medical Insurance trust fund and is financed through beneficiary premiums (about 25%) and general revenues (about 75%).

[31]

Spending on Medicare and Medicaid is projected to grow

dramatically in coming decades. The number of persons enrolled in Medicare is expected to increase from 47 million in 2010 to 80 million by 2030.

[32]

While the same demographic trends that affect Social Security also

affect Medicare, rapidly rising medical prices appear to be a more important cause of projected spending [33]

increases. Various reform strategies were proposed for healthcare,

and in March 2010, the Patient Protection

and Affordable Care Act was enacted as a means of health care reform. • Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" (OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax of 12.4%. During 2009, total benefits of $686 billion were paid out versus income i ncome (taxes (taxes and interest) of $807 billion, a $121 billion annual surplus. An estimated 156 million people paid into the program and 53 million received benefits, roughly 2.94 workers per beneficiary.

[34]

Since the Greenspan Commission in the early 1980's, Social

Security has cumulatively collected far more in payroll taxes dedicated to the program than it has paid out to recipients —    —  nearly $2.4 trillion by 2008. This annual surplus is credited to Social Security trust funds that hold special non-marketable Treasury securities, and this surplus amount is commonly referred to as the "Social Security Trust Fund". The proceeds are paid into the U.S. Treasury where they may be used for other government purposes. Social Security spending will increase sharply over the next decades, largely due to the retirement of  the baby boom generation. The number of program recipients is expected to increase from 44 million in 2010 to 73 million in 2030.

[35]

where it will stabilize.

Program spending is projected to rise from 4.8% of GDP in 2010 to 5.9% of GDP by 2030,

[36]

The Social Security Administration projects that an increase in payroll taxes equivalent

to 1.9% of the payroll tax base or 0.7% of GDP would be necessary to put the Social Security program in fiscal balance for the next 75 years. Over an infinite time horizon, these shortfalls average 3.4% of the payroll tax base and 1.2% of GDP.

[37]

Various reforms have been debated for Social Security. Examples include reducing future

annual cost of living adjustments (COLA) provided to recipients, raising the retirement age, and raising the income limit subject to the payroll tax ($106,800 in 2009).

[38] [39]

 

Because of the large accumulated surplus in the

Social Security Trust Fund, however, the Social Security system is expected to be able to pay all promised benefits through 2037 without adding to the deficit.

[40]

 

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Other spending • Military spending: The military budget of the United States during FY 2009 was approximately $683 billion in expenses for the Department of Defense (DoD) and $54 billion for Homeland Security, a total of $737 billion.

[41]

The U.S. defense

budget (excluding spending for the wars in Iraq and Afghanistan, Homeland Security, and Veteran's Affairs) is around [42]

4% of GDP.

Adding these other costs

places defense and homeland security spending between 5% and 6% of GDP. The DoD baseline budget, excluding supplemental funding for the wars, has grown from $297 billion in FY2001 to a

Defense Spending 2000 - 2011.

budgeted $534 billion for FY2010, an [43]

81% increase.

According to the CBO,

defense spending grew 9% annually on average from fiscal year 2000-2009.

[44]

Much of the costs for the wars in Iraq and Afghanistan have not been funded through regular appropriations bills, but through emergency supplemental appropriations bills. As such, most of  these expenses were not included in the budget deficit calculation prior to FY2010. Some budget experts argue that emergency supplemental appropriations bills do not receive the same level of  legislative care as regular appropriations [45]

bills.

FY 2010 Estimated Federal Spending per 2011 Budget

• Non-defense discretionary spending is used to fund the executive departments (e.g., the Department of Education) and independent agencies (e.g., the Environmental Protection Agency), although these do receive a smaller amount of mandatory funding as well. Discretionary budget authority is established annually by Congress, as opposed to mandatory spending that is required by laws that span multiple years, such as Social Security or Medicare. The Federal government spent approximately $660 billion during 2010 on the Cabinet Departments and Agencies, excluding the Department of  Defense, representing 19% of budgeted expenditures

[46]

or about 4.5% of GDP. Several politicians and think 

tanks have proposed freezing non-defense discretionary spending at particular levels and holding this spending constant for various periods of time. President Obama proposed freezing discretionary spending representing approximately 12% of the budget in his 2011 State of the Union address.

[47]

• Interest expense: Budgeted net interest on the public debt was approximately $189 billion in FY2009 (5% of spending). During FY2009, the government also accrued a non-cash interest expense of $192 billion for intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $381 billion. [48] Net interest costs paid on the public debt declined from $242 billion in 2008 to $189 billion in 2009 because of 

 

United States federal budget [49]

lower interest rates.

8 Should these rates return to historical averages, the interest cost would increase

dramatically. Historian Niall Ferguson described the risk that foreign investors would demand higher interest rates as the U.S. debt levels increase over time in a November 2009 interview.

[50]

Public debt owned by

foreigners has increased to approximately 50% of the total or approximately $3.4 trillion.

[51]

As a result, nearly

50% of the interest payments are now leaving the country, which is different from past years when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically as the U.S. debt increases and interest rates rise from very low levels in 2009 to more typical historical levels.

Understanding deficits and debt The annual budget deficit is the difference between

actual

cash

collections

and

budgeted spending (a partial measure of  total spending) during a given fiscal year, which runs from October 1 to September 30. Since 1970, the U.S. Federal Government has run deficits for all but four years [52]

(1998 – 2001) 2001)

contributing to a total debt

of $14.0 trillion as of December 2010.

[53]

The U.S. Federal Government collected $2.52 trillion in FY2008, while budgeted spending was $2.98 trillion, generating a total deficit of $455 billion. However, during FY2008 the national debt increased Deficit and Debt Increases 2001-2009.

by $1,017 billion, much more than the $455 billion deficit figure. This means actual

expenditure was closer to $3.5 trillion [why?]. The national debt represents the outstanding obligations of the government at any given time, comprising both public and intra-governmental debt, which was $12.3 trillion as of  January 18, 2010.

[54]

Differences between the annual deficit and annual change in the national debt include the

treatment of the surplus Social Security payroll tax revenues (which increase the debt but not the deficit), supplemental appropriations for the Iraq and Afghanistan wars, and earmarks. These differences can make it more challenging to determine how much the government actually spends relative to tax revenues. The increase in the national debt during a given year is a helpful measure to determine this amount. From FY 2003-2007, the national debt increased approximately $550 billion per year on average. For the first time in FY 2008, the U.S. added $1 trillion to the national debt.

[55]

In relative terms, from 2003-2007 the government

spent roughly $1.20 for each $1.00 it collected in taxes. This increased to $1.40 in FY2008 and $1.90 in FY2009. Social Security payroll taxes and benefit payments, along with the net balance of the U.S. Postal Service are considered "off-budget." Administrative costs of the Social Security Administration (SSA), however, are classified as "on-budget." In large part because of Social Security surpluses, the total federal budget deficit is smaller than the on-budget deficit. The surplus of Social Security payroll taxes over benefit payments is invested in special Treasury securities held by the Social Security Trust Fund. Social Security and other federal trust funds are part of the "intergovernmental debt." The total federal debt is divided into "intergovernmental debt" and "debt held by the public."

 

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Contemporary issues and debates Budgetary impact of the 2001 and 2003 tax cuts A variety of tax cuts were enacted under President

Bush

between

2001 – 2003 2003

(commonly referred to as the "Bush tax cuts"), through the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief

Reconciliation

Act

of

2003

(JGTRRA). Most of these tax cuts were scheduled to expire December 31, 2010. Since CBO projections are based on current law, the projections discussed above assume these tax cuts will expire, which may prove politically challenging. In August 2010, CBO estimated that extending the tax cuts for the 2011-2020

Congressional Research Service-Impact of Extension of the Bush Tax Cuts

time period would add $3.3 trillion to the [56]

national debt: $2.65 trillion in foregone tax revenue plus another $0.66 trillion for interest and debt service costs. The non-partisan Pew Charitable Trusts estimated in May 2010 that extending some or all of the Bush tax cuts would have the following impact under these scenarios: • Making Making the tax cuts perma permanent nent for all taxpayers taxpayers,, regardless regardless of income, income, would incre increase ase the nati national onal debt $3.1 $3.1 trillion over the next 10 years. • Limiting Limiting the exten extension sion to individuals individuals making making less less than $200,000 $200,000 and married married couples ea earning rning less less than $250,000 $250,000 would increase the debt about $2.3 trillion in the next decade. [57]

• Extending Extending the ta tax x cuts for all taxpaye taxpayers rs for only two years years would would cost $558 $558 billion over over the next 1 10 0 years.

The non-partisan Congressional Research Service (CRS) has reported the 10-year revenue loss from extending the 2001 and 2003 tax cuts beyond 2010 at $2.9 trillion, with an additional $606 billion in debt service costs (interest), for a combined total of $3.5 trillion. CRS cited CBO estimates that extending the cuts permanently, including the repeal of the estate tax, would add 2% of GDP to the annual deficit.

[58]

The Center on Budget and Policy Priorities wrote in 2010: "The 75-year Social Security shortfall is about the same size as the cost, over that period, of extending the 2001 and 2003 tax cuts for the richest 2 percent of Americans (those with incomes above $250,000 a year). Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat."

[59]

Stimulus packages The Economic Stimulus Act of 2008 provided an estimated $170 billion in tax rebates to stimulate the economy. The Congressional Budget Office (CBO) estimated that the Act "would increase budget deficits (or reduce future surpluses) by $152 billion in 2008 and by a net amount of $124 billion over the 2008-2018 period."

[60]

The American Recovery and Reinvestment Act of 2009 was passed by the U.S. Congress on 13 February 2009. The nearly $800 billion bill appropriated money toward tax credits and infrastructure programs. The CBO estimates that enacting the bill would increase federal budget deficits by $185 billion over the remaining months of fiscal year 2009, by $399 billion in 2010, by $134 billion in 2011, and by $787 billion over the 2009-2019 period. [61]

 

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Stimulus can be characterized as investment, spending or tax cuts. For example, if the funds are used to create a physical asset that generates future cash flows (e.g., a power plant or toll road), the stimulus could be characterized as investment. Extending unemployment benefits are examples of government spending. Tax cuts may or may not be spent. There is significant debate among economists regarding which type of stimulus has the highest "multiplier" (i.e., increase in economic activity per dollar of stimulus).

[62]

Earmarks GAO defines "earmarking" as "designating any portion of a lump-sum amount for particular purposes by means of  legislative language." Earmarking can also mean "dedicating collections by law for a specific purpose."

[63]

In some

cases, legislative language may direct federal agencies to spend funds for specific projects. In other cases, earmarks refer to directions in appropriation committee reports, which are not law. Various organizations have estimated the total number and amount of earmarks. An estimated 16,000 earmarks containing nearly $48 billion in spending were inserted into larger, often unrelated bills during 2005.

[64]

While the number of earmarks has grown in the past

decade, the total amount of earmarked funds is approximately 1-2 percent of federal spending.

[65]

Fraud, waste and abuse The Office of Management and Budget estimated that the federal government made $98 billion in "improper payments" during FY2009, an increase of 38% vs. the $72 billion the prior year. This increase was due in part to effects of the financial crisis and improved methods of detection. The total included $54 billion for healthcare-related programs, 9.4% of the $573 billion spent on those programs. The government pledged to do more to combat this problem, including better analysis, auditing, and incentives.[66]  [67] During July 2010, President Obama signed into law the Improper Payments Elimination and Recovery Act of 2010, citing approximately $110 billion in [68]

unauthorized payments of all types.

Former GAO Director David Walker said: "Some people think that we can solve our financial problems by stopping fraud, waste and abuse or by canceling the Bush tax cuts or by ending the war in Iraq. The truth is, we could do all three of these things and we would not come close to solving our nation's fiscal challenges."

[69]

2010 Budget Proposal President Barack Obama proposed his 2010 budget during February, 2009. He has indicated that health care, clean energy, education,

and

infrastructure

will

be

priorities. The proposed increases in the national debt exceed $900 billion each year from

2010 – 2019, 2019,

following

the

Bush

administration's outgoing budget which allowed for a $2.5 trillion increase in the national debt for FY 2009.

[70]

Tax cuts will expire for the wealthiest taxpayers to increase revenues, returning marginal rates to the Clinton levels. Further, the base Department of Defense budget increases slightly through 2014 (Table S-7), from

$534

to

$575

billion,

although

2010 Budget: Projected Deficits and Debt Increases

 

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11

supplemental appropriations for the Iraq War are expected to be reduced. In addition, estimates of revenue are based on GDP growth assumptions that exceed the Blue Chip Economists' consensus forecast considerably through 2012 [71] [72]

(Table S-8).

 

2010 Healthcare reform The CBO estimated in December 2009 that the Senate healthcare reform bill, later signed into law on 23 March 2010, would reduce the deficit during the 2010-2019 period by a total of $132 billion. This figure comprises $615 billion in incremental costs, offset by cost reductions of $483 billion and additional taxes of $264 billion. The CBO also estimated that the deficit would be about 0.5% lower each year in the 2020-2029 decade, or about $70 billion annually in 2010 dollars.

[73]

Whether the deficit reduction will materialize is questioned by some conservative

[74]

budget experts.

State finances The U.S. federal government may be required to assist state governments further, as many U.S. states are facing budget shortfalls due to the 2008-2010 recession. The sharp decline in home prices has affected property tax revenue, while the decline in economic activity and consumer spending has led to a falloff in revenues from state sales taxes and income taxes. The Center on Budget and Policy Priorities estimated that the 2010 and 2011 state shortfalls will total $375 billion. [76]

services.

[75]

As of July 2010, over 30 states had raised taxes, while 45 had reduced

State and local governments cut 405,000 jobs between January 2009 and February 2011.

[77]

GAO estimates that (absent policy changes) state and local governments will face budget gaps that rise from 1% of  GDP in 2010 to around 2% by 2020, 2.5% by 2030, and 3.5% by 2040.

[78]

Further, many states have underfunded pensions, meaning the state has not contributed the amount estimated to be necessary to pay future obligations to retired workers. The Pew Center on the States reported in February 2010 that states have underfunded their pensions by nearly $1 trillion as of 2008, representing the gap between the $2.35 trillion states had set aside to pay for employees ’ retirement benefits and the $3.35 trillion price tag of those [79]

promises.

Whether a U.S. state can declare bankruptcy, enabling it to re-negotiate its obligations to bondholders, pensioners, and public employee unions is a matter of legal and political debate. Journalist Matt Miller explained some of these issues in February 2011: "The AG [State Attorney General] might put a plan forward and agree to conditions. However, the AG has no say over the legislature. And only a legislature can raise taxes. In some cases, it would require a state constitutional amendment to reduce pensions. Add to this a federal judge who would oversee the process...and a state has sovereign immunity, which means the governor or legislature may simply refuse to go along with anything the judge rules or reject the reorganization plan itself."

[80]

Unemployment, trade deficit and globalization CBO reported in 2009 that income tax revenues had declined by nearly 20% due to higher unemployment caused by the recession, while social safety net expenditures increased significantly.

[81]

The Economic

Policy Institute (EPI) estimated in May 2010 that 15 million Americans

were

unemployed

and

another

11

million

were

involuntarily working part time or had dropped out of the labor [82]

force.

U.S. Current Account or Trade Deficit

 

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12

The U.S. has a large current account or trade deficit, meaning its imports exceed exports. This also affects employment levels. In 2005, Ben Bernanke addressed the implications of the USA's high and rising current account deficit, which increased by $650 billion between 1996 and 2004, from 1.5% to 5.8% of GDP.

[83]

The trade deficit

reached a dollar peak of approximately $700 billion in 2008 (4.9% of GDP) before dropping to $420 billion in 2009 (2.9% of GDP) due to the 2009 recession.

[84]

Imported goods are made by workers in other countries. EPI estimated U.S. job losses due to the trade deficit with [85]

China alone at 2.3 million jobs between 2001 and 2007, along with significantly lowered U.S. wages.

 USA Today

reported in 2007 2007 that an estimated estimated one in six factory jobs (3.2 million) have disappeared from the U.S. since 2000, due to automation or off-shoring to countries like Mexico and China, where labor is cheaper. These lost manufacturing jobs are fueling a debate over globalization -- the increasing connection of the United States and other economies. An estimated 84% of Americans in the labor force are employed in service jobs, up from 81% in 2000. Princeton economist Alan Blinder said in 2007 that the number of jobs at risk of being shipped out of the country could reach 40 million over the next 10 to 20 years. That would be one out of every three service sector jobs that could be at risk.

[86]

Former Fed chair Paul Volcker argued in February 2010 that the U.S. should make more of the goods it consumes domestically: "We need to do more manufacturing again. We're never going to be the major world manufacturer as we were some years ago, but we could do more than we're doing and be more competitive. And we've got to close that big gap. You know, consumption is running about 5 percent above normal. That 5 percent is reflected just about equally to what we're importing in excess of what we're exporting. And we've got to bring that back into closer [87]

balance."

Implications of entitlement trust funds Both Social Security and Medicare are funded by payroll tax revenues dedicated to those programs. Program tax revenues historically have exceeded payouts, resulting in program surpluses and the building of trust fund balances. The trust funds earn interest. Both Social Security and Medicare each have two component trust funds. As of  FY2008, Social Security Social Security had a combined $2.4 trillion trust fund balance and Medicare's was $380 billion. If during an individual year program payouts exceed the sum of tax income and interest earned during that year (i.e., an annual program deficit), the trust fund for the program is drawn down to the extent of the shortfall. Legally, the mandatory nature of these programs compels the government to fund them to the extent of tax income plus any remaining trust fund balances, borrowing as needed. Once the trust funds are eliminated through expected future deficits, technically these programs can only draw on payroll taxes during the current year. In effect, they are "pay as you go" programs, with additional legal claims to the extent of their remaining trust fund balances.

[88]

Deficit Describing the budgetary challenge Then OMB Director Peter Orszag stated in a November 2009 interview: "It's very popular to complain about the deficit, but then then many of the  the  specific steps that you could take to address it are unpopular. And that is the fundamental challenge that we are facing, and that we need help both from the American public and Congress in addressing." He characterized the budget problem in two parts: a short- to medium-term problem related to the financial crisis of 2007 – 2 2010, 010, which has reduced tax revenues significantly and involved large stimulus spending; and a long-term problem primarily driven by increasing healthcare costs per person. He argued that the U.S. cannot return to a sustainable long-term fiscal path by either tax increases or cuts to non-healthcare cost categories alone; the U.S. must confront the rising healthcare costs driving expenditures in the Medicare and Medicaid programs.

[89]

Fareed Zakaria said in February 2010: "But, in one sense, Washington is delivering to the American people exactly what they seem to want. In poll after poll, we find that the public is generally opposed to any new taxes, but we also

 

United States federal budget

13

discover that the public will immediately punish anyone who proposes spending cuts in any middle class program which are the ones where the money is in the federal budget. Now, there is only one way to square this circle short of  magic, and that is to borrow money, and that is what we have done for decades now at the local, state and federal level...So, the next time you accuse Washington of being irresponsible, save some of that blame for yourself and [90]

your friends."

Andrew Sullivan said in March 2010: "...the biggest problem in this country is...they're big babies. I mean, people keep saying they don't want any tax increases, but they don't want to have their Medicare cut, they don't want to have their Medicaid [cut] or they don't want to have their Social Security touched an inch. Well, it's about time someone tells them, you can't have it, baby...You have to make a choice. And I fear that —    —  and I always thought, you see, that that was the Conservative position. The Conservative is the Grinch who says no. And, in some ways, I think this in the long run, looking back in history, was Reagan's greatest bad legacy, which is he tried to tell people you can have it all. We can't have it all."

[91]

Harvard historian Niall Ferguson stated in a November 2009 interview: "The United States is on an unsustainable fiscal path. And we know that path ends in one of two ways; you either default on that debt, or you depreciate it away. You inflate it away with your currency effectively." He said the most likely case is that the U.S. would default on its entitlement obligations for Social Security and Medicare first, by reducing the obligations through entitlement reform. He also warned about the risk that foreign investors would demand a higher interest rate to purchase U.S. [92]

debt, damaging U.S. growth prospects.

The CBO reported several types of risk factors related to rising debt levels in a July 2010 publication: • A growing portion portion of savings savings would go towards towards purchases purchases of government government deb debt, t, rather than investm investments ents in productive capital goods such as factories and computers, leading to lower output and incomes than would otherwise occur; • If higher marginal marginal tax rates rates were used to pay rising rising interest interest costs, costs, savings would would be reduce reduced d and work would be discouraged; • Rising Rising interest interest costs would would force reductio reductions ns in important important governmen governmentt programs; programs; • Restriction Restrictionss to the ability of policymak policymakers ers to use fiscal fiscal policy to respond respond to econom economic ic challe challenges; nges; and and [93]

• An increased increased risk risk of a sudden fiscal fiscal crisis, crisis, in which which investors investors demand demand hig higher her inte interest rest rates. rates.

Can the U.S. outgrow the problem? There is debate regarding whether tax cuts, less intrusive regulation, and productivity improvements could feasibly generate sufficient economic growth to offset the deficit and debt challenges facing the country. According to David Stockman, OMB Director under President Reagan, post-1980 Republican ideology embraces the idea that the "economy will outgrow the [94]

deficit if plied with enough tax cuts." Former

President

George

W.

Bush

exemplified this ideology when he wrote in 2007: "...it is also a fact that our tax cuts have fueled robust economic growth and [95]

record revenues."

However, as described

GAO Comparative Increase in Spend vs. GDP.

 

United States federal budget

14

in the tax policy section of this article, multiple studies by economists across the political spectrum and several [9] [96]

government organizations argue that tax cuts increase deficits and debt.  

Further, the GAO has estimated that double-digit GDP growth would be required for the next 75 years to outgrow the projected increases in deficits and debt; GDP growth averaged 3.2% during the 1990s. Because mandatory spending growth rates will far exceed any reasonable growth rate in GDP and the tax base, the GAO concluded that the U.S. cannot grow its way out of the problem.

[97]

Fed Chair Ben Bernanke stated in April 2010: "Unfortunately, we cannot grow our way out of this problem. No credible forecast suggests that future rates of growth [98] of the U.S. economy will be sufficient to close these deficits without significant changes to our fiscal policies."

Polls According to a CBS News/New York Times poll in July 2009, 56% of people were opposed to paying more taxes to reduce the deficit and 53% were also opposed to cutting spending. According to a Pew Research poll in June 2009, there was no single category of spending that a majority of Americans favored cutting. Only cuts in foreign aid (less than 1% of the budget), polled higher than 33%. Economist Bruce Bartlett wrote in December 2009: "Nevertheless, I can't really blame members of Congress for lacking the courage or responsibility to get the budget under some semblance of control. All the evidence suggests that they are just doing what voters want them to do, which is [99]

nothing."

A Bloomberg/Selzer national poll conducted in December 2009 indicated that more than two-thirds of Americans favored tax increases on the rich (individuals making over $500,000) to help solve the deficit problem. Further, an across-the-board 5% cut in all federal discretionary spending would be supported by 57%; this category is about 30% of federal spending. Only 26% favored tax increases on the middle class and only 23% favored reducing the growth rate in entitlements, such as Social Security.

[100] [101]

 

A Rasmussen Reports survey in February 2010 showed that only 35% of voters correctly believe that the majority of  federal spending goes to just defense, Social Security and Medicare. Forty-four percent (44%) say it ’s not true, and 20% are not sure.

[102]

A January 2010 Rasmussen report showed that overall, 57% would like to see a cut in

government spending, 23% favor a freeze, and 12% say the government should increase spending. Republicans and unaffiliated voters overwhelmingly favor spending cuts. Democrats are evenly divided between spending cuts and a [103]

spending freeze.

According to a Pew Research poll in March 2010, 31% of Republicans would be willing to decrease military spending to bring down the deficit. A majority of Democrats (55%) and 46% of Independents say they would accept [104]

cuts in military spending to reduce the deficit.

Proposed solutions Solution strategies

In January 2008, then GAO Director David Walker presented a strategy for addressing what he called the federal budget "burning platform" and "unsustainable fiscal policy." This included improved financial reporting to better capture the obligations of the government; public education; improved budgetary and legislative processes, such as "pay as you go" rules; the restructure of entitlement programs and tax policy; and creation of a bi-partisan fiscal reform commission. He pointed to four types of "deficits" that comprise the problem: budget, trade, savings and [105]

leadership.

Economist Paul Krugman wrote in February 2011: "What would a serious approach to our fiscal problems involve? I can summarize it in seven words: health care, health care, health care, revenue...Long-run projections suggest that spending on the major entitlement programs will rise sharply over the decades ahead, but the great bulk of that rise will come from the health insurance programs, not Social Security. So anyone who is really serious about the budget

 

United States federal budget

15

should be focusing mainly on health care...[by] getting behind specific actions to rein in costs."

[106]

Economist Nouriel Roubini wrote in May 2010: "There are only two solutions to the sovereign debt crisis  — raise taxes or cut spending  — but the political gridlock may prevent either from happening...In the US, the average tax burden as a share of GDP is much lower than in other advanced economies. The right adjustment for the US would be to phase in revenue increases gradually over time so that you don't kill the recovery while controlling the growth [107]

of government spending."

David Leonhardt wrote in The New York Times in March 2010: "For now, political leaders in both parties are still in denial about what the solution will entail. To be fair, so is much of the public. What needs to happen? Spending will need to be cut, and taxes will need to rise. They won’t need to rise just on households making more than $250,000, as Mr. Obama has suggested. They will probably need to rise on your household, however much you make...A solution that relied only on spending cuts would dismantle some bedrock parts of modern American society...A solution that relied only on taxes would muzzle economic growth."

[108]

Fed Chair Ben Bernanke stated in April 2010: "Thus, the reality is that the Congress, the Administration, and the American people will have to choose among making modifications to entitlement programs such as Medicare and Social Security, restraining federal spending on everything else, accepting higher taxes, or some combination [98]

thereof."

Journalist Steven Pearlstein argued in May 2010 for a comprehensive series of budgetary reforms. These included: Spending caps on Medicare and Medicaid; gradually raising the eligibility age for Social Security and Medicare; limiting discretionary spending increases to the rate of inflation; and imposing a value-added tax.

[109]

National Research Council strategies

During January 2010, the National Research Council and the National Academy of Public Administration reported a series of strategies to address the problem. They included four scenarios designed to prevent the public debt to GDP ratio from exceeding 60%: 1. Low spending and low taxes. taxes. This path would allow payroll and income tax rates to remain roughly unchanged, but it would require sharp reductions in the projected growth of health and retirement programs; defense and domestic spending cuts of 20 percent; and no funds for any new programs without additional spending cuts. 2. Intermediate path 1. This path would raise raise income and payroll tax rates modestly. It would allow for some growth in health and retirement spending; defense and domestic program cuts of 8 percent; and selected new public investments, such as for the environment and to promote economic growth. 3. Intermediate path 2. This path would raise raise income and payroll taxes somewhat somewhat higher than with the previous path. Spending growth for health and retirement programs would be slowed, but less than under the other intermediate path; and spending for all other federal responsibilities would be reduced. This path gives higher priority to entitlement programs for the elderly than to other types of government spending. 4. High spending and taxes. This path would require substantially higher taxes. It wo would uld maintain the projected growth in Social Security benefits for all future retirees and require smaller reductions over time in the growth of spending for health programs. It would allow spending on all other federal programs to be higher than the level implied by current policies.

[110] [111]

 

CBO budget options reports

The CBO provided a two-volume report discussing the cost and revenue impact of various budget options during [112] [113]

2008 and 2009.

 

The CBO also estimated in 2007 that allowing the 2001 and 2003 income tax cuts to expire [114]

on schedule in 2010 would reduce the annual deficit by $200 – 300 300 billion.

In addition, CBO reported that annual

defense spending has increased from approximately $300 billion in 2001 (when the budget was last balanced) to [115] $650 billion in 2009.

 

United States federal budget

16

Republican proposals

Rep. Paul Ryan (R) has proposed the  Roadmap for America's Future , which is a series of budgetary reforms. His January 2010 version of the plan includes partial privatization of Social Security, the transition of Medicare to a [116]

voucher system, discretionary spending cuts and freezes, and tax reform. summarizing the impact of the plan are included. [118] [119]

of the plan.

 

[117]

Economists have both praised and criticized particular features

The CBO also did a partial evaluation of the bill.

Priorities (CBPP) was very critical of the Roadmap.

A series of graphs and charts

[121]

[120]

The Center for Budget and Policy [122]

Rep. Ryan provided a response to the CBPP's analysis.

The Republican Party website includes an alternative budget proposal provided to the President in January 2010. It includes lower taxes, lower annual increases in entitlement spending growth, and marginally higher defense spending than the President's 2011 budget proposal.

[123]

During September 2010, Republicans published "A Pledge

to America" which advocated a repeal of recent healthcare legislation, reduced spending and the size of government, [124]

and tax reductions.

The NYT editorial board was very critical of the Pledge, stating: "...[The Pledge] offers a

laundry list of spending-cut proposals, none of which are up to the scale of the problem, and many that cannot be [125]

taken seriously."

Fiscal reform commission

President Obama established a budget reform commission, the National Commission on Fiscal Responsibility and Reform, during February, 2010. The Commission "shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers." The Commission's report is due by December 1, 2010.

[126]

The Commission released a draft of its proposals on November 10, 2010. It included various tax and spend adjustments to bring long-run government tax revenue and spending into line at approximately 21% of GDP. For fiscal year 2009, tax revenues were approximately 15% of GDP and spending was 24% of GDP. The Co-chairs summary of the plan states that it: • Achieves Achieves nearly nearly $4 trillion in deficit deficit reduction reduction through through 2020 via 50+ specific specific way wayss to cut outdated outdated program programss and strengthen competitiveness by making Washington cut and invest, not borrow and spend. • Reduces Reduces the deficit deficit to 2.2% 2.2% of GDP GDP by 20 2015, 15, exceedi exceeding ng Presiden Presidentt’s goal of primary balance (about 3% of GDP). • Reduces Reduces tax rates, abolishes abolishes the alternativ alternativee minimum tax, and cuts backdoor backdoor spending spending (e.g. (e.g.,, mortgage inte interest rest deductions) in the tax code. • Stabilizes Stabilizes de debt bt by 201 2014 4 and reduces reduces debt debt to 60% 60% of GDP by 2 2024 024 and 40% 40% by 2037 2037.. • Ensures Ensures lastin lasting g Social Security Security solvency, solvency, prevents prevents projected projected 22% cuts in 2037, reduces elderly elderly poverty poverty,, and [127]

distributes burden fairly.

The Center on Budget and Policy Priorities evaluated the draft plan, praising that it "puts everything on the table" but [128]

criticizing that it "lacks an appropriate balance between program cuts and revenue increases."

 

United States federal budget

17

Total outlays in recent budget submissions • 2012 2012 Unite United d State Statess fe feder deral al b budg udget et $3.7 trillion (submitted 2011 by President Obama) • 2011 2011 Unite United d State Statess fe feder deral al b budg udget et $3.8 trillion (submitted 2010 by President Obama) • 2010 2010 Unite United d State Statess fe feder deral al b budg udget et $3.6 trillion (submitted 2009 by President Obama) • 2009 2009 Unite United d State Statess fe feder deral al b budg udget et $3.1 trillion (submitted 2008 by President Bush) • 2008 2008 Unite United d State Statess fe feder deral al b budg udget et $2.9 trillion (submitted 2007 by

Annual U.S. spending 1930-2014 alongside U.S. GDP for comparison.

President Bush) • 2007 United United States States federal federal budget - $2.8 $2.8 trillion (submitt (submitted ed 2006 by Presiden Presidentt Bush) • 2006 United United States States federal federal budget - $2.7 $2.7 trillion (submitt (submitted ed 2005 by Presiden Presidentt Bush) • 2005 United United States States federal federal budget - $2.4 $2.4 trillion (submitt (submitted ed 2004 by Presiden Presidentt Bush) • 2004 United United States States federal federal budget - $2.3 $2.3 trillion (submitt (submitted ed 2003 by Presiden Presidentt Bush) • 2003 United United States States federal federal budget - $2.2 $2.2 trillion (submitt (submitted ed 2002 by Presiden Presidentt Bush) • 2002 United United States States federal federal budget - $2.0 $2.0 trillion (submitt (submitted ed 2001 by Presiden Presidentt Bush) • 2001 United United States States federal federal budget - $1.9 $1.9 trillion (submitt (submitted ed 2000 by Presiden Presidentt Clinton) Clinton) • 2000 United United States States federal federal budget - $1.8 $1.8 trillion (submitt (submitted ed 1999 by Presiden Presidentt Clinton) Clinton) • 1999 United United States States federal federal budget - $1.7 $1.7 trillion (submitt (submitted ed 1998 by Presiden Presidentt Clinton) Clinton) • 1998 United United States States federal federal budget - $1.7 $1.7 trillion (submitt (submitted ed 1997 by Presiden Presidentt Clinton) Clinton) • 1997 United United States States federal federal budget - $1.6 $1.6 trillion (submitt (submitted ed 1996 by Presiden Presidentt Clinton) Clinton) • 1996 United United States States federal federal budget - $1.6 $1.6 trillion (submitt (submitted ed 1995 by Presiden Presidentt Clinton) Clinton) The President's budget also contains revenue and spending projections for the current fiscal year, the coming fiscal years, as well as several future fiscal years. In recent years, the President's budget contained projections five years into the future. The Congressional Budget Office (CBO) issues a "Budget and Economic Outlook" each January and an analysis of the President's budget each March. CBO also issues an updated budget and economic outlook in August. Actual budget data for prior years is available from the Congressional Budget Office Management and Budget (OMB).

[130]

[129]

and from the Office of 

 

United States federal budget

18

Basic budget terms (based on GAO Glossary) Appropriations "Budget authority to incur obligations and to make payments from the Treasury for specified

purposes." Budget Authority "Authority provided by federal law to enter into financial obligations that will result in immediate

or future outlays involving federal government funds." Outlay "The issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a federal

obligation." The term "outlays" is usually synonymous with "expenditure" or "spending." The amount of budget authority and outlays for a fiscal year usually differ because budget authority from a previous fiscal year in some cases can be used for outlays in the current fiscal year. Some military and some housing programs have multi-year appropriations, in which budget authority is specified for several coming fiscal years.

References [1] Charlie Rose Show-Senators Bayh, Bayh, Gregg and Roger Altman-February Altman-February 1, 2010 (http:/   / www.charlierose.com/ view/ interview/ 10840)  

 

 

 

 

 

 

[2] Center on Budg Budget et and Policy Priorities-The R Right ight Target: Stabilize the Fed Federal eral Debt January 2010 (http:/   / www.cbpp. org/ files/   

 

 

 

 

01-12-10bud.pdf)  

[3]] ht [3 http tp:/  :/   / www.law.cornell.edu/ uscode/ 31/ 1105. html  

 

 

 

 

 

 

 

 

[4] The Federal Credit Reform Act w was as passed as part of the Om Omnibus nibus Budget Reconciliation Reconciliation Act of 1990 1990 (P.L. 101-508) [5] A bill can also be enacted by a Congressional Congressional override of a presidential veto, veto, or is automatically en enacted acted if the president takes no action within 10 days after receiving the bill. [6] Historical Tab Tables: les: Bud Budget get of the U.S. Government (http:/   / www.whitehouse.gov/ sites/ default/ files/ omb/ budget/ fy2011/ assets/ hist.pdf)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[7] CBO Historical Historical Table Tabless (http:/  (http:/   / www.cbo.gov/ ftpdocs/ 120xx/ doc12039/ HistoricalTables[1].pdf) [8] CBO Historical Historical Table Tabless (http:/  (http:/   / www.cbo.gov/ ftpdocs/ 120xx/ doc12039/ HistoricalTables[1].pdf)  

[9] CBPP-Will the Tax Cuts Even Eventually tually Pay for Themselves?-March 2003 (http:/   / www.cbpp.org/ archiveSite/ 3-3-03tax.pdf)  

 

 

 

 

 

 

[10 [10]] CBO Stud Study y (http: (http:/  /   / www.cbo.gov/ ftpdocs/ 69xx/ doc6908/ 12-01-10PercentTaxCut.pdf)  

 

 

 

 

 

 

 

 

[11] Mankiw Mankiw Study Study ((http http:/  :/   / www.economics.harvard.edu/ faculty/ mankiw/ files/ dynamicscoring_05-1212.pdf)  

 

 

 

 

 

 

 

 

 

[12] Washingt Washington on Post Post 2007 (http (http:/  :/   / www.washingtonpost.com/ wp-dyn/ content/ article/ 2007/ 01/ 05/ AR2007010501801. html)  

 

 

 

 

 

 

 

 

 

 

 

[13] Washingt Washington on Post Post 2006 (http (http:/  :/   / www.washingtonpost.com/ wp-dyn/ content/ article/ 2006/ 05/ 14/ AR2006051400806. html)  

 

 

 

 

 

 

 

 

 

 

 

[14] "4. Akerlof, G., Arrow, K. J., Diamond, Diamond, P., Klein, L. R., McFadden, D. L., Mischel Mischel,, L., Modigliani, F., North, D. C., Samu Samuelson, elson, P. A., Sharpe, W. F., Solow, R. M., Stiglitz, J., Tyson, A. D. & Yellen, J. (2003). Economists Statement Opposing the Bush Tax Cuts ." (http:/  /  ’

 

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[15] Krugman, Krugman, Paul (200 (2007). 7). The Conscience of a Liberal. W.W. Norton Company, Inc.. ISBN 978-0-393-06069-0. [16] Financial Times-Nouriel Times-Nouriel Roubini-A Presidency Headed for a Fiscal Trainwreck-October Trainwreck-October 2010 (http:/  (http:/   / www.ft.com/ cms/ s/ 0/   

 

 

 

 

 

 

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[19] Fukuyama Fukuyama New Newsweek sweek Es Essay say (http:/  (http:/   / www.newsweek.com/ id/ 162401?tid=relatedcl)  

 

 

 

 

 

[20] Forbes-Bruce Bartlett-The 81 81% % Tax Increase-May 2009 (http:/  (http:/   / www.forbes.com/ 2009/ 05/ 14/   

 

 

 

 

 

 

taxes-social-security-opinions-columnists-medicare.html)  

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Entitlements-Alone-Eclipse-Historical-Tax-Levels-by-2052.aspx)  

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[23] Tax Policy Center Briefing Book-Retrieved 31 December December 2009 (http:/   / www.taxpolicycenter.org/ briefing-book/ background/ numbers/   

 

 

 

 

 

 

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news?pid=newsarchive&sid=axswEndVYlTY)  

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[2 [26] 6] http http:/  :/   / comparativetaxation.treasury.gov. au/ content/ report/ html/ 06_Chapter_4-08.asp International Comparison of Taxes by Australian  

 

 

 

 

 

 

 

 

 

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United States federal budget

19

[31] Congressional Research Serv Service-Medicare ice-Medicare Prim Primer-March er-March 2009 2009 (http:/  (http:/  / assets.opencrs.com/ rpts/ R40425_20090310. pdf)  

 

 

 

 

 

 

[32] The Economist-As Economist-As Boomers Wrinkle-December 2010 (http:/   / www.economist.com/ node/ 17800237)  

 

 

 

 

 

[33] Atul Gawande-The Gawande-The New York Yorker-The er-The Cost Conundrum-June Conundrum-June 2009 (http:/   / www.newyorker.com/ reporting/ 2009/ 06/ 01/   

 

 

 

 

 

 

 

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[35] The Economist-As Economist-As Boomers Wrinkle-December 2010 (http:/   / www.economist.com/ node/ 17800237)  

 

 

 

 

 

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[83] "Bernanke-The Global Saving Glut and U.S. Current Account Deficit" (http:/   / www.federalreserve.gov/ boarddocs/ speeches/ 2005/   

 

 

 

 

 

 

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[85] EPI-The EPI-The China Trad Tradee Toll-Ju Toll-July ly 2008 (http:/  (http:/   / www.epi.org/ publications/ entry/ bp219/ )  

 

 

 

 

 

 

 

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[112] CBO Bud Budget get Options-Volume Options-Volume 1 Healthcare-December Healthcare-December 2008 2008 (http:/   / www.cbo. gov/ doc. cfm?index=9925)  

 

 

 

 

 

[113] CBO Bud Budget get Options-Volume Options-Volume 2-August 2009 (http:/  (http:/   / www.cbo.gov/ ftpdocs/ 102xx/ doc10294/ 08-06-BudgetOptions.pdf)  

 

 

 

 

 

 

 

 

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[121] CBPP-Ryan Bill An Analysis-March alysis-March 10, 2010 2010 (h (http:/  ttp:/   / www.cbpp.org/ files/ 3-10-10bud.pdf)  

 

 

 

 

 

 

[122] Paul Ryan-Res Ryan-Response ponse to CBPP Study-March Study-March 11, 2010 (http:/  (http:/  / www.roadmap.republicans.budget.house.gov/ News/ DocumentSingle.  

 

 

 

 

 

 

 

 

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[125] NYT Editorial-Th Editorial-Thee GOP's Pledge-September 25, 2010 2010 (http:/   / www.nytimes.com/ 2010/ 09/ 26/ opinion/ 26sun1. html?src=me&  

 

 

 

 

 

 

 

 

 

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[128] CBPP-Bowles Simpson Plan Evalu Evaluation-November ation-November 16,2010 (http:/   / www.cbpp.org/ cms/ index. cfm?fa=view&id=3325)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[129] Histo Historical rical b budge udgets ts (http:/  (http:/   / www.cbo.gov/ budget/ historical.shtml), from the Congressional Budget Office [130] Office of Management and Budget Budget website (http:/   / www.omb. gov)  

 

 

 

External links • NYT-2011 NYT-2011 Budget Budget Interactive Interactive Graphic-Feb Graphic-February ruary 2010 (http:/  (http:/   / www.nytimes.com/ interactive/ 2010/ 02/ 01/ us/   

 

 

 

 

 

 

 

 

budget.html)  

• Death Death and Taxes: Taxes: 2009 2009 ((htt http:/  p:/   / www.wallstats.com/ deathandtaxes/ resource/ ) A visual representation of the  

 

 

 

 

 

 

2009 United States federal discretionary budget. • Columbia Columbia University University selectiv selectivee guide for research research on the U.S. Federal Federal budget budget process (h (http:/  ttp:/   / www.columbia.  

 

 

edu/ cu/ lweb/ indiv/ usgd/ budget.html)  

 

 

 

 

 

• FederalSpen FederalSpending.o ding.org rg "Federal "Federal Contracts Contracts and Grants Grants"" (http:/  (http:/   / www.fedspending.org/ )  

 

 

 

 

• Histor Historica icall bud budget get sstat tatist istics ics (htt (http:/  p:/   / www.gpoaccess.gov/ usbudget/ fy09/ pdf/ hist.pdf)  

 

 

 

 

 

 

 

 

• The Project Project on Middle East East Democracy' Democracy'ss May 2008 Report Report on the President's President's Budget Budget Requ Request est for FY09 for Democracy, Governance, and Human Rights in the Middle East (http:/  / pomed.org/ fy-09-budget-request-report)  

 

 

 

• FY 2009 2009 Omni Omnibus bus Budget Budget (http: (http:/  /   / publicservice.evendon.com/ OmniApprop2009M.htm) Passed by the House  

 

 

 

 

25Feb2009 • FY 2010 2010 Budg Budget et Prop Proposa osall ((htt http:/  p:/   / publicservice.evendon.com/ FY2010BudgetM.htm) Submitted by The  

 

 

 

 

 

President 26Feb2009 • Brookings Brookings Institutio Institution n - Auerbach Auerbach & Gale - An Update Update on the Eco Economic nomic and and Fiscal Cr Crises ises 20 2009 09 and Beyond Beyond September 2009 (http:/  / www.brookings.edu/ papers/ 2009/ 06_fiscal_crisis_gale.aspx)  

 

 

 

 

 

 

• Gale & Auerbach Auerbach (Brooking (Brookings) s) - Analysis Analysis of 2010 Budget Budget (http:/  (http:/   / www.taxpolicycenter.org/ UploadedPDF/   

 

 

 

 

411843_economic_crisis.pdf)  

• NYT-Warren NYT-Warren Buffet-Op Buffet-Op Ed-The Ed-The Greenback Greenback Effect Effect (ht (http:/  tp:/   / www.nytimes.com/ 2009/ 08/ 19/ opinion/ 19buffett.  

 

 

 

 

 

 

 

 

html) • Federa Federall B Budg udget et Exp Expert ertss (htt (http:/  p:/   / www.whorunsgov.com/ Issues/ Federal_budget/ ) at WhoRunsGov at The  

Washington Post 

 

 

 

 

 

 

 

United States federal budget

22

"Chart talk" examples One of the best ways to understand the long-term budget risks is through helpful charts. The following sources contain charts and commentary: • GAO Fisca Fiscall Brie Briefin fing g by David David Wa Walke lkerr (http:/  (http:/   / www.gao.gov/ cghome/ d08446cg.pdf)  

 

 

 

 

 

• Pe Pero rott Char Charts ts ((ht http tp:/  :/   / perotcharts.com/ challenges/ )  

 

 

 

• The Herita Heritage ge Foundati Foundation's on's "Budget "Budget Chart Chart Book" Book" (http:/  (http:/   / www.heritage.org/ budgetchartbook/ )  

 

 

 

 

 

• Peter G. Pe Peterson terson Foundation Foundation Citizen's Citizen's Guide (http:/  (http:/   / www.pgpf.org/ ~/ media/ PGPF/ Media/ PDF/ 2010/ 05/   

 

 

 

 

 

 

 

 

 

 

PGPF_CitizensGuide_2010.ashx?pid={4F7D605D-BE87-4B20-A867-EA24ACB761C8}) • I.O.U.S.A. I.O.U.S.A. Movie Movie - 30 Minute You Tube Summary-N Summary-Narrat arrated ed by Former GAO Director Director David David Walker (http:/  (http:/   /   

 

www.iousathemovie.com/ )  

 

 

Budget games and simulations • American American Public Media Media has developed developed a budget budget game that allows allows players players to select various various policy policy choices and and measure the effect on key economic variables. It is available at APM-Budget Hero Game (http:/  / marketplace.  

 

publicradio.org/ features/ budget_hero/ )  

 

 

• Committee Committee for a Responsi Responsible ble Fede Federal ral Budget-Sta Budget-Stabilize bilize the the Debt Simulator Simulator (http:/  (http:/   / crfb.org/ stabilizethedebt/ )  

 

 

 

 

 

Article Sources and Contributors

Article Sources and Contributors http://en.wikipedia.org/w/index.php?oldid=419654930 .php?oldid=419654930 Contributors: 2rock, A little insignificant, AaronSw, Aaustin, Adoniscik, Ageekgal, United States federal budget  Source: http://en.wikipedia.org/w/index Ahoerstemeier, Akadonnew, Alansohn, Alfie66, Alpha Quadrant (alt), AndrewGioia, Antony-22, Anwar saadat, Art LaPella, Australian cowboy, AutoGeek, Bar berio, Basel Maven, Beland, Ben76266, Bento00, Calatayudboy, CapitalR, Carmichael95, Chris the speller, Ckatz, Crohnie, Cst17, D6, Daniel Pritchard, Dcmacnut, Decltype, Detah, DickClarkMises, Dthomsen8, Duffman894, Eastlaw, Elderp, Enon, Excirial, Failure2002, Farc aster, Flyboy121, Footwarrior, Gfenno, Giraffedata, Grampion76, GregorB, Grittsu, Ground Zero, Gudeldar, Gvotno, IntrigueBlue, JaGa, JamesMLane, Jamesdowallen, Jatkins, Jfree dom007, Joetheguy, John Broughton, Jojhutton, Jsg278, KGasso, Kalmia, Kborer, King of Hearts, Kingturtle, Kslays, Kurieeto, Lacey.Loftin, Levineps, Lifthrasir1, LilHelpa, M3taphysical, Markles, MaryD99, Maxis ftw, Mibs, Michael Keenan, Mikael Häggström, Miss Madeline, Mluehrmann, Mnm628, Morphh, Mtalleyrand, NawlinWiki, Nick Number, Nononsenseplease, Nsaa, Ottre, Oxymoron83, Pacomartin, Pharaoh of the Wizards, Pinkkeith, Psoreilly, R'n'B, Razorflame, Rich Farmbrough, RightCowLeftCoast, Rjwilmsi, Ronhjones, Rricci, Sardonicone, Sebmol, Sicjedi, Skeejay, Sonia, South Bay, Spencerk, Stevewiki56, Student7, TastyPoutine, Texture, The Thing That Should Not Be, Theodork, Thrillspillchill, TimeClock871, TomCat4680, TomPointTwo, Top-50-in-the-World-MBA, Tulandro, Van helsing, VolatileChemical, Votarys, Wasted Time R, WildRichLord, Will Pittenger, WorthWhatPaid, Zebov, Zzyzx11, 242 anonymous edits

Image Sources, Licenses and Contributors http://en.wikipedia.org/w/index.php?title=File:U.S._Federal_Spending_-_FY_2007.png  License: GNU Free Documentation License Image:U.S. Federal Spending - FY 2007.png   Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Federal_Spending_-_FY_2007.png  Contributors: farcaster Image:U.S. Federal Receipts - FY 2007.png   Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Federal_Receipts_-_FY_2007.png http://en.wikipedia.org/w/index.php?title=File:U.S._Federal_Receipts_-_FY_2007.png  License: Creative Commons Attribution-Sharealike 3.0 Contributors: farcaster

http://en.wikipedia.org/w/index.php?title=File:Revenue_and_Expense_to_GDP_Chart_1993_-_2008.png 1993_-_2008.png  License: GNU Image:Revenue and Expense to GDP Chart 1993 - 2008.png   Source: http://en.wikipedia.org/w/index.php?title=File:Revenue_and_Expense_to_GDP_Chart_ Free Documentation License Contributors: User:Farcaster File:Estimated Funding Gaps in Medicare and Social Security Programs.png   Source: http://en.wikipedia.org/w/index.php?title=File:Estimated_Funding_Gaps_in_Medicare_and_Social_Security_Programs.png License: GNU Free Documentation License Contributors: User:Farcaster

http://en.wikipedia.org/w/index.php?title=File:GAO_Slide.png .php?title=File:GAO_Slide.png  License: Public Domain Contributors: GAO. Original uploader was Farcaster at en.wikipedia Image:GAO Slide.png  Source: http://en.wikipedia.org/w/index http://en.wikipedia.org/w/index.php?title=File:U.S._Defense_Spending_Trends.png  License: GNU Free Documentation License Contributors: File:U.S. Defense Spending Trends.png   Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Defense_Spending_Trends.png User:Farcaster File:Discretionary Spending by Dpt - 2010E.png   Source: http://en.wikipedia.org/w/index.php?title=File:Discretionary_Spending_ http://en.wikipedia.org/w/index.php?title=File:Discretionary_Spending_by_Dpt_-_2010E.png by_Dpt_-_2010E.png  License: GNU Free Documentation License Contributors: User:Farcaster File:Deficits vs. Debt Increases - 2009.png   Source: http://en.wikipedia.org/w/index.php?title=File:Deficits_vs._Debt_Increases_-_ http://en.wikipedia.org/w/index.php?title=File:Deficits_vs._Debt_Increases_-_2009.png 2009.png  License: GNU Free Documentation License  Contributors: Farcaster (talk) 17:59, 17 October 2009 (UTC). Original uploader was Farcaster at en.wikipedia

http://en.wikipedia.org/w/index.php?title=File:Impact_of_Bush_Tax_Cut_Extension.png ion.png  License: Public Domain Contributors: File:Impact of Bush Tax Cut Extension.png   Source: http://en.wikipedia.org/w/index.php?title=File:Impact_of_Bush_Tax_Cut_Extens User:Farcaster File:2010 Budget - Deficit and Debt Increases.png   Source: http://en.wikipedia.org/w/index.php?title=File:2010_Budget_-_Deficit http://en.wikipedia.org/w/index.php?title=File:2010_Budget_-_Deficit_and_Debt_Increases.png _and_Debt_Increases.png  License: GNU Free Documentation License Contributors: Farcaster (talk) 18:54, 1 Marc h 2009 (UTC). Original uploader was Farcaster at en.wikipedia

http://en.wikipedia.org/w/index.php?title=File:U.S._Trade_Deficit_Dollars_and_%_GDP.png P.png  License: unknown Contributors: File:U.S. Trade Deficit Dollars and % GDP.png   Source: http://en.wikipedia.org/w/index.php?title=File:U.S._Trade_Deficit_Dollars_and_%_GD Image:Growth Rates GDP vs. Entitlements.png   Source: http://en.wikipedia.org/w/index.php?title=File:Growth_Rates_GDP_vs._En http://en.wikipedia.org/w/index.php?title=File:Growth_Rates_GDP_vs._Entitlements.png titlements.png  License: unknown Contributors: GAO Image:US Federal Outlay and GDP linear graph.svg   Source: http://en.wikipedia.org/w/index.php?title=File:US_Federal_Outlay_and_GDP_linear_graph http://en.wikipedia.org/w/index.php?title=File:US_Federal_Outlay_and_GDP_linear_graph.svg .svg  License: Creative Commons Zero Contributors: User:Xp84

License Creative Commons Attribution-Share Alike 3.0 Unported http:/   / creativecommons.org/ licenses/ by-sa/ 3.0/   

 

 

 

 

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