The Real Budget Battle
Posted on January 31, 2013
The real budget battle in Washington is not between Republican and Democrats or conservatives vs. liberals.
The real budget battle in Washington is between discretionary spending vs. entitlement spending.
What the hell does that mean?
Discretionary spending is basically money authorized and then approved each year by Congress.
Entitlement spending is money that automatically goes out the Treasury, without much input from Congress at all each year.
Now, most people hate Congress, so they might think that having little Congressional oversight would be a good thing, but it isn’t.
Entitlement spending goes out to a whole class of people, usually old people and poor people. Discretionary spending goes out for specific purposes, and is usually aimed at the future.
Right now, entitlement spending is kicking the skinny little butts of the discretionary crowd.
It used to be fun to be on the Appropriations Committee, which is largely in charge of spending discretionary money. But the thrill is gone, because there is not much money in the discretionary pot anymore.
Social security, Medicare and Medicaid take up about 43% of the Congressional budget, a number that grows unchecked every year. About 20% goes to paying for other entitlement programs (like Farm subsidies and food programs) and to pay off the national debt.
About 20% of the budget goes to pay for defense discretionary spending, a number that should come down now that we are largely done with two overseas wars. Only 18% goes to pay for everything else.
By everything else, I mean money to pay for roads, bridges, science funding, cancer research, NIH, school loans, and any other investment in the future that will make America a better place to live.
Discretionary spending is largely what America invests in the future. Entitlement spending is what America invests in the past.
Last year, Congress and the President agreed to a budget compromise that included automatic spending cuts of about 1.3 trillion dollars. Unfortunately, none of those spending cuts hit the true drivers of entitlement spending. Instead, they largely hit discretionary spending, so if Congress does nothing to reverse itself, America’s investments in the future will take the brunt of the hit.
In 1970, Social Security and Medicare accounted for 15% of the total budget. Today, they account for almost 50% of the entire budget. Pretty soon, if the growth of these two programs are not reversed, they will take up 60% of the budget, and by the end of the century, they will take up 80% of the budget.
If you spend all of your money in a budget taking care of old people, you have no money to pay for defense, or roads or the science funding that could make life better for those old people.
This is the real crisis facing the American people, and it doesn’t matter if you are conservative or liberal, Republican or Democrat.
These are just the budget facts, and we better get a handle on them soon, or we won’t be able to afford to pay our troops in 40 years.