The Rational Moderate

One of the most sensitive topics in recent memory is the budget deficit and the escalating national debt. How should this be addressed? Stimulating the economy through tax breaks? Slashing federal spending? There are as many solutions as there are letters in every alphabet in the world.

In this series I will be breaking down each category, analyzing current spending, identifying problems, and making suggestions of possible solutions. To start, let’s take a look at current tax revenues and general spending.

The Congressional Budget Office reported that the federal government collected a record $3.266 trillion in tax revenues in 2016¹:

Federal spending topped out at $3.854 trillion in 2016, another record:

Discretionary Outlays¹

Mandatory Outlays¹

Top spending categories include (in billions):

1. 910.3 – Social Security – Mandatory
2. 691.6 – Medicare – Mandatory
3. 600.3 – Nondefense – Discretionary
4. 583.7 – Defense – Discretionary
5. 368.3 – Medicaid – Mandatory
6. 303.9 – Income Security – Mandatory

These 6 categories account for almost 90% of all federal spending. This is where we will be spending a majority of our time in this series.

The national debt, as of this writing, stands at $14.168 trillion. Servicing the interest on this debt will cost taxpayers an estimated $465 billion in 2017, which would qualify as the number 5 spending category¹.

In the next section I’ll be taking a look at Social Security, which has a gloomy future unless serious changes are made within the next decade.

References

1 Congressional Budget Office. 2017. Budget and Economic Data.