Top 10 Federal Spending Programs: ~96% of All Outlays ($3.3T in 2010)

                                                                             FIGURE 1

Making Sense of the Federal Budget: A Look at the Top 10 Federal programs (which spend ~96% of all the dollars). 

Talk about cutting federal spending brings on much hand wringing, caterwauling, crocodile tears, and gnashing of teeth.  Oh No! the lament goes. Cut defense and entitlements? WTF? Calamitous. And then there's the fact, OMG, that only 18% of the budget is discretionary! How can you do anything significant working with only 18% of the problem? Also, WIWWY? (What Is Wrong With You?), Ben Bernanke says that  cuts may bring back recession and economic malaise! Obama also says that now is not the time for cuts. YKWIS? (You Know What I’m Sayin’ ?)

The pitiful cries and the endless excuses for inaction, however, rely on one thing. Laziness.  Most Americans, or media, or journalists, or even academics, are unwilling to dive into the complexity of the budget details. So the ignorance aided by obfuscation and confusion continues.  

As an example of this, if we look at the White House document http://www.whitehouse.gov/omb/budget/Historicals, Table 3.2, we see a Fukushima Daiichi tsunami wave of numbers and categories, seemingly designed expressly to discourage not only the prying eyes of the unwashed public non-cognoscenti, but their opposites as well. The data is arcane, mysterious, inaccessible, and difficult to make sense of, right? Unexplained codes, and lots of categories labeled "Other".

It takes only a bare modicum of math skill, and the courage to face up to “math fear”, plus  a copy of Excel, or Lotus 123, or even , in honor of the late great Steve Jobs, VisiCalc (which will run on Apple II with as little as 16K of RAM). Girded with these weapons, we can calm the waters of the tsunami down from, for example 140 categories, to a more manageable top 10 spending programs, countable on the fingers of one’s hands. Moreover these 10 categories total up to containing ~96% of all dollars spent. Not only does this identify the big spending categories, but also this points to the vulnerable sub-categories, providing the necessary information to make choices: what to cut, and what not to cut. Obama, Reid, and Boehner please note. 

Of course an alternative approach is across the board cuts, for example one can just cut 10% per year from every spending category, perhaps taking care to spare a sacred cow or two, to achieve significant spending cuts. The goal is to limit the federal budget growth to 2% per year or less which, according to the CBO, will wipe out the deficit in a mere 8 years by the year 2020. WTV?

The spending data of 2010 is presented in more digestible and manageable form, suitable for humans, in Figure 1. The top 10 federal spending programs from 1999 to 2010 are shown as different color lines, where the left hand scale describes the spending as a percentage of each year’s GDP. The right hand scale (in blue) provides a scale in billions of dollars, where the scale applies only to the year 2010, and is provided to give an estimate of the dollar spending corresponding to the percentage lines. At the top of Figure 1 the time periods corresponding to the tenure of the 3 presidents, Clinton, Bush, and Obama, are shown.  At the right hand terminus of each line is listed the name of the spending category, along with a partial list of sub-categories for that category, defining the constituent parts for  “Defense”,  “Income Assistance”, “Health Services”, and “Foreign Aid”. 

For now I am providing Figure 1 as an overview. Future blogs will dive into some of the sub-categories listed above, providing further insight into the details of the spending, so that information is available for making priorities for cutting, with the goal of achieving a reduction of Federal spending growth to the 2% per year level.  

Interested readers are referred to examiner.com, where a search on my name, Abe Lesnik, will show a dozen of my articles, usually containing charts and graphs, and analysis of economic issues of the day.