Federal Spending Is Full of Surprises

COMMENTARY Budget and Spending

Federal Spending Is Full of Surprises

Aug 21st, 2013 2 min read

Former Senior Fellow and Director of the Roe Institute

Alison served as Director of the Roe Institute at Heritage and is currently a Senior Policy Fellow at Americans for Prosperity.

As Washington’s quiet August days dwindle down, Labor Day — and the return of Congress — draw nearer. With no spending bills passed and a debate looming over the debt limit, this fall promises to be quite contentious on Capitol Hill.

So let me recommend some pertinent summer reading. Short and easy to read, The Heritage Foundation’s “Federal Spending by the Numbers” is more than just numbers. It’s an engaging compendium of revelatory charts, graphs and key facts.

Consider the deficit. We’ve all heard how it has improved this year. That’s true. Following four straight years of trillion dollar deficits, the 2013 deficit will be “only” $642 billion — roughly $2,000 in new debt for every man, woman and child in America. Goody.

Some in Washington point to this “good news” as reason to not worry about reining in spending. “Why reform entitlements? Why not just chuck sequestration altogether? After all, the deficit is way down.”

That kind of happy talk is dangerous to the nation’s fiscal health. “Federal Spending by the Numbers” demonstrates why.

While the deficit isn’t as obscenely high as in the previous four years, it’s still huge — and still pushing our national debt ever higher. Total national debt will top $17 trillion this year, leaving it bigger than the entire U.S. economy. High levels of debt like this slow the economy. For those interested in spurring job creation, getting the debt — and spending — under control should be job one.

Moreover, the “improvement” in the deficit won’t last. Entitlement spending is on autopilot. Absent reform, it will push deficits higher and higher. Within a decade we’ll be in trillion dollar territory again. Even with sequester cuts, federal spending will grow 69 percent by the time today’s third-graders head off to college.

The total budget has grown 41 percent over the past decade. Every part of the government has grown.

Take spending on energy. It’s exploded, growing nearly 2,400 percent, even after adjusting for inflation. And remember, the energy boom currently fueling economic growth owes nothing to this public spending. It’s all happening due to private-sector investment in operations on private and state lands. The feds’ contributions, on the other hand, have given us … Solyndra!

As for constitutional priorities, national defense has taken a beating. Before President Lyndon Johnson’s Great Society programs, defense spending was about 9 percent of GDP while mandatory spending on Social Security, other means-tested entitlements and net interest was only 6 percent. Today defense is 4 percent while mandatory spending is more than 14 percent.

Recent years have seen real cuts to defense spending. This year, our military will suffer a 7.8 percent cut. Defense gets gored because it shoulders 50 percent of the sequester cuts, while the biggest part of the budget — entitlement spending — is held virtually harmless.

Take Social Security. It’s the largest federal spending program and has held that distinction since 1993. Today it takes 22 percent of all spending. Medicare is another 13 percent of the budget. Both of these programs have special budget priority — they do not have any budget limits. So they are rapidly growing without control: Social Security by 35 percent and Medicare by 63 percent over the last decade. Add Medicaid and nearly half the budget — 45 percent — is entitlement spending. By 2023 it will top 69 percent. Still not convinced the budget is out of control?

Let’s put the spending, deficit and debt number in the context of a family budget. If the average American family spent like the federal government, it would spend about $64,000 this year — on earnings of only $52,000. The excess spending ($12,000) would go on the family credit card — which already has more than $312,000 in debt racked up from previous years. Not a pretty picture.

“Federal Spending by the Numbers” has lots of pictures — and humor, history, drama, and, yes, horror. Perfect reading for those last days of summer.

-Alison Acosta Fraser is a senior fellow and director of government finance programs at The Heritage Foundation.

First appeared in The Washington Times.