The deficit is a problem but why? We are still looking at $1T and the folks in DC seem clueless. Well let's look at a back of the envelope analysis. I use some recent but not great data. It seems it is tough to get the latest from the Feds, although the FRB in St Louis does a great job.
Now here are some thoughts:
First, above is the change in expenditures by Agency from 2008 to 2011. It is a $400B increase. Nothing much has happened, just an increase. Why?
First Agriculture increased because of Food Stamps and the Broadband Stimulus etc. For a nation which is bordering on the morbidly obese why the food stamp excess?
Now for one of the big ones, Defense, a $150B increase. We were getting out of 2 wars so why the increase? Never really gets explained. Frankly $500B is not a bad number, $750B is insane. So here is a great place to start.
Now the revenue is a problem. Here we have a $400 drop. Taxes are just not there; fewer people working and lower business taxes. Simple. Get people back to work. Easier said than done.
But easier said than done. Yet we are not collecting SSI from those employed, part of the Tax Break.That is significant and it frankly is a large part of the drop.
So we have here $800B of the$1T. This can be solved by (1) cutting expenses, and we know where, (2) hopefully getting more back to work, simply by demonstrating an understanding of the problem and showing that it is being fixed.
But wait, now we have the ACA, and if you thought the above was a mess just wait till we finish 2013! Happy New Year.
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