Balancing the Federal Budget(or at least reducing the annual deficit to a manageable size)

The Problem:2010-11 Spending - $3.7 Trillion2010-11 Revenues - $2.2 Trillion(Revenues have declined 13% since 2007 due to the recession)

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$1.5 Trillion Deficit40% + Borrowed

Total Current Debt(Accumulated over 80+ Years)

$14.3 Trillion• Almost equal to our annual GDP (100%)• We’ve only topped 100% once before during

WW II

• Our annual deficit now equals 9.8% of GDP(above 10% is considered to be unsustainable by most economists)

The Debt Limit - $14.3 Billion• Set by Congress• No constitutional maximum• Will need to be raised in March, 2011• Not raising it would result in the USA

defaulting on outstanding Treasury Bonds.

• Catastrophic global economic consequences

The Budget is Divided

• Mandatory spending set by law - Entitlements. These include Social Security, Medicare, Medicaid, CHIP, Veterans’ Benefits, Food Stamps, and more.

• Discretionary spending – the parts that we can change without changing other laws.

• Interest on the debt

Entitlements

• The President's budget request for 2010 totals $3.55 trillion. Percentages in parentheses indicate percentage change compared to 2009. This budget request is broken down by the following expenditures:[8]

• Mandatory spending: $2.009 trillion– $695 billion (+4.9%) – Social Security– $571 billion (−15.2%) – Other mandatory programs– $453 billion (+6.6%) – Medicare– $290 billion (+12.0%) – Medicaid– $164 billion (+18.0%) – Interest on National Debt

Medicare :Rising at 3X the rate of inflation.

Revenue Sources

Defense Related Budget – Over $1 Trillion• Budget Breakdown for 2011Defense-related expenditure 2011 Budget request

& Mandatory spending[1][19]Calculation[6][20]• DOD spending $721.3 billion Base budget + "Overseas Contingency

Operations"• FBI counter-terrorism $2.7 billionAt least one-third FBI budget.• International Affairs $10.1–$54.2 billion At minimum, foreign arms sales. At

most, entire State budget• Energy Department, defense-related $20.9 billion• Veterans Affairs $66.2 billion• Homeland Security $54.7 billion• NASA, satellites $3.4–$8.5 billion Between 20% and 50% of NASA's total

budget• Veterans pensions $58.4 billion• Other defense-related mandatory spending $7.5 billion• Interest on debt incurred in past wars $114.8–$454.2 billion Between 23% and

91% of total interest• Total Spending $1.060–$1.449 trillion

The GINI Index Measures Income DisparityLow # means greater equality.

High # means greater gap, rich v. poor.