The 2012 enacted U.S. budget contained $2.469 trillion in receipts and $3.796 trillion in outlays, for a deficit of $1.327 trillion.
Here's how it is being spent:
Public encyclopedia reference: http://en.wikipedia.org/wiki/2012_United_States_federal_budget#Total_revenues_and_spending
You can verify the data by accessing the 2012 Budget of the U.S. Government available from the U.S. Government Printing Office (GPO): http://www.gpo.gov/fdsys/search/pagedetails.action?packageId=BUDGET-2012-BUD
This author is an honorably discharged U.S. military veteran but notice that the largest discretionary cost in the budget is military spending at almost $712 billion for 2011. Except for government spending on welfare (not counted are veteran's programs, Obamacare, or entitlement programs like Social Security or Medicare): it is the number one discretionary cost to the U.S. taxpayers.
The enormous amount spent on Iraq Wars aside (which arguably didn't need to be fought as Iraq had zero to do with 911 and al-qaeda though I would say we could have joined the powers in the region in keeping with our treaty obligations with those countries if they wanted Saddam gone badly enough to pay the brunt of the cost rather than the other way around), we are paying enormous sums of taxpayer money to protect Europe from Russia (completely unnecessary as the Cold War is over and the EU can certainly take over that responsibility) and wealthy asian countries like Japan, South Korea, and Taiwan. We get a rebate back from these countries but it's paltry compared to what we outlay in military spending for them.
Want to see what our military spending looks like compared to the rest of the world? We account for almost half of the entire world's military spending just by ourselves:
Public encyclopedia reference: http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures
You can verify the data by accessing the Stockholm International Peace Research Institute (SIPRI) military expenditure database: http://milexdata.sipri.org/
A major expense is the interest on our national debt. There's a lot of confusion on the internet about the national debt but the numbers are all published by our government and I have them right here.
The U.S. Treasury National Debt Statistics shows that on January 31, 1981 ten days after Ronald Reagan took office for the first time (U.S. Presidents enter office on January 20th and leave office on January 21st four years later unless they resign or are impeached), the U.S. national debt was only $934.073 billion total.
The monthly statement of the public debt of the United States for January 1981 can be accessed here: ftp://ftp.publicdebt.treas.gov/opd/opdm011981.pdf
As of March 8, 2012, the U.S. national debt is $15,517,794,642,311.25.
Type in the date above to confirm: http://www.treasurydirect.gov/NP/BPDLogin?application=np
Now debt is accounted for when it is incurred, not when it is paid. Here's what that looked like as of July 26, 2011:
Documentation: http://www.whitehouse.gov/infographics/us-national-debt
The OMB publishes the annual cost of interest paid on the national debt which is a major non-discretionary expenditure in the U.S. budget at $241.598 billion dollars for 2012 and estimated to be $248 billion for 2013 (see S-5).
This money goes out of the pockets of taxpayers every year straight into the pockets of our creditors and foreign countries hold a good share of it these days. The Treasury Bulletin, available online from the Financial Management Service categorizes ownership of U.S. Government securities by types of investors.
In order to reduce the amount spent on interest of our national debt, we need to balance the budget and then start paying it down. All spending areas can be reformed to help do this; however, how and what is cut must be carefully considered lest Americans be unecessarily hurt and even killed if areas such as medicare/social security, medical care for the indigent, disability, etc... are negatively impacted.
And it's important to note that tax breaks add up to almost the entire cost of the deficit currently.
It's also important to note that government welfare spending has rapidly increased as well.
But since the people and U.S. businesses don't want to give up their tax breaks, careful spending reform to lower the deficit combined with increasing revenue through fixing our economy is another way to balance the budget.
Though about 75% of all U.S. businesses are currently structured as pass-throughs that pay zero federal income taxes (contrast that with the year 1986, when non-taxable U.S. businesses comprised only 24 percent) and taxes on the wealthy are at historically low rates (for example, the hedge fund long-term capital gain rate is taxed at a maximum of 15%), we can carefully reform spending (including military spending) and fix our economy to balance the budget.
Putting 40 more million unemployed, underemployed, and underpaid American citizens to work at good paying jobs paying taxes would bring in hundreds of billions of tax dollars each year to the federal government. And it would benefit state and local governments as well. The combination of fixing our economy and appropriately reducing government spending would put the U.S. back in the black.
But that requires fixing U.S. trade, ending horizontal monopolies, ensuring job growth goes to American citizens rather than insourced foreign workers like so much of new job growth does now, etc... and neither party has shown an interest to do any of these things (we'll discuss why both party's politicians are deliberately ignoring fixing the U.S. economy and arguing about relatively minor federal spending cuts at another time as it's beyond the scope of this post).
The point that new job growth increasingly goes to foreign workers instead of American citizens is a major obstacle to balancing the budget. When American citizens are bypassed, new job growth doesn't benefit them and they don't pay taxes nor spend money. Also, the quality of the jobs is omitted from almost all media reports. Most of these new jobs are not on par with what Americans are accustomed to in pay and benefits and what we need to see to balance the budget.
The press has been touting new job growth in the media of late but they have omitted mentioning that a good share of it has gone to migrant workers and foreign workers insourced by the U.S. Labor Bureau's Office of Foreign Labor Certification nor that the jobs are not on par with what Americans are used to earning.
Look at the U.S. population clock and you'll see that as of the date of this article we net one international migrant worker every 46 seconds. That's 686,020 new American jobs going to foreign workers each year currently.
And though quotas exist, the U.S. Office of Foreign Labor Certification (OFLC) also imports foreign white collar workers to take new U.S. middle class jobs that are created in the U.S. but not offshored or outsourced as so many have been and contiue to be. In fact, the OFLC processed 422,228 employer applications requesting 851,556 foreign workers in 2010 and more in 2011.
Consider that in Texas, for example, between 2001 and 2007 the Center for Immigration Studies was able to show that 81% of all new job growth went to immigrant workers (both legal and illegal). Natural born American citizens were just passed over though the job growth was touted in the media and used to propel Rick Perry's run for the presidency. Both the red and blue teams play these games with the American public.
Documentation: http://cis.org/immigrants-filled-most-new-jobs-in-Texas
They have also ignored discussing U.S. population growth. New born American citizens quickly grow into adults that need to earn sustainable incomes and we have a net gain every year and when you add the foreign workers and the new population growth together, the U.S. is actually going backwards in job growth.
The number of illegals working in the Southwest may surprise you. Here's a study showing California's economy being negatively impacted by two million illegal aliens working under the table in that state.
Weak outlook for state seen: Many are working under the table, UCLA group says.
Cutting spending isn't going to be enough. If we are going to balance the budget without ending tax breaks and raising taxes, we need to generate revenue by fixing our broken economy and immigration system. Simply implementing a value-added tax (VAT) on all foreign made goods would bring in hundreds of billions of dollars into the U.S. Treasury. It would also stimulate new job growth in the U.S. resulting in increased tax revenues.
U.S. government employees should be agitating to fix trade so they can draw their income off government revenues rather than deficits as they currently do. It's in their long-term interest to do so. It's in all U.S. citizen's long-term interests.
But instead, their public employee unions, along with other Democrats are agitating for a "trillion dollar coin" solution. They assert that simply having Geithner mint trillion dollar coins, walk them over to the Federal Reserve and deposit them in the Treasury’s account to erase our national debt is a solution.
From the Wiemar Republic to the Argentine economic crisis, modern history is replete with concrete examples of how printing enormous amounts of money from thin air has melted down entire economies.
Some of the negative consequences are that it generates high inflation adversely impacting savings and pensions while spurring increases in the price of goods and services eventually resulting in capital flight and replacement of the dollar as the currency of choice in the world ushering in uber-negative draconian economic problems for the U.S. people... for you.
Of course, it violates the rule of law and principles of economics as well as U.S. central banking policy while encouraging U.S. fiscal profligacy by finding a way to fund excessive government expenditures that does not bear the cost of paying interest on reserves or any interest differential between new and old debt (as the Treasury would if the Fed used standard open market operations). And, as stated, it has a much greater inflationary potential than open market operations because a direct infusion to the Treasury will definitely be spent while injections of reserves into the banking system will likely not enter the spending stream.
This is a very bad idea lacking any common sense that manages to undermine any semblance of sanity in both monetary and fiscal policy simultaneously. But the Democrats call it a solution. If you're trying to finish destroying the U.S. economy, then it's a "solution." That it is being seriously discussed by our politicians is a sign of how far the U.S. economy has fallen and what a mess has been made of U.S. fiscal and monetary policy.
The author hopes his "MBA analysis" has helped you to have a better understanding.
I recommend visiting Economy In Crisis for more information:
http://www.economyincrisis.org/
Update April 2014: China is poised to supersede the U.S. as the largest economy in the world but note that China's national debt is only about $5 trillion USD (1). Not a big deal since the U.S. owes China a little over $5.308 trillion (2)(3)(4). Of course, nobody owes the U.S. anything. We're stuck with our $17.577 trillion debt.
To provide some perspective, the entire U.S. national debt the month Ronald Reagan took office (note U.S. Presidents enter office on January 20th and leave office on January 21st) on January 20, 1981 was only $934.073 billion (5).
Now, using the CPI calculator (6), $934.073 billion in 1981 would be equal to $2,678.579 trillion in 2014. If the U.S. had passed the balanced budget legislation brought in 1982 (7), we'd be in an excellent position right now with respect to our national debt.
Data Sources:
(1) http://www.nationaldebtclocks.org/debtclock/china
(2) Federal Reserve Statistical Release. H.4.1. Factors Affecting Reserve Balances. Release Date: 17 April 2014. [Online Document]. Accessed 23 April 2014. [Data through 16 April 2014]. http://www.federalreserve.gov/releases/h41/Current/
(3) U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 23 April 2014. [Data through February 2014]. http://www.treasury.gov/ticdata/Publish/mfh.txt
(4) U.S. Treasury. Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2014 Through March 30, 2014. [PDF Document]. [Data through March 2014]. http://www.fms.treas.gov/mts/mts0314.pdf
(5) Source: ftp://ftp.publicdebt.treas.gov/opd/opdm011981.pdf
(6) http://data.bls.gov/cgi-bin/cpicalc.pl
(7) http://fpc.state.gov/documents/organization/169050.pdf
Here's how it is being spent:
Public encyclopedia reference: http://en.wikipedia.org/wiki/2012_United_States_federal_budget#Total_revenues_and_spending
You can verify the data by accessing the 2012 Budget of the U.S. Government available from the U.S. Government Printing Office (GPO): http://www.gpo.gov/fdsys/search/pagedetails.action?packageId=BUDGET-2012-BUD
This author is an honorably discharged U.S. military veteran but notice that the largest discretionary cost in the budget is military spending at almost $712 billion for 2011. Except for government spending on welfare (not counted are veteran's programs, Obamacare, or entitlement programs like Social Security or Medicare): it is the number one discretionary cost to the U.S. taxpayers.
The enormous amount spent on Iraq Wars aside (which arguably didn't need to be fought as Iraq had zero to do with 911 and al-qaeda though I would say we could have joined the powers in the region in keeping with our treaty obligations with those countries if they wanted Saddam gone badly enough to pay the brunt of the cost rather than the other way around), we are paying enormous sums of taxpayer money to protect Europe from Russia (completely unnecessary as the Cold War is over and the EU can certainly take over that responsibility) and wealthy asian countries like Japan, South Korea, and Taiwan. We get a rebate back from these countries but it's paltry compared to what we outlay in military spending for them.
Want to see what our military spending looks like compared to the rest of the world? We account for almost half of the entire world's military spending just by ourselves:
Public encyclopedia reference: http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures
You can verify the data by accessing the Stockholm International Peace Research Institute (SIPRI) military expenditure database: http://milexdata.sipri.org/
A major expense is the interest on our national debt. There's a lot of confusion on the internet about the national debt but the numbers are all published by our government and I have them right here.
The U.S. Treasury National Debt Statistics shows that on January 31, 1981 ten days after Ronald Reagan took office for the first time (U.S. Presidents enter office on January 20th and leave office on January 21st four years later unless they resign or are impeached), the U.S. national debt was only $934.073 billion total.
The monthly statement of the public debt of the United States for January 1981 can be accessed here: ftp://ftp.publicdebt.treas.gov/opd/opdm011981.pdf
As of March 8, 2012, the U.S. national debt is $15,517,794,642,311.25.
Type in the date above to confirm: http://www.treasurydirect.gov/NP/BPDLogin?application=np
Now debt is accounted for when it is incurred, not when it is paid. Here's what that looked like as of July 26, 2011:
Documentation: http://www.whitehouse.gov/infographics/us-national-debt
The OMB publishes the annual cost of interest paid on the national debt which is a major non-discretionary expenditure in the U.S. budget at $241.598 billion dollars for 2012 and estimated to be $248 billion for 2013 (see S-5).
This money goes out of the pockets of taxpayers every year straight into the pockets of our creditors and foreign countries hold a good share of it these days. The Treasury Bulletin, available online from the Financial Management Service categorizes ownership of U.S. Government securities by types of investors.
In order to reduce the amount spent on interest of our national debt, we need to balance the budget and then start paying it down. All spending areas can be reformed to help do this; however, how and what is cut must be carefully considered lest Americans be unecessarily hurt and even killed if areas such as medicare/social security, medical care for the indigent, disability, etc... are negatively impacted.
And it's important to note that tax breaks add up to almost the entire cost of the deficit currently.
It's also important to note that government welfare spending has rapidly increased as well.
But since the people and U.S. businesses don't want to give up their tax breaks, careful spending reform to lower the deficit combined with increasing revenue through fixing our economy is another way to balance the budget.
Though about 75% of all U.S. businesses are currently structured as pass-throughs that pay zero federal income taxes (contrast that with the year 1986, when non-taxable U.S. businesses comprised only 24 percent) and taxes on the wealthy are at historically low rates (for example, the hedge fund long-term capital gain rate is taxed at a maximum of 15%), we can carefully reform spending (including military spending) and fix our economy to balance the budget.
Putting 40 more million unemployed, underemployed, and underpaid American citizens to work at good paying jobs paying taxes would bring in hundreds of billions of tax dollars each year to the federal government. And it would benefit state and local governments as well. The combination of fixing our economy and appropriately reducing government spending would put the U.S. back in the black.
But that requires fixing U.S. trade, ending horizontal monopolies, ensuring job growth goes to American citizens rather than insourced foreign workers like so much of new job growth does now, etc... and neither party has shown an interest to do any of these things (we'll discuss why both party's politicians are deliberately ignoring fixing the U.S. economy and arguing about relatively minor federal spending cuts at another time as it's beyond the scope of this post).
The point that new job growth increasingly goes to foreign workers instead of American citizens is a major obstacle to balancing the budget. When American citizens are bypassed, new job growth doesn't benefit them and they don't pay taxes nor spend money. Also, the quality of the jobs is omitted from almost all media reports. Most of these new jobs are not on par with what Americans are accustomed to in pay and benefits and what we need to see to balance the budget.
The press has been touting new job growth in the media of late but they have omitted mentioning that a good share of it has gone to migrant workers and foreign workers insourced by the U.S. Labor Bureau's Office of Foreign Labor Certification nor that the jobs are not on par with what Americans are used to earning.
Look at the U.S. population clock and you'll see that as of the date of this article we net one international migrant worker every 46 seconds. That's 686,020 new American jobs going to foreign workers each year currently.
And though quotas exist, the U.S. Office of Foreign Labor Certification (OFLC) also imports foreign white collar workers to take new U.S. middle class jobs that are created in the U.S. but not offshored or outsourced as so many have been and contiue to be. In fact, the OFLC processed 422,228 employer applications requesting 851,556 foreign workers in 2010 and more in 2011.
Consider that in Texas, for example, between 2001 and 2007 the Center for Immigration Studies was able to show that 81% of all new job growth went to immigrant workers (both legal and illegal). Natural born American citizens were just passed over though the job growth was touted in the media and used to propel Rick Perry's run for the presidency. Both the red and blue teams play these games with the American public.
Documentation: http://cis.org/immigrants-filled-most-new-jobs-in-Texas
They have also ignored discussing U.S. population growth. New born American citizens quickly grow into adults that need to earn sustainable incomes and we have a net gain every year and when you add the foreign workers and the new population growth together, the U.S. is actually going backwards in job growth.
The number of illegals working in the Southwest may surprise you. Here's a study showing California's economy being negatively impacted by two million illegal aliens working under the table in that state.
Weak outlook for state seen: Many are working under the table, UCLA group says.
Cutting spending isn't going to be enough. If we are going to balance the budget without ending tax breaks and raising taxes, we need to generate revenue by fixing our broken economy and immigration system. Simply implementing a value-added tax (VAT) on all foreign made goods would bring in hundreds of billions of dollars into the U.S. Treasury. It would also stimulate new job growth in the U.S. resulting in increased tax revenues.
U.S. government employees should be agitating to fix trade so they can draw their income off government revenues rather than deficits as they currently do. It's in their long-term interest to do so. It's in all U.S. citizen's long-term interests.
But instead, their public employee unions, along with other Democrats are agitating for a "trillion dollar coin" solution. They assert that simply having Geithner mint trillion dollar coins, walk them over to the Federal Reserve and deposit them in the Treasury’s account to erase our national debt is a solution.
This makes about as much sense as waiving a magic amnesty wand to do away with all of the problems illegal immigrants are creating in this country which is to say it makes no sense at all. Obviously, the social and economic problems being caused by illegal immigrants remains after amnesty but now there is no way to remove them.
Likewise, to simply coin trillions of dollars out of thin air for the government to spend is called straight monetization and it has very serious negative consequences to a nation's people and economy.
Likewise, to simply coin trillions of dollars out of thin air for the government to spend is called straight monetization and it has very serious negative consequences to a nation's people and economy.
From the Wiemar Republic to the Argentine economic crisis, modern history is replete with concrete examples of how printing enormous amounts of money from thin air has melted down entire economies.
Some of the negative consequences are that it generates high inflation adversely impacting savings and pensions while spurring increases in the price of goods and services eventually resulting in capital flight and replacement of the dollar as the currency of choice in the world ushering in uber-negative draconian economic problems for the U.S. people... for you.
Of course, it violates the rule of law and principles of economics as well as U.S. central banking policy while encouraging U.S. fiscal profligacy by finding a way to fund excessive government expenditures that does not bear the cost of paying interest on reserves or any interest differential between new and old debt (as the Treasury would if the Fed used standard open market operations). And, as stated, it has a much greater inflationary potential than open market operations because a direct infusion to the Treasury will definitely be spent while injections of reserves into the banking system will likely not enter the spending stream.
This is a very bad idea lacking any common sense that manages to undermine any semblance of sanity in both monetary and fiscal policy simultaneously. But the Democrats call it a solution. If you're trying to finish destroying the U.S. economy, then it's a "solution." That it is being seriously discussed by our politicians is a sign of how far the U.S. economy has fallen and what a mess has been made of U.S. fiscal and monetary policy.
The author hopes his "MBA analysis" has helped you to have a better understanding.
I recommend visiting Economy In Crisis for more information:
http://www.economyincrisis.org/
Update April 2014: China is poised to supersede the U.S. as the largest economy in the world but note that China's national debt is only about $5 trillion USD (1). Not a big deal since the U.S. owes China a little over $5.308 trillion (2)(3)(4). Of course, nobody owes the U.S. anything. We're stuck with our $17.577 trillion debt.
To provide some perspective, the entire U.S. national debt the month Ronald Reagan took office (note U.S. Presidents enter office on January 20th and leave office on January 21st) on January 20, 1981 was only $934.073 billion (5).
Now, using the CPI calculator (6), $934.073 billion in 1981 would be equal to $2,678.579 trillion in 2014. If the U.S. had passed the balanced budget legislation brought in 1982 (7), we'd be in an excellent position right now with respect to our national debt.
Data Sources:
(1) http://www.nationaldebtclocks.org/debtclock/china
(2) Federal Reserve Statistical Release. H.4.1. Factors Affecting Reserve Balances. Release Date: 17 April 2014. [Online Document]. Accessed 23 April 2014. [Data through 16 April 2014]. http://www.federalreserve.gov/releases/h41/Current/
(3) U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 23 April 2014. [Data through February 2014]. http://www.treasury.gov/ticdata/Publish/mfh.txt
(4) U.S. Treasury. Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2014 Through March 30, 2014. [PDF Document]. [Data through March 2014]. http://www.fms.treas.gov/mts/mts0314.pdf
(5) Source: ftp://ftp.publicdebt.treas.gov/opd/opdm011981.pdf
(6) http://data.bls.gov/cgi-bin/cpicalc.pl
(7) http://fpc.state.gov/documents/organization/169050.pdf
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