Reality Check

Monday's Reality Check - a weekly presentation of facts and figures to help us all discuss important issues with some degree of understanding. Because, despite living in this post-modern, post-truth world, the fact remains that facts still remain.

Today's Reality Check involves the US Federal Budget.  Below are four pie charts showing the details of the 2015 Federal budget.  The first shows a breakdown of the various large sectors that comprise the total Federal budget:

Another way to look at the budget is by breaking it down into mandatory and discretionary spending. Mandatory spending is primarily composed of entitlements such as Social Security and Medicare/Medicaid.  This entitlement spending is required by existing law:

With mandatory spending including interest on the national debt taking up over 70% of all government spending, it is easy to see why some consider this an area to focus on to reduce the annual deficit.  On the other hand, it should be noted that the interest on the national debt is over 50% of the 2015 annual deficit of $438 billion - and that is in an historically low interest rate environment. But all this mandatory spending is required by existing law and Congress can not change the amount spent on these programs without changing the existing law that creates these programs. These programs tend to be very popular which is why any attempts to modify them have become know as "the third rail" of American politics.

The two pie charts below provide a more detailed breakdown of mandatory and discretionary spending into their various component parts.



On the other hand, Congress can and does change the amounts spent on these discretionary programs on an annual basis.  With military expenditures taking up over 50% of total discretionary spending, it is easy to see why people point to that are as a potential source of savings to reduce the deficit.

So the next time someone tells you that the annual deficit could be eliminated by getting rid of all that foreign aid, you'll be able to point out that all non-military spending on international affairs, of which foreign aid is only a subset, is only $50 billion versus an annual deficit of $438 billion. Or that we could eliminate the deficit by cutting back on the military budget, you'll be able to point out that in order to eliminate the $438 billion deficit, we would have to reduce the $598 billion military budget by nearly 75%. 

That's just reality...

But remember, spending is only one part of the equation; revenue is the other.  But that will wait for another Reality Check.