Budgets and Moonbeams

We’re not sure if the president would accept this premise but TheFundamentals will offer it anyway. Here goes: The national budget for fiscal year 2011 (FY2011), which covers the twelve months between October 1, 2010 and September 30, 2011, or months 21 to 32 or his guaranteed 48 month regime, can reasonably be attributed to the Obama administration! Wow, we sure do hope that that premise is not too upsetting to too many of the president’s growing legions of “open minded, well satisfied with the successful implementation of his stimulus to get everything going again” fans.

Let’s now look at the major ingredients of the budget proffered by the fellow most famous for saying, “I inherited it.” “Don’t be blaming me for all the problems created by the last guy and the bad policies of his regime.” “I’m just here to fix things.”

In FY 2011, Obama projects revenues of $2.567 trillion with the major sources as follow:

• Personal Income Tax      $ 1.121

• Corporate Income Tax        .297

• Social Security Tax             .674 

• Medicare Tax                     .192

• All Other                            .283

• Total                                2.567

In FY 2011, Obama projects outlays of $3.834 trillion. They like to categorize these outlays in order to communicate that large portions are not controllable. The not controllable group of outlays is called “mandatory.” The other group, which of course is the smaller portion, is designated as “discretionary.” The “mandatory” group includes the following outlays:

• Social Security    $ .730

• Medicare               .491

• Medicaid               .297

• Interest                 .251

• Other                    .650

• Sub total             2.419

The discretionary group includes the following:

• Security (used to be defense)   $ .895

• All other (this is a big one)          .520

• Sub total                                  1.415

For a grand total of outlays of $3.834 trillion which is about 25% of projected GDP and about the same percent as the last two fiscal years. If you subtract the outlays from the revenue the deficit is a cool $1.267 trillion. Not quite at the record levels of the past two years but it does garner a solid third place for record deficits in the 234 years history of the nation.   Our readers who like to dig into the details can see lots of backup data at:  http://www.whitehouse.gov/omb/budget/fy2011/assets/tables.pdf

Now, if you remember, the president’s own deficit/debt reduction commission has said that the deficits/debts are a cancer suggesting that they must be eliminated or else we are either chronically ill or we die. So how do we deal with a problem like the third consecutive year of record deficits and record debt levels following GWBush's eight years of massive deficits and debts? At this point the song from The Sound of Music starts running through our head – How do you solve a problem like Maria, how do you hold a moonbeam in your hand….

Well, unfortunately the song does not give us any really good steps to a solution.

We, at TheFundamentals, proposed a 5% reduction in entitlements, a 10% reduction in federal employment and a 15% reduction in all other spending which, if our math is correct when applied to the above budget outlay numbers, would produce a reduction of about $300 billion which is quite a lot of dough but not enough when the deficits are running between $1.3 and $1.5 trillion. So, to paraphrase and slightly modify the words of Mr. Bowles, head of the presidents deficit/debt commission, “We’re not going to grow out of it and were not going to tax out of it and we’re not going to reduce out of it, so it must mean we’re just going to…hold moonbeams in our hands.”

You just gotta love this leadership group in Washington DC.