The federal government is simply spending too much money and the budget keeps growing larger and larger. Our tax dollars are squandered on massive, inefficient government bureaucracies, complacent vendors, debt payment, and really on just a lot of unnecessary waste. The Federal Debt is $28.43 TRILLION DAMN DOLLARS and is only getting bigger. And you better believe the juice is running on that debt, we’re handing over billions in tax dollars each year to investors holding that debt.
We have leaders on both sides of the aisle incapable or uninterested in leading, in actually lifting a finger to get anything done. Instead they are playing grabass on Twitter, scoring political points and making us hate each other. All the while the government continues it’s march into chaos.
And there’s no end in sight!
Given the waste and bureaucracy endemic to our government, there’s no reason to think this reckless spending its ever going down.
Retiring Baby Boomers Make it Worse
If the gridlocked political climate wasn’t enough, the countries demographics are against us too. As the Baby Boomers continue retiring, they are going to be a bigger and bigger drain on social security and Medicare, while ALSO not working and contributing taxes.
If you think federal spending is high now, wait a few more years!
We are headed for trouble
This is really bad stuff.
Unless something happens, (unless we make the situation Less Bad), we’re in for a world of hurt.
Here’s what the future looks like if there aren’t big changes:
- More and more of our tax dollars are going to go to debt payment.
- Taxes are going to have to go up.
- There will be less money for programs like social security, Medicare and Medicaid, so they’ll just get worse and worse.
- If the situation gets bad enough, politicians might even be forced to cut spending on the military.
- With an increasing cost of living, a widening wealth gap, social media agitation and political anger, we are marching into instability that could easily turn violent.
It doesn’t have to be this hard
Why are so dead-set on making everything as difficult as possible?
As a country, we certainly have the ability to bring government spending under control. We could do it if we wanted to.
We just don’t have the will to do it.
Government Spending is Easy to Ignore
- The problems are so big they seem insurmountably.
- We look around at those that we expect to be in charge and see petty distractions.
- We see prices continuing to increase.
- And a corporate sector hell-bent on taking our every last cent, one way or the other.
Against these odds, and with our own families to take care of, it just seems hopeless.
It’s clear government isn’t up to the challenge, so what are we going to do?
See also:
To start to get at some semblance of ideas on bringing federal spending under control, we need to understand why we are here.
Why is government spending so high?
Because the government doesn’t function well.
It’s as simple as that.
The federal budget is exploding because the government is spending too much money. Congress writes the rules that determine how the government spends money. And members of congress are clearly not interested in spending our money more effectively.
This is nothing new, the problems we face today are the result of government incompetence built up over decades.
But we’re here now and we have to look at the “leaders” we have now. Their nonsense is having serious consequences which are only getting worse.
The Massive Deficit – We Spend More than We Bring In
A breakdown of 2020 spending vs revenue from Wikipedia.
We keep borrowing, making the budget more and more unstable
At the basic level, the federal deficit is a result of the government spending more than it brings in. According to Wikipedia, in 2020 the government spent $6.6 trillion but only brought in $3.4 in revenue (most of that is taxes but not all). We spent more than double what we brought in.
To make up that shortfall, we borrow. We take on more and more debt. We don’t cut spending and we don’t increase taxes, we borrow.
How long could your household or business survive borrowing twice what you bring in? And doing it year after year after year?
By Borrowing, We See it Less
There are tons of people who are upset about the debt, but it’s a small fraction compared to the howls elected officials would hear if taxes went up to the level required to pay off the debt. Or if there were cuts to social security, Medicare and Medicaid, people would complain. There are many who think those programs are already underfunded.
What Does the Government Spend Our Money On?
The government spends money on all kinds of things. With trillions of dollars in spending, keeping track of it all is a massive endeavor. That being said, here’s a look at some of the government spending programs that has got us where we are.
This is a useful breakdown of 2020 government spending from Wikipedia.
Covid – the government spent a ton (under both Trump and Biden) to prop up the economy during the pandemic. As of May 2022, the federal government has spent $3.70 trillion in response to COVID-19. Remember the stimulus checks, the paycheck protection programs, more generous unemployment and all the rest. There are many who think they spent too much, and there was certainly some fraud, but either way dealing with Covid increased the deficit.
But that was hopefully a one-time thing, we’ll stop that extra spending and as the economy grows we can bring spending down and pay down some of the debt.
Mandatory Spending
Mandatory spending is a fact of life we need to deal with. Basically, about 70 percent of $6.5 trillion in annual Federal spending goes to mandatory spending programs. The law says government is required to pay these bill as they’re presented. Important programs under mandatory spending are Social Security, Medicare, Medicaid and Unemployment. That means we get the bill and we just pay it. There’s no negotiation, and because change can be hard, legislators don’t really try to do anything about it.
Things like the rest of government, (i.e. all federal employees) are a much smaller part of the overall spending. We can argue about the budget for this or that department, and clearly that is important, but in terms of getting the federal budget out of control, the impact is incredibly limited.
To make real change we need to deal with mandatory spending and the debt. That’s where the real cost issues are.
Medicare and Medicaid
The cost of Medicare and Medicaid is a major reason why the federal government is facing a large deficit.
- Medicare costs $770 Billon annually – Health insurance program for seniors
- Medicaid costs $460 Billion annually – Health insurance program for low-income people
Clearly, these are very expensive programs, representing almost six percent of GDP. And they are growing rapidly. Medicare accounted for about 10 percent of federal spending in 1990, and it is now about 15 percent. Medicaid was about 3 percent of federal spending in 1990, and it is now about 9 percent.
Value-Based Care Can Remake the Health Care System
As Baby Boomers continue to retire, the number of people enrolled in Medicare will continue. And unless we help those in need escape poverty, Medicaid will keep growing too.
They are Entitlements
Medicare and Medicaid are both entitlements, which means that everyone who meets the eligibility requirements has a right to receive benefits. Medicare and Medicaid reimbursements to providers are often higher than what private insurance companies pay. These are just paid no matter what the bill is. So there’s no real way to control costs.
Social Security
Social Security is another program that is costing taxpayers a lot of money. The high cost of this program is putting a strain on the federal budget. Social security is supposed to be self-funding, meaning that the program is supposed to generate enough revenue to cover its own costs. However, this is not the case. There are too many retirees claiming benefits, and contributions from current employees is not enough to cover the costs. And that is only getting worse. So the government borrows to make social security payments. The high cost of social security puts an enormous strain on the federal budget.
Discretionary Spending
Discretionary spending of the federal government refers to the amount of money that the government spends on programs and activities that are not required by law. These programs and activities include defense, education, infrastructure, and many others. Discretionary spending is made up of things politicians can tweak, basically defense and all the other departments, and it is real money, but it’s just under 25 percent of annual spending.
The amount of discretionary spending varies from year to year, and it is often a topic of debate among lawmakers. Some people believe that the government should spend less money on discretionary programs, while others believe that the government should invest more money in these programs.
Defense spending – Defense makes up less than half of discretionary spending, in 2020 that was $714 billion. A big part of that goes to maintaining military bases.
Federal Debt Payments
We Spend Hundreds of Billions on servicing the federal debt
Debt servicing is just tax-payer money we hand over to investors (including, bizarrely enough, social security… But that’s another story…) As the government continues to spend more than comes in through taxes, it borrows to make up the difference.
In 2020 we spent $345 Billion on paying debt.
I can’t really wrap my head around a number that big… But it seems like a lot.
I mean it’s like ten percent of what the government spends each year.
It seems like an insane amount to just give away.
And you know how it is, the longer it takes to pay, the way more you end up paying.
So those are kind of the technical explanations of why the budget is as big as it is.
So then the question becomes, so what?
Why Is Government Spending Important?
The government’s spending habits are important for a variety of reasons.
First, government spending accounts for a large chunk of the economy. In fact, it’s been estimated that government spending is responsible for about one-third of all economic activity in the United States. This means that any changes in government spending can have a significant impact on the overall economy.
Second, government spending is one of the main drivers of the federal deficit. As we’ve seen, the federal government has been running deficits for years, and government spending is one of the main reasons why. If the government can’t get its spending under control, it will continue to add to the national debt, which is at more than $28 TRILION dollars.
Third, government spending is one of the main factors that determines how much taxes people have to pay. The more the government spends, the more it has to collect in taxes to pay for all of its spending. This means that government spending has a big impact on people’s tax bills.
Fourth, government spending can have a big impact on interest rates. When the government borrows money to finance its spending, it drives up demand for borrowing, which can lead to higher interest rates. Higher interest rates can then have a ripple effect throughout the economy, affecting everything from home prices to stocks to inflation.
Why is Government Spending So High?
So why is government spending so high? There are a number of reasons, but the main one is that the government is broken.
The government is broken.
That is the fundamental problem, that the government just doesn’t work.
Until we get a responsible, functioning government, wasteful federal spending is just going to get worse and worse.
The fact that Government is Broken is one of the unifying themes of the site.
And of course it’s easy to bitch and moan. Here are some ideas on how to fix government generally and how to bring government spending under control.
There is clearly a lot of waste and bureaucracy in our federal government. The out-of-control spending is costing us billions of dollars each year, and this money could be better used to fund important programs or reduce taxes. We need to call for greater accountability and demand that our elected officials get our spending under control.
