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Updated on June 5, 2012

By: Wayne Brown

The United States of America is in the worst financial condition it has ever been in since our inception as a nation. Amazingly, to a large segment of the American public, that is not an alarming realization. There seems to be many reasons for that mindset ranging from outright apathy and ignorance to frustration in attempting to understand something so massive and complex as the operating budget of the federal government. In truth, it is really not that complex unless you drill down into the detail…that dark place where things can easily be hidden in a document so large…much like the legislation outlining Obama-Care. To understand conceptually, we, as a public do not have to drill into the details. All we need to know is right there on the surface of the document.

Obama proposed a budget for 2013 which never cleared the legislative process. For now, our country operates without a budget at the present, basically an open checkbook which is spending lots of borrowed money…approximately 42 cents of every dollar spent. Senator Harry Reid sees no problem with a lack of budget and apparently the President is of the same mind as neither of them has shown any real leadership in establishing one since Obama took office in early 2008.

Using the President’s proposed 2013 budget as the basis for our understanding, we can consult the Summary pages of the budget and see that the federal government is projecting to take in total revenue of $2.59 trillion dollars mainly from income tax, Social Security taxes, Medicare taxes, and unemployment taxes and a few smaller incidentals. On the outlay side…the spending side of the books, the government breaks things down into two main areas: Appropriated Programs and Mandatory Programs. Appropriated Programs break down into two main divisions: Defense and Non-Defense spending. In 2013, Defense spending was projected at $700 billion dollars; Non-Defense Spending (basically, the operation of the federal government other than the military) was projected at $565 billion totals with the two categories (Defense & Non-Defense) totaling $1.265 trillion dollars. This number is what is required for the government to stay in business without consideration of the Mandatory Spending Programs. No doubt, Defense should be a big concern of the American public and it amounts to a little over half of the total amount. The remainder, the $565 billion dollars, is the amount necessary to feed the monster of a federal government which has grown by almost 20% under Obama’s watch through expansion of federal jobs, government positions, and departmental spending.

Mandatory Programs are the reverse of part of the incoming revenue stream. This area is made up mainly of Social Security, Medicare, Unemployment, TARP, and numerous other programs which, by law, the government must fund. The 2013 payouts in the area of Mandatory Programs project to a total of $2.213 trillion dollars in spending. 74% of that payout is projected for Social Security, Medicare, and Medicaid Programs. The remaining 26% covers the other mandatory programs.

A few other things are included under the Mandatory Programs heading and include items such as interest on debt, disaster payouts, and joint committee enforcement. For 2013, the payouts combined over these areas amounted to an additional $179 billion dollars. This is a net figure as interest on debt ($246 billion dollars) was actually offset by a $71 billion dollar credit in the joint committee column.

Totaling up the payouts for all Programs in both of categories (Appropriated, Mandatory), spending for 2013 is projected at $3.655 trillion dollars. As noted above, total revenue taken in for 2013 was projected at $2.59 trillion dollars leaving the government with a revenue shortfall of $1.065 trillion dollars. Any way you write that, it is red ink on the books and adds to that every growing national debt which is approaching $16 trillion dollars at the present.

Conceptually, that is really all the average citizen needs for an understanding of our critical situation as a country. From there, most folks can see what the problem really is for us and have some idea as to what we can do about it. Amazingly, those we elect to go to Washington have too many “child-like” tendencies to show any real leadership in doing anything about it so they just continue to kick the can down the road as we borrow, and borrow, and borrow our way into oblivion as a nation.

The thing one must understand conceptually in this spending model is that the “Mandatory Program” spending amounts to a figure that almost matches that of the incoming revenue stream….$2.213 trillion dollars versus $2.59 trillion dollars. What this says is that once we pay the Mandatory Programs, the government is actually almost broke yet still projects to spend another $1.265 trillion dollars for Appropriated Programs….basically Defense and the operation of the physical federal government. This is the underlining reason why some elected officials in Washington are pointing to Mandatory Programs and suggesting that something must be done to fix those programs. At present, programs like Social Security and Medicare have, since inception, brought in more revenue than was paid out under those headings. The surplus initially went into treasury bonds but then some creative elected officials in the 1960’s decided it would be better if that money were applied to other debt shortfalls in the government rather than the government actually “borrowing” the money from outside. Then a simple “IOU” was placed on the books to show the government owed the American public for spending those funds. This was an outgrowth of Lyndon Johnson’s Great Society. It was the true point at which the problem we have today financially took root and has continued to grow like a cancer eroding our financial strength as a country.

There are two things we need to understand at this point and they are as follows. Due to the retirement of the “Baby Boomer” generations and the smaller size of follow-on generations, the American workforce will slowly shrink in size. This will reduce the inflow of revenue to mandatory programs such as Social Security and Medicare eventually forcing them out of the surplus revenue column and into the red ink column where outlay exceeds income. This situation will come to fruition within the next decade. That is a problem to be faced and a plan must be put into place to address methods to create some level of solvency in these programs. At the same time, this is not a “fix all” for the true problems we have in terms of the federal government. This is simply to say that over the past fifty years, the revenue which we paid into these programs as taxpayers has been mismanaged and used by those we elected to office and entrusted with it. Both of those situations require remedy and soon.

On a larger scale, let’s look back at the projected $1.265 trillion dollars which is identified for “Appropriated Program” use in 2013. Approximately 45% of that amount ($565 billion dollars) is projected for use in “operating” those elements of the government which is not defense-related. Within that expense are certainly some necessary services such as the FBI, the FAA, etc., etc., etc. There are also many questionable services which have grown into “monsters” such as the EPA which, by the way, received a 125% increase in its projected operating budget likely aimed at “crucifying” those industries which the Obama Administration deem as bad for America, like fossil fuel-related operations. Questions arise as to how large and how necessary some of these functions are and whether we, as a country, can really afford them anymore. As a country, do we really want to see an elderly person’s Social Security benefit reduced so that we can increase the operating budget of the EPA yet again? Questions such as this must be asked in Washington and those elected to be there must be accountable in answering them. Government, beyond the spectrum of the military, is basically out of control on the federal level and aimed at doing just one thing…grabbing up as much power from the states as possible in the shortest amount of time. This has become the mantra under Obama and will continue as long as his administration is in office. It is an agenda that the American public can ill-afford.

Many years ago, we taught economics in our schools. One of the most basic economic premises was the concept of “guns or butter”. It was an economic theory which acknowledged that our economic system had a finite revenue value in terms of dollars available for our government to spend. Within that value, our elected officials had to decide if we would buy butter, a term used to define the more general purpose aspects of our economy or if we would buy guns, the ability to defend, protect, and wage war as in the expansion of our military. The theory essentially pointed out that a balance must be found between the two in order to maintain a financial health long term. Somewhere along the way, our elected officials have lost sight of that truth and determined that we can have anything we want if we are willing to borrow the money and pile up the debt. Their approach ignores the inevitable day when the bill must be paid…it essentially kicks the can down the road and both sides of the aisle are guilty as charged.

Obama-Care will increase the debt burden even higher and certainly offers no relief in terms of the downstream deficits associated with shortfall revenue from Medicare. It is a program which will simply dig the hole deeper and faster which we will inevitably find ourselves in as a nation. It is a program which ignores the economics of guns and butter as it exceeds the funds available for either one. Just as a household must decide what it can and cannot afford, our elected officials are responsible and accountable to the American public to make the same conscious decisions. Unfortunately, too often, these hard decisions are been laid aside in the interest of getting re-elected…a return to the mindset of guns and butter all from the same wallet.

For now, the federal government must begin to shrink in size. Departments must be cut or reduced in size and scope. Activities which have been “federalized” in the interest of uniformity and power-grabbing such as education must be returned to the state eliminating the federal departments associated with that subject matter. Privatization of various functions like the TSA and the FAA must be considered allowing private industry served by these functions to pick up more of the costs associated with them. Regulatory agencies must be scrutinized in terms of purpose and scope. As a nation, we can no longer afford monster departments like the EPA which are considered “holy” because it plays to the voting block associated with environmental activism. In effect, we must have officials in elected office in Washington that are willing to put the federal government on a diet. This includes looking at payrolls of elected officials, especially the payroll and benefits of the Congress, which is totally out of perspective with the intended job function. There are many, many ways to reduce the over half-trillion dollars in outlays for the operation of our federal government that do not involve taking some little old lady’s social security check or reducing our military to bare bones. Those are easy targets but not the ones any responsible elected official should have on their list. We cannot keep feeding this monster we call the federal government based on the financial diet that it demands year after year. The time has come to trim the fat and face the music.

Responsible American voters and taxpayers cannot afford to ignore the financial dilemma we face as a country. For too many years, we have used accounting principles and theory which have done nothing but squander the future of too many of our citizens who put too much of their hard-earned money into programs like Social Security and Medicare. They deserved a return on that payout and should not see it cut so that some official in Washington can receive higher pay, have more assistants, or ride in a bigger jet. It is time for responsible government at the federal level and that means changing the scope and size of the current government into something we can afford over the long haul. If we can do that, maintain our freedoms and the ability to pursue individual happiness, we will then make the Founding Fathers very proud while insuring that our country still has a future for the younger generations.

© Copyright WBrown2012. All Rights Reserved.

2 May 2012


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    • Wayne Brown profile imageAUTHOR

      Wayne Brown 

      6 years ago from Texas

      @drbj...I hope that is the case, Doc. I do not getting a sense of sincerity from this President. In fact, my sense is that he is very dangerous to our future in many, many ways. It would be better if we all just parted company now before it gets too ugly. Thanks much! WB

    • drbj profile image

      drbj and sherry 

      6 years ago from south Florida

      You laid everything out masterfully, Wayne, and summed up the whole mess with the statement that we must elect citizens (from both sides of the aisle) willing to put the federal government on a strict, no-nonsense diet. From your pen (hub) to the new president's ear!

    • Wayne Brown profile imageAUTHOR

      Wayne Brown 

      6 years ago from Texas

      @J Elaine...Amen to that conclusion. I think economics would be a lot more interesting to us all now that we have experienced some of it first-hand and saw what a mess government can make. We need to turn out the whole lot them and start over. Thanks much. WB

    • J Elaine profile image

      J Elaine 

      6 years ago from Northern Minnesota

      I vividly remember my Econ 101 class in college when I learned how markets work and when the government gets involved with subsidies and price fixing, that it just screws everything up. I also remember wondering at the time if any politicians ever took Econ 101.

    • Wayne Brown profile imageAUTHOR

      Wayne Brown 

      6 years ago from Texas

      @CMerritt...Thanks, Chris. Those who look to the government as the answer to life's challenges will eventually be failed by it as it cannot carry the burden it is taking on...that is evident in the numbers which I reviewed. I can understand that we have some folks in generations previous to ours who have no real choices as age over takes them but it is not a mindset that today's younger generations can depend on for a reliable outcome. Life is about self-reliance. WB

      @Diana Lane...It is quite disturbing and very troubling to realize how long it has gone on as America sat by and let others handle things. We can no longer allow someone else to mind our house...we will distroy ourselves as a nation. Time to open our eyes. Thanks much! WB

      @KD411...Thank you! WB

      @The Frog Prince...You probably understand it better than me, Jim and you are working hard to get the word out. We have to be vigilant if we are to head in the best direction for the people of this country. Thanks much! WB

      @dahoglund...That may be the case. I do remember college economics but in my apathetic mind of the day, I could not make the necessary connection. I was of the mind that America was infallible as was I...ten feet tall and bulletproof. Thanks much! WB

      @sholland10...It is no different than if I were taking care of your needs out of my wallet...eventually the cupboard runs bare...then who are you going to depend upon? That is the fallacy of a government that wants to provide for all of us...not feasible or possible long term even if you take all the money from the people in taxes. Over time, the available money will slowly diminish as all people become demotivated and look to the government for their subsistence. Thanks much! WB

      @bankscottage...You are so correct. Obama is all show and no go...all hat and no cattle. He will sell his grandmother's underwear for a vote. His sense of caring is all about aligning himself with votes and using our money to purchase them. We have to change that and soon. Obama is a great place to start. Reid right behind him. Pelosi will never leave as those in her district are totally of the same mindset as she. Thanks much. WB

    • bankscottage profile image


      6 years ago from Pennsylvania

      Great Hub! The Senate has not passed a budget in over 3 years (nor even offered one for consideration). The American tax payers are OK with this? It is an outrage!

      The President creates a bipartisan committee to look at reform and ignores their recommendations. Paul Ryan, the only adult in the room, makes tough suggestions and he is demonized.

      We cannot continue to accept the status quo.

      Voted up, awesome and shared.

      Thanks for writing this Hub.

    • sholland10 profile image

      Susan Holland 

      6 years ago from Southwest Missouri

      Thanks for helping others become more aware of our dire situation. It amazes me at how many people do not care. Of course, if you don't want to work and want the government to pay you for existing, I guess I can see why it would not bother you. I on the other hand see our country falling into the same decline as the European countries that for some ridiculous reason are held in such esteem for their social programs and governmental practices. Again, thanks for writing this eye opening hub. I hope many read it. Votes and shares!

    • dahoglund profile image

      Don A. Hoglund 

      6 years ago from Wisconsin Rapids

      Wayne, you mention economics was taught in the schools. It might have been but I do not recall it being offered in high school. I will admit that I was not enthused about it in my later years. I am not sure if it was available to me as a Liberal Arts student as it was a business school subject. I did try to read it on my own in those years but did not find it very interesting.It would be good if more business and economics were taught at the high school level. Some economics should be required in college, I think. However, it should probably be a survey course that shows the various theories. Otherwise they would probably teach Keynesian economics

    • The Frog Prince profile image

      The Frog Prince 

      6 years ago from Arlington, TX

      Wayne - The bottom line is that we can't continue to spend more money than we take in. I'm a fiscal conservative above all else. The fact that the US Senate has no passed a budget in over three years should wave a red flag at anyone. It's a federal law that is being broken with a wink and a nod.

      Great writing. What we need isn't a huge money munching federal Nanny to take care of our every need. Give me a month and I can make one half of the federal bureaucracy disappear. The excessive regulations would disappear with them. It's a harsh reality that we must face as a nation if we are to survive as a Republic.

      You laid this all out extremely well where it is easy to understand. That is, if one wants to see it for what it is - the truth.

      The Frog

    • KDee411 profile image


      6 years ago from Bay Area, California

      Very good Wayne, so true


    • Diana Lee profile image

      Diana L Pierce 

      6 years ago from Potter County, Pa.

      This is a scary topic, Wayne. Something is wrong with the budget even when they do have one in place. If everyone just wrote themselves a blank check with no regards to where the money is backing it, they, too would be in debt with no daylight in sight. We are paying for the last generations mistakes and the next one will pay for it as well if things continue like they are.

    • CMerritt profile image

      Chris Merritt 

      6 years ago from Pendleton, Indiana

      I certainly hope, IF we have a turnover in power in November, that the republicans actually make the changes we need to fix this mess, instead of a continuation of pointing fingers and passing the buck.

      Wayne, you did a fantastic job of explaining this in your hub...up and awesome.


    • breakfastpop profile image


      6 years ago


      Have a great time!

    • Wayne Brown profile imageAUTHOR

      Wayne Brown 

      6 years ago from Texas

      @breakfastpop...I would not hold Great Britain up as the shining beacon of hope for the world. They are further out on the brink of socialism than we are at the present but not by much. Our debt is simply a representation of the long-term stupidity and manipulation by those we elected to take care of our business. We have been duped and it is high time everyone in Washington knows that we know that as a fact not just hearsay. Be out of town for a wedding until next Wednesday...low profile on the HP. Thanks Poppy. WB

    • breakfastpop profile image


      6 years ago

      Paul Krugman, who is representative of the liberal angry left, has been on a tour of television shows promoting his new book. He is proud to be of the opinion that being in debt is no big deal. He points to Great Britain, a nation that is always in debt, as proof that massive debt is okay. There are still plenty of voters out there who feel the same way because they see our nation as a giant piggy bank. Up and awesome.

    • Wayne Brown profile imageAUTHOR

      Wayne Brown 

      6 years ago from Texas

      @Davesworld...Does not sound much different to me that what Madoff did and he is in jail for a long time for it...just shows the accountability. It turns my stomach every time I hear a politician say that we have to do something about Social Security and Medicare as if it has been the drain on the American financial situation...they have paid their way all along and then some only to be mismanaged. Now those programs are looke upon with distain when it is one of the few things that the government got right but then screwed up. Spending and the growth in government are the two areas which must be attacked and that means some on the public dole will need to return to private life to find a career. All the more reason to take the bridle off the private sector and let it works its magic on the economy. For now, Obama has us on a perscription of government centered everything which will eventually kill us as a nation. Thanks for the great viewpoint Dave...I could not agree more. WB

    • Davesworld profile image


      6 years ago from Cottage Grove, MN 55016

      A large part of the financial mess we are in results from our representatives tendency to buy votes, as opposed to doing what is best for the country. Both Republicans and Democrats play this game with Democrats, IMO, being slightly better at it. As a result federal dollars go streaming out of Washington to favored constituencies and politicians keep getting re-elected. Works out O.K. for them.

    • Wayne Brown profile imageAUTHOR

      Wayne Brown 

      6 years ago from Texas

      @Old Poolman...What you point out is extremely true, Mike. Too many Americans are living on the come today...kicking the can down the road and living by the philosphy that he who dies with the most toys wins. For most, it ends all wrong...if not for them, then their children. But, it does point to a sect which would have a difficult time understanding the problems with how the government is run. The funny part is that any private company that was run that way would probably get shut down by government regulators in no time at all. Thanks. Mike. WB

      @fherj48...I do not enjoy thinking in this vain either but we have to do it. Never in my life has a president affected me so negatively as this one. I truly feel that he and his administration along with those around him do not want the same future for America that we expect and they are working hard to make it so. Four more years of this administration and a majority of those in Congress and we will have nothing to work then it will be too late. We have to grasp this fact and we have to show our unhappiness at the polls. We have no leadership in any form or fashion at the present and attempting to demonstrate that he made the decision to go after Bin Laden is a really poor example of it. Thanks much...WB

    • fpherj48 profile image


      6 years ago from Beautiful Upstate New York

      No, we can't afford to ignore the financial dilemma we face. Although I realize this is top priority, there's so much gone awry in our country, quite honestly it makes me dizzy. I do realize, anything that has become so terribly broken and out of control, the road back will be an astronomical task, one step at a time.

      But, for heaven's sake, if the movement is at LEAST forward....we stand a chance.

      Thanks for this eye-opener, as usual, with your dynamite political hubs!

      I think Im liking the "fantasy" (poetry) a whole lot better than the reality!! lol............UP+++

    • profile image

      Old Poolman 

      6 years ago

      WB - Perhaps the apathy you describe is related to the fact that many households today operate exactly the same as the government when it comes to budgets. Whether this is because of need, or ignorance doesn't really matter. I have a friend who sells new cars for a living. The first question he is usually asked by prospective buyers is how much a month would this one cost me? They are not at all concerned about the price of the vehicle, just how much the monthly payment would be. This should tell us a little about the thought processes used by many today.

      Great hub as usual with great information.


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