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The details of the budget deficit and how it is calculated

Updated on September 3, 2012

First I understand and realize that we have a budget crisis in our country and the world. Understanding what the deficit numbers involved is a difficult task as there are many variables and assumptions in reaching the number that keeps being broadcast in the media. The primary source of this information is the Congressional Budget Office which is a non-partisan organization to keep tabs on government spending. The projections whether they are accurate or not is dependent upon what data is provided by the government in determining the level of debt we are currently incurring.

It is a known fact that government is spending more than it is taking in and this is a scenario that needs to change. We as individuals must watch the money we spend in relation to our income. We are careful in many cases to not spend more than what we are able to afford. Sometimes it is necessary given specific situations where we must incur a debt but incurring that debt we must analyze the resources we have in deciding to incur some debt. This cannot be avoided in some instances as medical bills or family emergencies and this I understand. The government however is a different situation.

No government can survive if it continually spends more than it takes in and the path we are presently taking cannot be sustained at the current rate. Changes in government at all levels must take place. It is true that some instances in the past required debt to be incurred such as the events of 9/11 in establishing a response which continues today. Other issues and policies regarding the expending and allocating of funds the government receives are not in all cases necessary. It is true that government through laws have established commitments to the general population and in some cases they reflect the willingness to help those less fortunate in their time of need. These are not the issues or questions being raised regarding the expending and allocating of funds received.

Entitlement programs such as Medicare, Medicaid and Social Security being discussed today are important and necessary programs which need to be maintained. They were not meant to be an all encompassing income for individuals who reach the age where they need such assistance but they have become just that. In reviewing how this situation was generated there is plenty of blame to go around. The time now is to address the issues for these programs to make them solvent.

The main problem today as I see it involves the attitude by many individuals that the government owes them. Changing this culture will not be easy but the economic path on which we are headed requires a culture change not only from individuals but government at all levels. The current level of debt is not all about the fund shortages for the programs previously mentioned but involves all programs which have been created through legislation and the costs of monitoring the requirements as established by regulations from various government entities.

The topics previously discussed in relation to the budget deficit we are currently incurring are only a portion of the issues needing to be addressed. While the current deficit continues to rise the manner in how the deficit is calculated and presented leaves much to be desired. Government expenditures/commitments will continue to increase as the number of individuals taking advantage of programs. In principle this situation has been discussed and presented to some extent by both political parties but clearly identifying the details has been lacking. This is not meant to criticize either political party but programs need to be evaluated as to their necessity and cost.

Once a program is implemented it is almost impossible to get it eliminated with regards to the current culture in Congress and other government entities around the country. It is true some have been eliminated but their number is not near what they should be. It is important to understand the budget deficit is a projection of debt now and for the future but making changes to the many entities involved in reaching the level of debt will change the outlook. That being said the debt does continues to rise as government spends more than it takes in but other entities involves funds which the government allocates but does not have. Government cannot or should not allocate funds it does not have or that is not anticipated.

The financial outlook will also be impacted in the future by the number of individuals working and paying taxes at all levels. Government operates through the taxes we pay. The more taxes paid the more funds for the government to expend/allocate to various programs. The current economic downturn has impacted government tax receipts and creating an environment which encourages businesses to hire or expand will have a positive impact on tax revenues across the board. Our current complicated tax structure and proposals to make changes to it will have an impact either positive or negative on the future economic environment it is a matter of what changes are made.


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