Solving the Budget Problem

March 1, 2012

Imagine sitting down at your kitchen table to solve your family’s budget problems.  Before you start working on the budget, you immediately declare that your biggest expenditures are off limits.  Do you think you’d ever solve your problems?  It may be hard to believe, but that’s exactly what Congress is doing when they talk about cutting spending.

Let me explain. Although there’s been lots of talk in Washington about cutting spending, most of the so-called cuts come from the smallest part of the federal budget, discretionary spending. Discretionary spending is made up of items that Congress funds on a yearly basis–things like defense, education and transportation.  In the government’s last fiscal year, discretionary spending took up 37 percent of all federal spending.  Mandatory spending, on the other hand, took up 56% of all federal spending.  Mandatory spending funds programs like Social Security and Medicare that have been obligated by previously passed laws and are funded on “auto-pilot.”  (Check out our latest infographic to see it broken down in graphic form.)

In testimony before the House Budget Committee yesterday, Defense Secretary Leon Panetta touched on this very issue.  Panetta, the former head of the Office of Management and Budget under President Bill Clinton, has some credible experience in developing budgets.  He said:

“Look, discretionary spending is one-third of the budget. You can’t ignore that two-thirds of the budget that are blowing through the ceiling right now. That has to be part of any deal.”

Panetta is right.  Congress will never get our nation’s finances under control unless everything is on the table.

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