Federal Deficit: it is mostly Entitlement spending
Recently, a Fool Article stated “the key driver of our recent deficits: the bloated U.S. security apparatus ”. Beg to differ: it is mostly American generosity in giving away free food and free money and free medical care that threatens the federal budget and our economy.
The author did some slicing-and-dicing and shake-'n-bake of the federal budget to come to his conclusion. Well, I did the same thing and came up with an entirely different conclusion.
Gentlemen, start your engines...
I chose the years 2000 (because the federal gov't ran a surplus that year) and 2012 (the most recent fiscal year). I chose Medicare (free medical care for old people), Medicaid (free medical care for the “poor”), and Welfare (free food, free rent, free Obamaphones, etc.), and in toto these take up about 40% of the entire federal budget.
I herewith cite “per capita” (per person) spending in the federal budget:
**Medicare increased $700 to $1,709.
**Medicaid increased $483 to $1,306.
**Welfare increased $629 to $1,445.
I am pretty sure that the above numbers are not corrected for the CPI. OK, let us do a calculation using % of GDP, whose calculation is not affected by inflation year-to-year.
**Medicare increased 2.0% to 3.6%.
**Medicaid increased 1.4% to 2.1%.
**Welfare increased 1.8% to 2.9%.
In one sense, the author is correct: the DOD has its share of white elephants: V-22, F35, LCS. However, to blame these for the federal budget deficit in the face of the hard numbers is not logical. Using the tube of lipstick my GF hates, and this cocktail napkin (ewww...could you get a clean one from the bartender?), it seems that free stuff to the “old” and “needy” has increased from 5% of our economy to almost double.
Ladies and Gentleman of the jury, which is the real cause of the an annual federal deficit in excess of $1 trillion?