We have a Spending Problem

"I am confident we can get government off our backs and out of our pockets..."- Ronald Reagan, Nov. 3, 1980

"Read my lips, no new taxes."- George H. W. Bush, Aug. 18, 1988

"The era of big government is over."- Bill Clinton, Jan. 27, 1996

"We must balance the federal budget."- George W. Bush, Jan. 23, 2007

"That's why today I'm pledging to cut the deficit we inherited by half by the end of my first term in office."- Barack Obama, Feb. 23, 2009

Based on quotes from our last 5 presidents, we should not be in the middle of a budget crisis. All 5 at one point in their term in office pledged to control spending without raising taxes. Yet, here we are today with the largest debt and deficit in history. If the president controlled the spending, their words might be followed by action. But presidents don't control spending, nor do they develop budgets or write checks. That is the work of our Congress. Here is what they have done for us lately.

Figures on government spending and debt. The federal government's fiscal year runs Oct. 1 through Sept. 30. As of January 22nd,

Statutory debt limit: $12,394,000,000,000
Total debt outstanding: $12,302,465,000,000
Money in our checking account: $142,454,000,000

Interest we pay on debt: $383,365,000,000
New 2009 debt: $1,417,121,000,000
Debt taken on in 2008: $454,798,000,000

2009 Revenue (Taxes) $2,104,613,000,000
2008 Revenue (Taxes) $2,523,642,000,000

Our 2009 spending: 3,521,734,000,000
Our 2008 spending: 2,978,440,000,000

Summary: We and our children currently owe over 12 trillion dollars. Congress recently approved increasing the debt ceiling, but we are already within $90.5 billion of the new maximum debt limit (on 1/28 the Senate approved raising the debt limit to $14.3 trillion). In 2009 we paid over a third of a trillion dollars in interest on our debt while taking on an additional $1.4 trillion in new debt (over 3x increase over 2008). Revenue (taxes paid) fell by over $400 billion in 2009, but our spending increased by over $500 billion.

It is obvious that America has a short term revenue problem due to the recession, however our Congress is making a bad situation worse. Congress has a spending problem. If they were managers of any business and behaved this way, they would be fired.

Consider this scenario. A young manager if a Fortune 500 company is asked to review the company financials and come back with a plan to improve the company's fiscal health. The current condition of the company is similar to the financial health of America. After a few weeks he returns to recommend an approach to the company's executives. His plan is to freeze spending on budget line items that total 17% of the total budget. These same line items were increased over 20% a year ago. What would the executives do?

The young manager of a large business would be fired because his plan won't work. The executives might wonder if the manager was only trying to develop a plan that sounds good. We won't get the chance to fire Barrack for another 3 years, but that is what his current budget initiative deserves.

Karl Rove, after the State of the Union address, writes "Mr. Obama is now calling for a spending freeze to save $15 billion for fiscal year 2011. That's nice, but it freezes in place a 24% increase in discretionary, nonsecurity domestic spending. The president would also exempt from a freeze the $512 billion that has yet to be spent from last year's stimulus package. To present such a proposal as a serious attempt at restraining spending is to reveal a low opinion of the intelligence of ordinary Americans. "