Tuesday, July 27, 2010

Charts of the Day

The White House released its mid-session budget review on Friday. Unsurprisingly, the Office of Management and Budget predicts the 2011 deficit will be $ 150 billion more than the Administration thought in February (see Table 1). This will be the highest Federal budget deficit in history.

Here's OMB's projection of the components of spending and revenue shares for FY2011 and FY2015:

source: OMB MSR Summary Tables at 153

Because there's a deficit, the spending and revenue "pies" aren't the same. This is illustrated by the Congressional Budget Office's analogous chart of 2020 spending and revenues:

source: CBO Director Douglas Elmendorf, Issues in Tax Policy at 10 (May 19, 2010)

Still, the OMB chart shows that increases in Medicare spending top growth in Medicare receipts (see also Summary Table S-4). And net interest keeps ballooning.

I continue to conclude that the shortfall isn't driven primarily by defense spending. OMB hasn't yet released the underlying spreadsheets, so I've done only a high-level review of the data. But I reviewed Summary Table S-4 (page 151) and interpolated the current-appropriation numbers in Table S-12 (page 52), to apportion predicted FY2011 spending between defense, on the one hand, and non-defense on the other. I assumed all discretionary "security" spending (about 73 percent of discretionary spending) was defense (though that includes Homeland Security), and added veterans benefits, military retirement and a small defense appropriation funded through mandatory spending. Non-defense outlays included the remaining 37 percent of discretionary spending, plus all but 4 percent of mandatory spending (Social Security, Medicare, Medicaid and income security account for virtually all remaining mandatory spending). I excluded net interest from both defense and other spending (i.e., focusing on so-called "primary spending," see CBO at 5, Note).

According to my rough calculation, in FY2011 defense/security at its most expansive extent will account for about 27 percent of non-interest spending. (With a more realistic definition, Veronique de Rugy recently estimated (page 9) "defense" spending plus vets' benefits at 20 percent of total spending; CBO says defense narrowly defined will be 15 percent of 2020 spending.) The remaining 73 percent will be non-defense spending--and most of that, about 80 percent, is entitlements (which CBO elsewhere predicts for 2020):

source: CBO Deputy Director Robert Sunshine, Mandatory Spending at 5 (May 12, 2010)

Meanwhile, President Obama seemingly ignores entitlements to focus on small-fry when pledging budget cuts.

Entitlements, and growth in entitlement spending, remain the biggest budget busters, not the Iraq war. Indeed, the CBO confirms (at pages 7, 10) that spending on Iraq and Afghanistan amounts to about 1.1 percent of GDP, as compared with 10.4 percent of GDP spent for Social Security, Medicare, Medicaid and other health spending in total (adding income security spending would up the latter number). For the math challenged, that means entitlement spending's impact on the deficit is an order of magnitude greater than the cost of the war.

I hope to update with tables and graphs when the data become available.


OBloodyHell said...

> an order of magnitude greater than the cost of the war.

Unfortunately, that's not adequately translated for the math challenged.

Near as I can ascertain, this is the closest one can get to a comprehensive translation, when one is math challenged:

Urkha Bluug Ver Duknlikt Gah Borkgfo Dinsha Voo!!!




LOL. Word verif is -- I kid you not: "Billed".

Carl said...

"Klaatu barada nikto"