One of the problems we face with fiscal prudence in the US is that the average voter has a very poor understanding of what the federal government actually spends money on. Here’s what we actually spend, roughly, over the last 10 years or so:
Social Security -28% - biggest single program,
Defense in Aggregate - 23% - includes 18% for current military a spending and 5% for veterans benefits
Medicare - 18% - health care for people over 65
Interest on National Debt - 11% - (this fluctuates depending on bond interest rates)
Medicaid & ACA - 8% (health care for low incomes)
Social Programs for the Poor - 4% (this includes food stamps, low income housing subsidies, etc. but does not include health care)
Every Other Program Combined - 8%
That’s the rough ballpark of the federal budget over the last few years and also going forward.
If you look at the items that the vast majority of Americans don’t want to cut (Social Security, Defense, Veterans, and Medicare) that’s almost 70% of the budget. Then you add in around 10% for the interest on the debt, which we are constitutionally obligated to pay, that takes us to roughly 80%.
Given the last year’s experience with ACA repeal, most Americans also don’t want to cut Medicaid. So that gets us to around 88% of the budget that can’t be cut.
Of the remaining 12% only about a third (4%) goes to “welfare”. That last 8% of the budget is roughly split 3 ways between homeland security, administrative agencies and other federal programs like research, the arts, etc.
So where is there room to cut? The deficit for the next fiscal year is projected to be around 25% due to the massive impact of the Trump tax cuts. The deficit alone eats up all the “stuff we are willing to even think about cutting”.
The public meanwhile thinks we spend much more on “welfare” than we do, and much more on “boondoggles”, government waste and the like.
Here’s the reality: over half of our federal budget goes to pensions for the old and health care for the old and poor. Another quarter roughly goes to defense and another tenth to interest. That leaves us with only 15% to 20% to even think about cutting, unless you are willing to brave the political firestorm of cutting Social Security, defense, Medicare or Medicaid.
The true fiscal conservative position at this point in time is actually a pro-tax-increase position, to bring the deficit down. That’s just the way the numbers work.