Spending Is Never Reduced

Spectator

By Stephen Tuttle | Nov. 9, 2024

It’s finally over. This is being written late Tuesday (election) night, so the complaining and accusations have just begun. At the very least, we should now be relieved of the low-quality, high-volume barrage of electronic commercials and mailers.

There was some amusement, much of it provided by a seemingly unhinged Elon Musk, who said plenty that was bizarre but nothing quite as comical as his claim about cutting the federal budget by $2 trillion. That is mighty bold talk, so let’s see if it’s even remotely possible for Elon or anyone else.

Our federal government spent a bit more than $6.2 trillion in fiscal year 2023 (FY23) but had revenues of only about $4.5 trillion. Musk’s desire to have spending more closely resemble revenue might be admirable to most and critical to many conservatives, but is a practical impossibility.

For example, the entire non-military payroll for every federal job is a shade under $280 billion, less than 15 percent of Musk’s goal, though the entire government would be shut down since all employees would be eliminated. Let’s assume we aren’t going to lay off all federal workers, so we’ll just go after the departments and employees previously targeted or at least those some have identified as unnecessary.

There’s the oft criticized Department of Education ($238 billion), the Department of Energy ($52 billion) always trying to find a solution other than “beautiful coal and oil,” the intrusive Environmental Protection Agency (a paltry $12.1 billion), there’s the Department of Transportation and their know-it-all secretary ($90 billion), the Department of the Interior and all their annoying parks ($18 billion), there’s the National Oceanic and Atmospheric Administration which provides the climate change information some would rather not believe ($6.7 billion), and Health and Human Services with all their discretionary spending ($144 billion).

Those have been favorite targets of budget cutting wannabes forever, but if you’ve had your calculator handy you know eliminating all of those departments amounts to just $560.8 billion, barely 28 percent of Elon’s $2 trillion reduction. Which brings us to the same problem that has existed for decades, a budget so heavy in Social Security, Medicare/Medicaid, and defense spending it is politically impossible to make meaningful budget reductions.

We paid $2.755 trillion for Social Security and Medicare/Medicaid last year, and since our population is aging, those numbers will not be coming down. We paid another $448 billion in additional income security programs—Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program (SNAP), unemployment insurance, and five other programs. There’s another $895 billion for defense.

Expenditures for Social Security, Medicare/Medicaid, and defense consume two-thirds of the total budget and literally everything else just a third. Congress has shown no spine in the past for weeding out the waste and duplication in defense spending, which is why new weapons systems are always wildly over budget and never ready when promised.

According to Census.gov (which would be eliminated by the budget cutters), nearly 18 percent of the country is 65 or older and they do vote—70.7 percent turnout in 2022 (76 percent in Michigan) so hacking away at Social Security or Medicare is unlikely.

There are some common sense changes that would increase revenues. We could once again delay the retirement age for younger people now in the system. A 30-year-old already has to wait 32 years to collect even a portion of their Social Security benefit, so waiting another couple years shouldn’t be a huge hardship. That would help extend full benefits for a little while longer.

More helpful would be doing away with the Social Security tax cap. Only the first $176,100 of earnings can be taxed for Social Security and Medicare and only “earned income”—money you worked to earn, not interest or dividends—is taxable for Social Security. Fully 15 percent of the population makes more than $176,000, and they should contribute from that earned income and all income as well. We’ll consider it a privilege tax since it’s a privilege for them to earn that much money.

This gets pretty silly in a worst-case scenario. Jeff Bezos, the world’s richest person, made just under $7.9 million per hour last year, every hour, 24/7/365. Yet, he paid Social Security tax on only $176,100, if he paid anything at all.

Nobody is going to cut $2 trillion from the budget. There are likely billions to be found in waste, fraud, and duplication, but not trillions. Since the Clinton Administration, no president has managed to even balance the budget, much less reduce it. Donald Trump claimed he would “easily” eliminate the annual deficit and reduce the debt, but that easy-to-reduce-debt increased by $7.8 trillion on his watch.

Promising to reduce spending is a time-honored campaign theme we hear every election cycle. But spending is never reduced. Ever.