Newsletter: A Closer Look at Our Budget Problems

Statement

Dear Friend,
In town hall meetings across the district, I have been using some charts that I want to share with you.

In thinking about our financial problems, the crucial first step is to understand how we got in this position. If we are not clear on what caused the problem, we will have a hard time solving it.

For that reason, the following three charts go back 50 years to 1962. Seeing the changes that have occurred from 1962 to 2012 should help show us what has gone wrong.

The first chart shows how much the federal government taxes and spends per person. Since the population has grown over 50 years, we expect that the total amount of taxes collected and the total amount spending would probably grow as well. Tracking how much the federal government taxes and spends per American enables us to see how policy decisions have affected our fiscal health. This chart also removes inflation as a factor so that a dollar in 1962 is worth the same as a dollar in 2011. Thus, it provides a true "apples to apples" comparison.

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As you can see, the federal government received, on average, $4,000 per American in 1962 and spent slightly more. Today, taxes per person have doubled to about $8,000 per American; while spending has tripled to $12,000 person.

The next chart gives us a closer look at spending. It shows defense and non-defense spending per person, discounting for inflation, over the last 50 years.

In 1962 we spent about $2,000 per American to defend the country, and that is roughly the same that we are spending today. By contrast, non-defense spending has gone from $2,000 per American in 1962 to $10,000 per person today.

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The obvious conclusion is that defense did not cause our enormous debt, and defense cuts cannot bring our budget into balance.

The final chart breaks down federal spending even further. Again it looks at what has happened over the last 50 years. The blue shows the percentage of federal spending devoted to defense. The green is all other discretionary spending, which is the spending that Congress votes on every year through appropriations bills. The purple at the top is interest payments on the national debt, and the red section shows mandatory spending, also known as entitlements. Net interest and entitlements are essentially on automatic pilot until Congress and the President change the law.

Let's talk a little about those entitlements. The reason it is called "mandatory spending" is that once the criteria for the program is set as far as who is eligible and what benefits they receive, the benefits must be paid for everyone who qualifies, regardless of the total cost. That is also the reason they are known as entitlements -- everyone who meets the qualifications is "entitled" under law to receive the benefit.

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As you can see, the growth of entitlements is responsible for the big increase in federal spending. In fact, mandatory spending and interest payments comprise more than 60% of federal spending.

It is pretty clear to everyone who looks at the facts that in order to get the federal government on a better financial path, we must reform mandatory spending. That is exactly what the House budget, scheduled to be considered next week, will begin to do.

I invite you to learn more about these issues by visiting my website. As always, I am interested in your feedback and your suggestions on any issue that matters to you. I hope you will contact me with your opinion via phone, email, letter, website, or Facebook.

As always, I appreciate hearing from you.

Sincerely,

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