Deficits and Balanced Budgets

My lack of posts here about the debt ceiling and annual budgets is not lack of interest.  Previously I posted mainly in the Mensa Forums, but now I’m turning my attention to my web site.

Chart of rising numbers

It’s interesting to look at what would have to happen to make the Republican Balanced Budget Amendment enforced for the 2012 budget (from a watchdog site).  The column on the left is the 2012 budget as it currently stands.  It calculates that 29% comes from deficit financing (which is unsustainable as well as a reaction to the Great Recession). In the right column, I stripped out some line items, just to see how we might get to a balanced budget.

If we funded only defense, healthcare, pensions, and interest in the 2012 Budget, we would still have a deficit of $210.9M.

The consequences of such drastic cuts would be felt beyond the GDP which would sink back into recession and possibly depression.  Imagine the chaos in the streets and the loss of future productivity by reducing funding for schools.

Funding Area2012 Proposed BudgetBalanced Budget
Pensions805.6805.6
Healthcare866.1866.1
Education121.1
Defense925.2925.2
Welfare431.5
Protection58.7
Transport104.9
Admin32.6
Other141.5
Interest241.6241.6
Total3738.82838.5
Deficit1101.2210.9

The entire budgetary argument is hobbled because budgets are yearly income-outgo documents. No business plans its future while ignoring its net worth. Spending this year that builds the asset base for the future is essential investment that doesn’t pay for itself in one year’s budget.


Net Worth, the Missing Side of Budget Debates
Social Contract
requires law and order as well as opportunity

Photo of chart with growing line by Isaac Smith on unsplash.com

  1 comment for “Deficits and Balanced Budgets

  1. Robert Hamill
    July 28, 2011 at 3:16 pm

    If the debt ceiling is not raised, then no new money can be borrowed. The budget will have to reflect just income and outgo.

    Certainly a goal to get to. The concern is the economic and social impacts of immediate imposition of the goal.

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