The rest of the story

Rex Hoover’s recent letter (“Stop the spending,” Jan. 13) on stopping spending motivated me to look a little deeper into the federal budget. I found that America’s budget problems are more complicated than Hoover’s letter describes. To paraphrase Paul Harvey, now for the rest of the story.

Federal spending, as Hoover pointed out, increased from $2.7 trillion in 2006 to a projected $3.7 trillion in 2012.

However, mandatory spending — spending that occurs without congressional vote or presidential approval (i.e., Social Security, Medicare, Medicaid) – accounted for about 77 percent of the $1 trillion increase.

Discretionary spending — spending that Congress must vote on and that is negotiated between the president and Congress each year — accounted for about 23 percent of the increase.

Eliminating all discretionary funds authorized for the Departments of Defense, Agriculture, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, State and Veterans Affairs would just about eliminate the 2012 budget deficit.

Six budget functions account for more than 90 percent of the $1 trillion spending increase between 2006 and 2012: Social Security, $218 billion; defense, $216 billion; income security, $201 billion; Medicare, $162 billion; health, $121 billion; and veterans benefits, $55 billion.

Most Americans will not take issue with providing for our national defense or caring for veterans who have sacrificed to protect our freedoms.

Most Social Security and Medicare spending increases are set by law, and neither the president nor the Democrats and Republicans in Congress control the number of Americans who celebrate their 65th birthday each year.

And where and how much should the health and security income functions be cut?

The health function funds programs that protect the health of the general population and includes funding for the National Institute of Health, Centers for Disease Control and Prevention, Health Resources and Services Administration, the Food and Drug Administration, and programs such as Medicaid.

Income security consists of a range of income security programs that provide benefits to low-income persons, and to certain retirees, persons with disabilities , and the unemployed.

Hoover failed to address the impact of decreased receipts (taxes) on the deficit.

Between 1992 and 2006, federal receipts increased at an annual rate of about 5.8 percent. However, between 2006 and 2012, the annual growth rate dropped to about 1.5 percent.

In fact, for 2009, 2010 and 2011, receipts averaged $260 billion less than in 2006. The decreased receipts were the result of a recession.

Between 2006 and 2012, federal receipts increased by about $220 billion, from $2.407 trillion to a projected $2.627 trillion.

Individual income taxes accounted for $1.141 trillion of the 2012 total (a $97 billion increase over 2006); social insurance and retirement (i.e., Social Security) accounted for $925 billion (a $87 billion increase); and excise and other taxes for $233 billion (a $61 billion increase).

Corporate income taxes accounted for only $329 billion of the 2012 receipts (a decrease of $25 billion).

Many believe that our tax code is broken. I’ve read about billionaires and multi-millionaires paying taxes at rates less than half of what many middle-income Americans pay; corporations paying no income taxes; individuals and corporations moving funds or profits off shore to avoid paying taxes; and federal employees who owe more than a $1 billion in unpaid taxes.

Senate Finance Committee Chairman Max Baucus (a Democrat) and David Camp (a Republican), who chairs the tax-writing Ways and Means Committee in the House of Representatives, agree that the tax code is riddled with special-interest breaks and loopholes, is not serving the economy well and badly needs an overhaul.

The president and Congress can make reasonable and acceptable changes to discretionary and mandatory spending programs and can fix our broken tax laws. To do this, they need political courage as President Kennedy described in “Profiles In Courage.” The president, senators and representatives must put what is good for America ahead of their political parties, getting reelected, special-interest groups, and extremist constituents. Ideologues on the left and right pointing the finger of blame at each other do nothing to solve our budget problems.

Lou Modliszewski

Warrenton