FINALLY, THE BATTLE TO FIX THE FEDERAL BUDGET HAS BEGUN . . . . . 

► GET THE FACTS SORT THROUGH THE SPIN► CONSIDER THE CHOICES► TEST YOUR KNOWLEDGE►

► AND FIND OUT MORE IN THE 2011 REVISED EDITION

SCOTT BITTLE AND JEAN JOHNSONWWW.WHEREDOESTHEMONEYGO.COM

The Six Points You Need To Know To Understand The Federal Budget Crisis

1. For 31 out of the last 35 years, the country has spent more on government programs and services than it has collected in taxes.

2. Every year the government comes up short, it borrows money to cover the difference. We’ve now built up a very big debt – roughly $14 trillion, and yes, that is trillion with a “t.”

3. The country will have humongous additional expenses over the next couple of decades as the baby boomers begin to retire and health care costs rise.

4. There is no realistic way government can lower taxes (or even keep them at current levels) and still spend money on everything people want the government to do (at least according to the polls) and still end up with a balanced budget.

5. If we keep on going the way we’re going, the debt will get bigger and begin to endanger the U.S. economy and our own personal finances and plans.

6. A substantial portion of the country’s debt is held in foreign countries.

2009 Federal Spending: $3.5 Trillion

2009 Revenue: $2.1 Trillion

Deficits As Far As the Eye Can See

Social Security and Medicare Costs Are Rising

Interest Costs Will Balloon As Well

Income Tax Rates Are Relatively Low Historically  

Picking on the Little Guys Won’t Do It 

Tiny Slivers Of Spending

Science, Space And Technology• Total savings: $29.4 billion, less than 

1 percent of the budget. The Arts and Humanities:• Total savings: NEA, $152 million, 

NEH $151 million, .009 percent of the budget

 Foreign Aid And International Relations• Total savings: $37.5 billion, 1.1 

percent of the budget

And it all adds up to?  Less than 3 percent of the budget.

And Taking The Meat Ax? 

The  Federal  Deficit in 2010:• $1.3 trillion

Eliminating the Departments of Education, Energy, Agriculture, Transportation, HHS, and HUD entirely

• Less than $300 billion

The Remaining Red Ink:• $1 trillion for just one year

Where Should We Start?

You can’t do everything at once, but you have to start somewhere. Here are a few ideas now on the table.

• Make major spending cuts--$100 billion for 2012• Let the Bush tax cuts lapse after the 2-year extension• Fix Social Security first• Make the tax code much simpler• Get a grip on health care costs first• Improve the Congressional budget process first• Set a budget target• Clean up politics first

Six Realities We Need To Accept To Solve The Problem

1. We have to start now. – The longer we wait, the more wrenching the choices

2. We have a short-term problem and a long-term problem -- we need to address them both.  – Fighting the recession vs fixing the budget is a false choice

3. We need to address the waste, fraud, and abuse issue, and then we need to move on– Fighting waste isn’t enough to balance the budget, but it builds trust

4. We need to demand candor from politicians, and then accept it when they offer it – Vague promises won’t do the job.

5. We need to think about what we can live with – not what we personally want. – Our budget problems won’t get solved without compromise

6. Being angry is not enough