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When we talk about reducing government spending in order to reduce debt, isn't this...

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yaga49 | Valedictorian

Posted March 1, 2013 at 11:56 AM via web

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When we talk about reducing government spending in order to reduce debt, isn't this what we should be talking about instead of reducing Medicare or Social Security?  So why aren't we able to do that?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted March 1, 2013 at 2:28 PM (Answer #1)

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In order to understand this, it will be beneficial for you to examine the charts in this link

The basic reason why we have to talk about cutting Social Security and/or Medicare is that those programs make up the great majority of the federal budget.  As the first chart in the link shows, discretionary spending makes up only about one third of the President’s proposed budget for this year.  Therefore, there is simply not enough discretionary spending relative to the deficit for cuts in such spending to be sufficient.

There are three main kinds of spending that the US government does.  First, there are payments on the debt we already have.  Those payments must be made.  Second, there is discretionary spending.  This is the spending that Congress orders through the budget process each year.  Each year Congress decides how much to spend on those programs.  Finally, there is entitlement spending.  This is spending that is already promised and whose actual level is not controlled by Congress each year.  Congress does not get to say “here is how much we will spend on Medicare this year.”  Instead, it has set rules for who qualifies for Medicare, what sorts of care will be paid for, and so on.  All qualifying care, no matter how much or how little, must be paid for.  In short, Congress does not control how much is spent on Medicare each year.  As you can see in the chart, discretionary spending makes up only 31% of the President’s proposed budget for this year.

As you can see in this link, the President proposes to spend $3.8 trillion this year.  Of that $901 billion would be deficit spending.  That means that the deficit is about 24% of all spending.  This means that we would have to cut out essentially all discretionary spending (since it is 31% of all spending) to completely eliminate the deficit.  This makes it clear that we cannot eliminate the deficit simply by cutting discretionary spending.  In addition, Medicare and Social Security expenses will only go up in future years, meaning that things will be even worse if no cuts/changes are made.

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