Monday, February 1, 2010

FY 2011 Budget Proposed by White House

The White House has proposed a budget for FY-2011, with projections out for several years into the future. There are huge cuts in the federal budget planned for FY-2012, including a $45 billion cut in defense spending (why not a $90 billion cut, I wonder?). There are optimistic forecasts of savings from health care reform ($7 billion in FY 2011 and $17 billion in FY 2012, with a $23 billion drop in Medicaid spending from $297 billion to $274 billion) between 2011 and 2012.

The budget deficit we're building up now to take care of the economy will mean that our payments on the national debt go up from $251 billion in FY 2011 to $343 billion in FY 2012. Still, our servicing of the national debt is only about 6.5% of the total federal budget. That's not too bad just yet, but when we are out of the recession and unemployment drops below 7% we need to balance the federal budget so we can reduce the national debt and use a smaller portion of federal spending on debt servicing. The proposed budgets with the long-term forecast don't show us ever balancing the federal budget.

I noticed that only 0.3% of the federal outlays go to international aid (USAID, Peace Corps, Development Banks, and so forth—the only unlabeled sliver of the pie chart above). It seems to me we ought to be spending about 1% on foreign aid. The National Institutes of Health and the Centers for Disease Control and Prevention combined get about 1.0% of the federal budget. These are some of a very few areas where big cuts aren't planned. Still, it seems to me unwise to devote 13.5% of the budget to defense and security from violent threats from abroad and only spend 1% on diseases and health threats at home. Why not spend 3% of the federal budget on health research and prevention of disease and injury and then cut defense spending to 6% or 7% instead of 13.5%?

Anyway, I recommend people check out the proposed budget on their own.

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