Presidential Issue - Budget

Just like any other organization or person, the United States of America collects and spends money. The United States budget is prepared by the Office of Management and Budget and submitted to Congress. Congress then makes changes to the budget. If you would like more detail on the process, please follow the below link:

http://en.wikipedia.org/wiki/United_States_budget_process

When the government takes in more than it spends, we call that a "balanced budget". When the government spends more than it takes in, we call that "operating at a deficit". Not too complex.

To be fiscally responsible, the government should have a balanced budget. Just like a family, the government can borrow money. However, also just like a family, the government has to pay interest on the money borrowed. So, the government wants to avoid debt. However, the United States government is currently (according to my best numbers) approximately $9 trillion ($9,000,000,000,000) in debt. Wow. A lot of zeros. In 2003, $318,000,000,000 was spent on interest payments alone. Still, a lot of zeros.

On top of the explicit debt, there are other financial problems that need to be dealt with. The ones that concern me most are Medicare and Social Security. Some have described Social Security as a "pyramid scheme". I believe that description is close. Here's how it works: The government collects money from workers. It then promises to return money to those workers when they reach the age of retirement. Sounds simple. If it is so simple, why do we keep hearing debate about "when Social Security will run out of money"? Why are the best current estimates that Social Security will run out of money in 2041? Unfortunately, Medicare will also run out of money in 2019. This can be chalked up to the fact that the government takes the money it gets from you and sticks it in the general fund. Then, it pays out benefits from the general fund. So, they talk about "having money" when they are taking in more money than they are paying out. However, there is no saved money. The money you paid in was used to pay out to others that were then collecting Social Security, or to prop up the general fund. So, the money you put in is gone.

So, we have an even larger problem than the current deficit would indicate, because in the relatively near future (11 - 33 years) we have other obligations that will add to the federal debt.

Basically, we are in a very bad financial situation. We need to begin solving it soon, before it gets more out of control than it already is. While we can't cut enough or generate enough new revenue to change this situation overnight, we need to start turning the ship.

I don't have details on the federal budget. I don't know how long it will take to get the federal government a balanced budget. I don't know how long it will take to develop alternatives to Social Security and Medicare (whether those alternatives are alternative funding or alternative plans, I don't know). However, I do know that the longer we operate with poor financial planning (the kind that would make the average citizen eventually file bankruptcy) , the more difficult it will be to correct and the more likely we are to run into a financial crisis.

End.