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THE FEDERAL DEFICIT EXPLAINED

 

We’re hearing a lot about the federal budget and the deficit, about spending and taxes. I wondered what our government would’ve looked like in 2011 if we had balanced the budget, only spending what we took in. Hello, my name is Carolyn Federoff. I’m a federal employee and a member of the American Federation of Government Employees. And this presentation shows you what our government would’ve looked like.

 

 

 

This chart is from the Congressional Budget Office. It’s full of information, but I want you to focus on the bottom left. In 2011, we spent $3.6 trillion, and took in $2.3 trillion. What would it take to cut $1.3 trillion, and only spend what we brought in?

 

 

This is a picture of the Secretaries of the cabinet level agencies and Directors of some key Independent Agencies. At the bottom is our total spending in 2011, including our deficit spending. Let’s start our discussion about cutting with the “independent agencies.” You know—Public Broadcasting, the National Endowment for the Arts, the so-called extras. If we were to eliminate every independent agency except Social Security—since there is some agreement that some form of Social Security should continue—but if we were to eliminate every other independent agency, according to the Office of Management and Budget, in 2011, we would have saved…$253 billion! Wow! We didn’t even get down to a trillion dollars, and we wiped out …AMTRAK, the CIA, EPA, EEOC, NASA, the NLRB, Nat’l Endowment for the Arts and for the Humanities, the Security and Exchange Commission, the SBA, the TVA, and more! And we didn’t get rid of a fifth of the deficit. Clearly, it’s going to take more cutting.

Let’s start getting rid of the cabinet, from left to right, starting with Agriculture. We’re below a trillion dollars. Recognize, though, that we just eliminated all food inspectors, the school lunch program, all food stamps and other safety net programs. One in 7 Americans currently receives
food stamps, and half of those are children not of working age. But we’re going to have to do more cutting, so next is the Department of Transportation…that’s roads, bridges, mass transit systems, and air traffic controllers. We need to continue cutting, so next is the Department of Energy…no one’s looking out for nuclear security. Next is the Department of Homeland Security and we’ll eliminate the Department of Commerce…no more FEMA to help when a tornado blows through town, no border patrol, customs or immigration, and no more airport security; no more Census, no more patent office, no more promotion of exports. The next agency is the Department of Labor…no OSHA, MSHA, pension protections, unemployment insurance. We’re about half way to the $1.3 trillion we need just to balance the budget. Next we’ll move to the Department of the Interior…good bye Yosemite and the National Parks. After that, we’ll move to the Department of Housing and Urban Development…there goes about million units of housing for the elderly, and another million for families. Department of Education…bye-bye Pell Grants and student financial aid. We’ll eliminate discretionary spending at the Veteran’s Administration…that’s about 45% of their budget—that’s why you see about half of Secretary Shinseki. According to the Heritage Foundation, the discretionary budget is mostly Veterans healthcare, but we can’t afford to keep our promises to our veterans. Next is the discretionary budget at HHS…that’s about 16% of their budget, the remainder of their budget is for Medicare and Medicaid. And we finally broke the $1 trillion dollar mark. But to do it, we’ve eliminated funding for the National Institute of Health, which funds cancer research, and the Centers for Disease Control and Prevention. More to go, we’ll eliminate the Department of State…no more ambassadors or foreign aid. Next is the Department of Justice …which includes the Bureau of Prisons, the FBI and our criminal prosecution system. Eliminate the budget of the Treasury, except for interest payments on the debt…

We still have a gap of $200 billion, and the only Department untouched is Defense. We’re hearing a lot about the need to protect defense from cuts. So before we cut them, let’s do away with the budget for the Congress and for the Courts; that must be a lot for two whole branches of government, right? Even if we eliminate the entire budget for Congress and for the Courts, we still have a deficit of almost $188 billion. So we’ll have to make some defense cuts.

To completely eliminate the budget gap, we’d have to eliminate about 26% of the Defense budget. This picture still has Secretary Gates, while the Secretary of Defense is currently Secretary Panetta, but you get the point. This is your cabinet, ladies and gentlemen: 84% of Secretary Sebelius, 74% of Secretary Panetta, 97% of Secretary Geitner, and 55% of Secretary Shinseki. It’s also your entire government, since we eliminated Congress and the Courts. Now, when people realize that about 60% of our budget is related to “entitlement” spending—Social Security, Medicare and Medicaid—some decide that we have no choice but to reduce entitlements, to reduce benefits. So I started by investigating Social Security.

And when I looked at benefits, I said “really?” For most workers, Social Security provides less than $20,000 annually. In June 2010, the average Social Security retirement benefit was $1,170/month, or about $14,000 per year! In 2008, before the stock market crash, Social Security provided more than half of the retirement income for more than half of elderly beneficiaries. For 26% it provided more than 90% of their income. Keep in mind, these numbers reflect persons already retired—a population that had a greater likelihood of having a defined benefit pension plan with guaranteed retirement income. Since 1983, the proportion of workers covered by traditional pension plans has plummeted. Persons retiring in the future will probably be relying even more on Social Security. Social Security should not be cut.

But even so, for many people, government just feels too big! And studies show that people recoil from “big”—big labor, big business, big government. But the fish bowl—the United States—is really big! How big is the United States?

We have thousands of airports handling millions of passengers annually. We have hundreds of shipping ports, thousands of terminals, handling more than 9 million cargo containers annually. There are about 13 million truck and rail cars crossing the Canadian and Mexican borders annually. There are thousands of food facilities in the US subject to FDA inspection, with a congressional mandate to inspect thousands more foreign food facilities by 2016, with fewer than 3000 FDA inspectors. There are more than 7.5 million workplaces covered by OSHA, and only 1100 OSHA Inspectors. There are more than 24 million living veterans, 5 million of whom receive medical services annually from the VA. Approximately 10,000 people file for Social Security benefits, and thousands receive new or replacement Security Cards EVERY SINGLE DAY.

The population of the United States has increased more than 70% since 1960. And the quality of life—well, it’s increased significantly, too. In 1960…The interstate highway system was just beginning, and regular people didn’t hop on a plane to visit grandma for the holidays; in January, the produce aisle held only potatoes, onions and oranges; zip codes hadn’t been introduced yet; credit cards were rare, and credit card debt rarer; lead was in our paint and in our gasoline. In 1960…Lakes and rivers were so polluted, they could catch fire, and DDT use was wiping out the Bald Eagle; there was hardly any warning when a hurricane or tornado was heading for your town; there were no civil rights in the workplace, the marketplace or the polling place; penicillin was a wonder drug, and the iron lung was cutting edge medical technology.

Federal programs and federal employees have played a direct role in these and many more advances since 1960, maintaining the current quality of our lives and advancing positive change for the future.

But while what we expect from government has significantly increased and the US population has grown 70% since 1960, the number of federal employees has only increased 16%. Walmart has 2.1 million employees in the United States, with one mission—to sell you products. There are 2.1 million non-postal federal employees, with dozens of missions—to make sure food is safe, rivers are clean, borders are patrolled, and much, much more. In fact …2/3 of federal employees work for the Departments of Defense, Homeland Security, Veterans Affairs and Justice, working to protect you and me, and serve our nation’s veterans. So, the United States is BIG, the population is rising, the federal government has a significant role to play in the quality of our life, and despite all the changes, the number of federal employees has stayed relatively stable. And taxes…?

Taxes are at the lowest level since 1958! USA Today reported that the total tax burden—the combined total of federal, state and local taxes– is at the lowest level since 1958! The United States is larger, government does more, and we are paying a smaller share of our income today than we did in 1960. And Grover Norquist and his allies talk about pushing revenue lower. They would take our country back. Back before 1958. Repeal a half century or more of progress.

People need to talk about increasing revenue and about restoring our government. People need to talk about revenues. Where’s the revenue? In 2011, the cost of operations in Iraq and Afghanistan was estimated to be $159 billion. Winding down these unfunded wars will help reduce the deficit. We need to talk about allowing the reckless Bush tax cuts to expire. We need to talk about a Financial Transaction tax. We need to talk about taxing capital gains as ordinary income. We need to talk about an estate tax on estates over $3.5 million.

We need to talk about JOBS! Putting people back to work will go a long way to improving our tax revenue. We have billions in estimated repairs needed for our water and sewer systems nationwide, and trillions in estimated repairs to our roads, bridges, airports and transit systems. We can invest in our nation, and generate revenue at the same time And we haven’t even talked about corporate tax loopholes and corporate welfare.

And we need to stop talking about decreasing Social Security benefits. Enough with the scare tactics. There’s a simple solution to ensuring Social Security’s solvency through our grandchildren’s lifetime. Scrap the Cap. 94% of workers pay Social Security taxes on 100% of their earnings. 6% of workers do not. That’s because there is a cap on wages subject to Social Security taxes; in 2012, all earnings above $110,100 are not subject to Social Security taxes. All of us need to pay Social Security taxes on all of our earnings. Scrap the cap.

So, what do we have? We have a big problem. We can’t cut our way out without gutting our government. People who talk about “taking back” our country are talking about taking our country back 50 years, and further tax cuts will take us back 100 years!

What do we have? We have a big country, with a modest sized government, and a small tax burden. None of us felt crushed by taxes in 2000, when Clinton left office. But then came the reckless aughts—the 2000s. Massive tax cuts, unfunded wars, and Wall Street speculators. It’s unfortunate that we’re going to have to pay to put it all back together. But the biggest beneficiaries of the reckless aughts ought to make the biggest contribution to balancing this budget.

What do we need? Revenue! The options include, winding down the war, allowing the reckless Bush Tax cuts to expire, raising taxes on the 1%, investing in our country and putting people back to work, and we need to save Social Security for the next 75 years, for our grandchildren—scrap the cap and extend Social Security taxes to all earnings. That’s the message that we need to take to our members, to our families and to our neighbors. Find a way to make the truth known.

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