Let’s take a journey together, a journey of numbers. I love numbers, so much so that I pretty much live in Excel. I thoroughly enjoy calculating and charting data of all types. As part of my (soon to be former) job, the Federal Budget – in particular the Defense Budget – is my main analysis area. It’s amazing when I talk to people, read articles, or listen to pundits the amount of mistakes made when referring to certain aspects of the US budget or budget process.
I want to simply put some information out there on the government budget to help everyone understand it and the many terms associated with it. All this information is available on line at the Office of Management and Budget. President Obama submits his budget to congress (and on-line) every year during the first week of February. So, all that talk from the Right insinuating that President Obama has no plan or no budget is pretty much non-sense.
Let's start with the highest level possible, The Federal Budget. Two things make up the Federal budget at its highest level; they are Receipts, and Outlays. Receipts are what the government takes in yearly, sometimes also referred to as revenues. Outlays are what the Government sends back out yearly sometimes also referred to as spending. A simple flow chart of this is below.
The US debt is a figure that is made up by adding up all the yearly deficits so you could think of it like this;
What president Obama is proposing to do is lower outlays/spending (blue) while at the same time increasing receipts/revenue (green).
The Republicans have so far refused to raise the green and will only agree to reduce the blue. This is also referred to as "Starving the Beast" with the Beast in this case being the federal government. Grover Norquist comes into the picture here with his Pledge (I will not link to it). The sole purpose of this pledge is to bully anyone signing it into never, never ever raising the green. Deficits should be corrected by only reducing the blue. Although I have noticed as of late that Grover is shifting his interpretation of the pledge.
So President Obama's proposed solution seems like a reasonable approach given how we got here.
Next week we will look at the make-up of the two colors above by breaking out the receipts/revenues and outlays/spending. Then in following weeks, I will lay out a time line of when budgets get created and the not so strict timelines involved in approval through Congress. From there we will dive headlong into the Defense budget (yeah!), I think you will be amazed at what we actually spend that >$600B on.
Finally, I wanted to say thanx for following along, I know you are all as excited about these numbers as I am.
Until next week...Cheers
*note* re-released to fix some spelling typos...opps