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Federal Spending Questions

Apr 21, 2011 • Economic Debates, Government, Households, Macroeconomic Measurement, Thinking Economically • 178 Views    No Comments

Hearing the following, one Washington Post reporter said, “Four pinocchios.”

In a February survey of 801 “likely” voters, a majority (63%) said that the biggest budget items were defense and foreign aid. Also, they suggested controlling waste, fraud, and abuse as the best way to substantially diminish the deficit. In an Ipsos/Reuters Poll, 75% of the respondents said that foreign aid should be cut. Another survey quoted people suggesting that foreign aid should go down to 13% of the budget. (You could look here at a list of results from several surveys to see what Americans believe about the budget.)

Our fact check (based on the President’s 2012 budget proposal):

  1. Yes, representing close to 20% of all federal spending, defense is a huge budget item.
  2. Foreign aid, though, is less than 1% of the federal budget. And, looking at the rest of the world, our spending on foreign aid, based on our relative affluence, is tiny.
  3. Social Security represents 20% of all spending.
  4. Healthcare spending, primarily through Medicare and Medicaid, are almost 23% of the whole budget.

You can see where this is going. How can voters learn the facts so that the budget debate can become more realistic?

The Economic Lesson

Here is a wonderful budget interactive for the President’s 2012 budget proposal.

What would you cut?

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