Federal Spending - Where does The Money Go ?

The previous Cogport post provided facts about the massive growth in Federal Government as measured by Spending Trends.

The Federal Government now spends over 50 times as much money as it did in 1920 (in real terms adjusted for inflation).

 National Debt is rising at the rate of about $ 1 Trillion every 100 days.   It currently stands at $ 36 Trillion !!

Elon Musk has stated that the new Trump Administration can cut spending by $ 2 Trillion per year.

The 2024 course of Federal Spending is about $7 Trillion.   That would mean a 28% Reduction in Spending.

Is that feasible ?

This report provides a breakdown of current Spending.   We separate Fixed Costs (Obligations that must be paid) and other Discretionary Costs. in separate buckets.

Federal Spending                                                                      $ Billion               Percent of Spend

Fixed Spending Commitments
Social Security	1,220	19%
Medicare	747	12%
Medicaid	475	8%
Civilian and Military Retirement	170	3%
Veterans Affairs	301	5%
Interest on National Debt	475	8%
TOTAL Fixed Commitments	3,388	54%
Discretionary Spending
Defense	767	12%
Education	222	4%
Transportation Dept	115	2%
Homeland Security	99	2%
Other Departments & Mandatory Programs	1,679	27%
TOTAL Discretionary Spending	2,882	46%
TOTAL Spend	6,270	$ 6.27 Trillion
TOTAL Revenue	4,900	$ 4.9 Trillion
Federal Deficit	(1,370)	($ 1.4 Trillion)

OBSERVATIONS

Fixed Spending:

The Data shows that 54% ($3.4 Trillion) of current Federal Spending is committed to what we must consider as a social contract for benefits. 

Also, interest on the National Debt is a committed expense. 

The two major benefit obligations are Social Security and Medicare.

Cogport does not endorse a plan that would affect benefits already earned in the Fixed Benefit Programs. 

However, the current design of these programs is not viable for continuation into the future. 

The programs are unfunded liabilities paid from current revenue that cannot keep up given changes in demographics.

For now, we leave the subjects of Social Security and Medicare for discussion in future Cogport Posts about reform to meet the goal of a balanced Federal Budget.

Discretionary Spending:

The Data shows that 46% ($ 2.9 Trillion) of current Federal Spending is committed to Discretionary Items.

How much can be cut from Discretionary Spending by Efficiency and Reengineering of the Federal Government ?

This will also be addressed in future Cogport Posts.

SUMMARY

With the Elon Musk goal of $ 2 Trillion in reduced Federal Spending, and Discretionary Spending at $ 2.9 Trillion, this cannot be the only target

A plan for Balanced Budgets must include future reform of Fixed Costs like Social Security and Medicare without affecting current beneficiaries.

David Hollaender                                November 18, 2024

Cogport.com