Budget policy in 2012
was characterized by deficit spending, major increases in the national debt,
and a heated debate over the “ fiscal cliff.”
With just days left for
President Obama and lawmakers in Congress to avert a major tax hike,
sequestration, and other major policy changes, today we bring you a list of the
top 10 facts on federal spending in 2012:
1. Four years of
trillion-dollar-plus deficits. Fiscal year 2012 concluded with a $1.1
trillion deficit, marking the fourth yearof trillion-dollar-plus deficits. Too much
spending is the root cause of the federal government’s deep and sustained deficits. At 23 percent of gross domestic product (GDP)
in 2012 and on track to rise further, federal spending is growing at a
dangerous pace.
2. National debt hit
$16 trillion. On September 4, the U.S. national debt hit the $16 trillion mark. We owe more on the national debt than the
entire U.S. economy produced in goods and services in all of 2012. Sixteen
trillion dollar bills stacked one on top of the other would measure more than 1
million miles high, which would reach to the moon and back more than twice.
3. The debt limit was
raised by $1.2 trillion. On January 30, the federal government raised its
debt limit from a staggering $15.194 trillion to an even bigger $16.394 trillion. This increase was the last one of three
granted in the Budget Control Act of 2011, a result of that summer’s debt
ceiling negotiations, which allowed for a total debt limit increase of $2.1
trillion.
4. The $650 billion
fiscal cliff distracted from the $48 trillion looming fiscal crisis. Much
of 2012 was spent arguing over tax rates in the fiscal cliffdebate while lawmakers ignored the much more
dangerous looming fiscal crisis. As large and as major a concern as federal
budget deficits are today, they stand in the shadow of $48 trillion in long-term unfunded
obligationsin Social Security and
Medicare. Even with President Obama’s originally proposed tax hikes in his
budget, the federal debt would still rise by more than $7.7 trillionin the next 10 years.
5. Social Security
ran a deficit for the second year in a row. According to the 2012 trustees
report, Social Security spent $45 billionmore in benefits in 2011 than it took in from
its payroll tax. This deficit is in addition to a $49 billion gap in 2010 and
an expected average annual gap of about $66 billion between 2012 and 2018.
Social Security’s deficits will balloon yet further. After adjusting for
inflation, annual deficits will reach $95 billion in 2020 and $318.7 billion in
2030 before the trust fund runs out in 2033 and a 25 percent across-the-board benefit
cut occurs.
6. Three years of
spend-as-you-go policies without a federal budget. The last time both
chambers of Congress agreed on a budget was on April 29, 2009. Since then,
Congress has operated on a spend-as-you-go basis, characterized by incoherent,
ad hoc budget procedures. The House passed budget resolutions each of the past
two years, but the Senate failed to do its part.
7. The government
spent nearly $30,000 per American household. The average American
household’s share of federal spending in 2012 was $29,691, or roughly
two-thirds of median household income. The government collected $20,293 per
household in taxes in 2012, resulting in a budget deficit of $9,398 per
household in 2012.
8. Obamacare will
spend $1.7 trillion over 10 years. After the Supreme Court decision on
Obamacare, the Congressional Budget Office did an update of its scoring of the
law. The result: Obamacare will spend $1.7 trillion over 10 yearson its coverage expansion provisions alone,
including a massive expansion of Medicaid and federal subsidies for the new
health insurance exchanges. This means that Obamacare will increase federal
health spending by 15 percent.
9. Social Security
was the biggest federal spending program. In 1993, Social Security
surpassed national defense as the largest federal spending category, and it
remains first today. The top five biggest spending programs, in order, are 1) Social Security; 2) national
defense; 3) Medicare; 4) Medicaid, CHIP, and other government health care; and
5) interest on the debt.
10. More than 40
percent of Americans are on some government program. According to Census
Bureau data and Heritage Foundation calculations, 128.8 million people in Americadepend on a government program for basic (or not
so basic) needs, such as rent, prescription drugs, and higher education.
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