Posted on Jul 12, 2015
Do you understand the federal budget and where the military fits in?
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With all the talk of the downsizing of military, reductions, layoffs, etc... How many people actually understand the U.S. Federal Budget and where DOD fits in? This www site gives an as easy 101 summary.
The federal budget is over 3.9 Trillion, and that is broken up up Mandatory Spending (must pay by law - Social Security, Unemployment, etc...) and Discretionary Spending (those things that are paid with the money available... and are hence subject to cuts when money is tight.)
Discretionary spending includes Defense, which is the largest part of discretionary spending (over 50%), and that is why DOD is political target number one in times when money is tight.
This is good stuff to know, if you want to understand what is going on in the DOD and why.
https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
The federal budget is over 3.9 Trillion, and that is broken up up Mandatory Spending (must pay by law - Social Security, Unemployment, etc...) and Discretionary Spending (those things that are paid with the money available... and are hence subject to cuts when money is tight.)
Discretionary spending includes Defense, which is the largest part of discretionary spending (over 50%), and that is why DOD is political target number one in times when money is tight.
This is good stuff to know, if you want to understand what is going on in the DOD and why.
https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
DoD
Downsizing
Politics
Posted >1 y ago
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I think the pie charts are awesome yet the lack of context pertaining to unfunded obligations over simplifies it and masks the future troubles of the current fiscal policies. Unfunded liabilities - the difference between the net present value of expected future government spending and the net present value of projected future tax revenue, particularly those associated with Social Security and Medicare, are well over 100 trillion. The Congressional Budget Office (CBO) knows of this gap but more or less much like a criminal enterprise has two books, the Extended Baseline Forecast or EBF and the Alternative Fiscal Scenario or AFS. The AFS report accounts for unfunded liabilities yet when it come to creating a budget in their infinite wisdom congress ignores the conservative approach and uses the EBF in coming up with a budget. In business the net present and future value are the basis in determining a projects feasibility. However in context of social security we have 76 million baby boomers that began retiring in 2011 and will continue at 10,000 a day until 2029. In 2010 Social Security began running in deficit of 51 billion a year and as of 2014 it increased to 79.9 billion a 56.6% increase in just 4 year. This is going to exponentially increase. Additional this is only one of the inputs that make up the aggregate of unfunded debt. To put this into perspective The Affordable Care Act (ACA)or "ObamaCare" accounts for 17 trillion in contrast to our total current debt of 18.3 trillion. In order to cover this future gap we would need to raise all federal taxes by 57% and cut all spending by 37%. Obviously we can not do this as this as this would put our economy into a death spiral. Much of this is also going on at the state level with pensions. I could not find a more current graph but the image shows the problem back in 2010 numbers. However when one begins to start talking "net present lingo" the eyes glaze over.
http://www.forbes.com/sites/keithweiner/2014/03/19/unfunded-liabilities-are-fraudulent-promises/
http://www.forbes.com/sites/keithweiner/2014/03/19/unfunded-liabilities-are-fraudulent-promises/
Unfunded Liabilities are Fraudulent Promises
The U.S. government reports its debt at more than 17 trillion dollars. To put this sum in perspective, it’s well over 50 thousand bucks for every man, woman, and child in America. Of course children and retirees don’t work, so the debt burden on each working adult is much higher. Unfortunately, [...]
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COL Charles Williams
SPC David S. entitlements are an area we need to address... those who don't taxes, being subsidized by us...
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COL Charles Williams This is great article and very educational for all. It really depicts the amount of Federal budget that is used for Mandatory Spending (Social Security, Unemployment, Labor, etc.) and (Medicare & Health). These are two areas that I really think we need to have overhauled or fixed in some way. By decreasing military spending through personnel cuts we are just adding to Mandatory spending with the number of individuals that will go onto unemployment. It's a viscous circle!
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1LT William Clardy
COL Mikel J. Burroughs, I can't disagree more with your claim about personnel cuts causing an increase in unemployment. In order for that to be true, you would have to consider our active-duty soldiers to be unfit for civilian employment.
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COL Mikel J. Burroughs
1LT William Clardy that wasn't my point, they are very fit for employment. Let me explain. When I first left the military and was in transition I immediately qualified for unemployment benefits for about 2 months until I secured a job. I believe this will be the same for many of the 40,000 that reduced from the manning, as well as the civilians that get laid-off supporting those troops reductions around the various bases. This doesn't include the lay-offs foe defense type industries that are already experiencing layoffs a will continue to draw down their work forces due to level of decreased spending. I have an uncle that works in Alabama that works on producing the munitions for the Navy and his plant already cut back significantly due to the draw down in both wars. These 2nd and 3rd order affects from decrease defense spending will have an impact on unemployment, thus increasing Mandatory Spending for the government. States have already ran out of emergency unemployment a couple times in the last two years because of the increased amount of unemployment (not due to the military alone, but all the factors contributing to unemployment). I agree that the military draw down and decreased defense spending isn't the only culprit, but it contributes. Many of the Active Duty coming out will find jobs (on the average within 6 months to a year) depending on their skills sets and MOS! IN the meantime, they will need the benefits and they are entitled to them.
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COL Mikel J. Burroughs
SPC David S. I really think that a combination of what you are referring to and keeping the withholding going for all employees is something that really needs to be explored. I'm not an expert in that area, but I do fund large deals that actually pay for themselves and then we take those profits and reinvest them into the project, so it becomes self-funding. This gets us to profitability quicker. I'm not looking for the SS to make a profit (nice if it could), but looking for it to grow and become self-sufficient so that down the road its still a benefit and we don't have lose it for the next generation or borrow from Peter to pay Paul. Hope that make some sense.
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SPC David S.
COL Mikel J. Burroughs I agree and yes the self funding concept I fully understand. Not sure why this is not more prominent in the news however this will become more of a hot button as 2020 approaches when social security will have to start cashing in the treasury securities. However this stop gap will only last until 2033 - then it get ugly as social security will only be 75% funded with estimated revenues meaning a 25% drop in benefits. The SS fund needs some injection of capital; not sure from where. Some possible blend of higher payroll taxes, new legislation to close exploited tax loopholes, modification of laws pertaining to the social security fund and tightening the discretionary budget will more than likely all be considered. Like you said its not you or me I'm worried about our kids' futures - I don't like the idea of welching on a deal to my daughter.
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The primary driver in the reduction in troop strength is the escalating personnel costs which are becoming unsustainable. The pay increases, bonuses and other personnel costs instructed during the last 14 years have put a strain on the Defense budget.
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1LT William Clardy
LTC Kevin B., generally I agree that there is nothing wrong with applying for promised benefits for legitimate issues, but I take exception to some aspects, such as the way "concurrent receipt" legitimizes what used to be considered abusive double-dipping. I also consider it naive to not consider the overall fiscal impact of abusive trends when discussing personnel policies -- and to me, at least, the soldiers discussing how to maximize their VA disability percentages are just as odious as the much-reviled ticket-punching officers of the Vietnam era.
That said, I'll try to find some other means to sooth this particular burr in my butt.
That said, I'll try to find some other means to sooth this particular burr in my butt.
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LTC Kevin B.
1LT William Clardy - Personally, I've never considered concurrent receipt to be double-dipping, and I always wondered why pensions were offset by disability payments. A pension is cash flow for past service. Disability is compensation for lost future earning power. I don't see why they should be tied together in a "double-dipping" argument. Congress finally agreed when they passed it into law under the Bush administration. The only problem is that, while they acknowledged it, they couldn't find a way to fully pay for it. Thus, the compromise (for budgetary reasons) was only to consider those with 50% or more disability.
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1LT William Clardy
Negative, LTC Kevin B.. Disability payments are meant to compensate for earnings that ceased because you became disabled. If you are retired due to longevity, then your disability does not prevent you from earning that money, so there is no monetary loss to compensate for.
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LTC Kevin B.
1LT William Clardy - I don't see anything that specifies that is the sole reason for disability payments. If that were the case, why wouldn't the disability payments stop at your maximum allowable time on active duty? For instance, if you were injured at the 23-year point, but would have been forced to retire at the 30-year point, then why wouldn't you only get 7 years of disability payments? After all, those "lost earnings" would have ceased at that point regardless. And, when people leave service (and their earnings are set), but subsequently qualify for disability (which happens all of the time), there's no change in earnings to quantify for an offset. Either way (compensation for ceased earnings or compensation for lost future earnings), the cash flow impact is still the exact same. I don't see why anyone's pension should be reduced in order for the military to pay for having harmed them.
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