Do you understand the federal budget and where the military fits in?

2015-07-12T11:31:47-04:00

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/

Federal Spending: Where Does the Money Go

In fiscal year 2014, the federal government will spend around $3.8 trillion. These trillions of dollars make up a considerable chunk - around 22 percent - of the US. economy, as measured by Gross Domestic Product (GDP). That means that federal government spending makes up a sizable share of all money spent in the United States each year. So, where does all that money go?

Response by SSG Private RallyPoint Member made Jul 12 at 2015 11:43 AM

2015-07-12T11:43:14-04:00

COL Charles Williams The federal budget is a mystery to all of us. DOD funding coming out of the discretionary appropriations has always puzzled me. It's constantly the reason that all of our benefits, pay, equipment, etc. are on the chopping block.

Personally I'd like to see DOD tossed in to mandatory spending, with certain aspects maintained in discretionary appropriations; such as particular fields of research and development.

I'm certainly not a economist or political science guru, but shrinking our budget shrinks our force (as we're currently seeing) and that feels a lot like the beginning of privatization.

Response by LTC Bink Romanick made Jul 12 at 2015 12:05 PM

2015-07-12T12:05:03-04:00

My last job was in the Comptroller field (due to profile). I went thru the PPBES courses, and all kinds of arcane and complicated education on the budget including the Professional Military Comptrollers Course. They PDIPd and FYDPd us into a state of stupor.

You've.never been as bored and you come out the other end more confused than when you went in. Did I mention the HASC and SASC.? No? Good.

Response by LTC Bink Romanick made Jul 12 at 2015 12:21 PM

2015-07-12T12:21:14-04:00

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.

Response by COL Mikel J. Burroughs made Jul 12 at 2015 2:28 PM

2015-07-12T14:28:25-04:00

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!

Response by PO1 John Miller made Jul 12 at 2015 3:20 PM

2015-07-12T15:20:17-04:00

I have a layman's understanding of the budget! But this definitely helps me have a more clear understanding. Thanks for sharing.

Response by SPC David S. made Jul 12 at 2015 7:18 PM

2015-07-12T19:18:38-04:00

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/

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, [...]

Response by LTC Jason Mackay made Jul 12 at 2015 10:48 PM

2015-07-12T22:48:38-04:00

Sir, this was a great primer. Something else the crowd needs to be aware of as they push contracting functions further down the tactical line is the Anti-Deficiency Act. http://www.gao.gov/legal/anti-deficiency-act/about

Antideficiency Act

This Act prohibits federal agencies from obligating or expending federal funds in advance or in excess of an appropriation, and from accepting voluntary services.