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Funding Government by the Minute

In 2011, the federal government received $2.2 trillion from all revenue sources and spent 3.8 trillion, resulting in a $1.6 trillion deficit. To put federal government spending in perspective, economics professor Antony Davies shows how long it takes the government to run out of money and how much the government needs to cut to make it through the end of the year.

Suppose that on January 1 the government received its revenue of $2.2 trillion and began spending. To spend $3.8 trillion in one year means the government spends at the rate of $434 million an hour, or more than $10 billion a day.

With $2.2 trillion to spend, spending at a rate of $434 million an hour, the federal government runs out of money at 11:59 p.m. on July 31. To eliminate the deficit the government needs to cut five months’ worth of spending. Professor Davies shows that perhaps just cutting programs is not going to be enough to balance the budget.

Funding Government by the Minute

In 2011 the Federal Government received a total of $2.2 trillion from all taxes, fees, and other revenue sources, and spent $3.8 trillion. To put the federal budget in perspective, let’s see how long it takes the government to run out of money and how much the government needs to cut to make it through to the end of the year. Suppose that on January 1 the government received its annual tax revenue of $2.2 trillion and began spending. $3.8 trillion in spending means that the government is spending at the rate of $434 million an hour or more than $10 billion a day.

With $2.2 trillion to spend, and spending at the rate of $434 million an hour, the government runs out of money at 11:59 PM on July 31. To balance the budget, the government needs to cut five months’ worth of spending. Let’s look at some things the government might cut to see how much time they might save. Remember, we need to cut enough from the budget to fund the government from August through December.

Some people argue that the government shouldn’t be funding space missions when we have budget problems here on Earth that require our attention. So let’s cut the entirety of NASA. That would save $20 billion, or enough to fund the government for about two days. Now we’re getting somewhere. Suppose a new aircraft carrier costs $15 billion to build and lasts 40 years. That’s about $400 million per year. If it costs another $400 million a year to operate, then cutting the aircraft carrier from the budget saves about $800 million a year or enough to fund the government for about 90 minutes. That doesn’t buy us much.

How about if we cut the entire U.S. Navy? The 2011 Navy budget was $160 billion. Eliminating the entire Navy buys the government 15 days. We now have no space program and no Navy, and we still have four and a half months of spending to cut. So let’s get serious. If we cut the entire Department of Defense, including foreign military aid, foreign economic aid, and veteran services, we’ll save a total of $930 billion, or enough to fund the government until October 30. Eliminating all federal funding for police, fire protection, and the courts and prisons saves $57 billion and takes us to November 4. We now have no space program, no Navy, no Army, no Air Force, no Marines, no nuclear weapons, no defense research, no veteran services, no federal funding for police and fire protection. Yet we still have to cut almost two months’ worth of spending to balance the budget.

Eliminating all federal funding for education saves us $140 billion. Cutting federal moneys for transportation saves us another $100 billion. These cuts will allow the government to keep operating until November 27. With all these cuts there’s not much left for the government to do. So let’s shut down Congress and the White House. That saves us $30 billion. And then we can shut down all the other things the government does, like waste management, street lighting, pollution abatement, housing development, cultural services, and other things. That will save us another $170 billion. This buys us an additional 19 days, funding the government until December 16.

The only thing left that we haven’t cut is Social Security, Medicare, Medicaid, interest on the debt. But we still haven’t balanced the budget. In other words, we can reduce the federal government to nothing more than a glorified assisted-living facility, and we still wouldn’t be able to balance the budget. All of this suggests that our budget problems have gone beyond the need to talk about cuts. We need to completely rethink the appropriate role for government in society. We have made promises to retirees and veterans that we need to honor. However, we must stop making promises to future generations that mathematically it is impossible for us to keep.

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6 Comments

  1. Brian Phillips

    Government needs to shrink at every level.  Entitlement spending is out of control.  Not only does this increased spending put us further in debt, but it makes people less dependent on themselves and more on the government, which only makes the problem worse.  

  2. TylerHeald

    Why can’t people understand this about government spending? This is one of the most frustrating things that I apparently can’t effectively communicate. I guess it’s like that saying, "It’s difficult to make a man understand something when his paycheck depends on him not understanding it."

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