Unexpectedly Intriguing!
April 6, 2011

Now that Paul Ryan has released the U.S. House of Representatives' proposed budget for Fiscal Year 2012, which aims to cut future U.S. government spending by over $6,200 billion over the next decade, we thought we'd take a moment to discuss just what the current battle over the unfinished portion of the U.S. government's Fiscal Year 2011 budget is really all about, so we can see just what it is that President Obama and the congressional Democrats are fighting for in the debate over excessive federal spending.

First, here's Representative Ryan laying out the basic fiscal issues:

Now let's take the current debate over the Fiscal Year 2011 budget into account.

Here, thanks to the inaction of the U.S. Senate and the White House, a potential shutdown of the federal government looms as early as this week. Assuming they don't opt for a more limited proposal to keep the federal government running for an additional week and cutting a less contentious $12 billion portion of excessive federal spending.

The main point of contention has to do with President Obama's and the majority Democratic Party senators' opposition to the Republican Party-controlled House's proposed total of $61 billion of spending cuts for Fiscal Year 2011, which is at stake because the previous 111th Congress, which was fully under the control of members of the Democratic Party, declined to pass a budget for Fiscal Year 2011.

Relative Size of $61 Billion Spending Cuts with Respect to FY2011 Budget - Source: CATO

That $61 billion is just 1.6% of the $3,834 billion federal government budget for Fiscal Year budget that President Obama submitted to Congress early in February 2010, and a very slightly larger fraction of the $3,819 billion the government is currently projected to actually spend. It's also just 0.1% of the total amount of spending reductions in Paul Ryan's proposal for containing federal spending over the next decade.

But if you'd prefer to think of that $61 billion of spending cuts that President Obama and the Democratic Party members are willing to orchestrate the shut down of the U.S. government for means in more personal terms, we can help! If we assume that there are 118,700,000 households in the United States this year (2011), it amounts to savings to taxpayers of $513.90 per household.

That compares to the unrestrained amount of federal spending of $32,299 per U.S. household for Fiscal Year 2011. And that number, in turn, is about $12,000 per household more than what the typical American household can actually afford for it to be.

Now, if you'd rather get a sense of that total federal spending with a picture, we can accommodate you:

U.S. Total Federal Outlays per Household vs Median Household Income, 1967 through 2009, with 2010 and 2011 Estimates Shown

The "Zero Deficit Line" shown on the chart is the actual amount of federal spending that Americans can actually afford, given the income of a typical American household.

All in all, the President and congressional Democrats seem far too anxious to shut down the federal government over $61 billion worth of federal government spending that amounts to little more than a lot of excessive financial padding in the grand scheme of things, which we'll visualize below...

Financial Padding

Just remember that they would really rather give this big bag of cash to their political friends so they can be popular with them and stay in power than see it not add to the already over $14,000 billion U.S. national debt. In Washington D.C., they call this "standing on principle."

And if you don't like those principles, well, we're sure they have others....

Image Credits: Cato Institute and thinkofthe.


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