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Saturday, February 14, 2015

Misconception of federal spending (mandatory vs discretionary spending).

As a man that really likes to look at numbers, every so often I'll take a look at a few specific numbers regarding our economy (GDP, total debt, largest budget items, unfunded liabilities, etc). I've talked with my father before about how much money our government spends and how our country runs deficits year after year since about the year 2001 or 2002.

After looking at the country's track record, I'm very pessimistic about our future. Our country is being mismanaged. In the middle of these conversations, my dad has stated that the government has to just cut back the military and everything will be fine. For the longest time, he believed the military is the biggest source of government spending.

I've had to repeatedly tell him that the military is not the biggest budget item on the United States budget. It is not even close to being the biggest item. The easiest way to check this is just to click this link.

As of today, the federal government spends $600 billion (per year) on the military. The largest budget item is medicare/medicaid at $900 billion (per year) and the second largest budget item is social security at $850 billion (per year). Social security and medicare/medicaid total to $1.75 trillion (per year). That amount is almost three times amount of military spending.

By simply looking up the budget items of the United States, you know the truth of what we spend money on. By knowing this, you know that anyone who makes the claim that the military is the biggest budget item doesn't know what he is talking about. For fun, if you hear anyone make this claim, ask him the following questions.

How much money does the federal government spend per year on the military?
Most likely, he won't know the answer but you know the answer is $600 billion.

How much money does the federal government spend on social security and medicare/medicaid per year?

Use Cappy's betting method if you want to.

My dad's perspective is quite common. There are a lot of people that believe that the military is the biggest budget item. I guess they watch the news a lot. Maybe they get that opinion there. Since I don't watch the news at all, I can't confirm or verify that.

So, where to people get this misconception? I didn't know for the longest time until I saw this video from flinging monkey. This video Monkeynomics 101. Please don't disregard the video on the sheer basis that it is narrated by a monkey hand puppet.

The big take away from the video is mandatory vs discretionary spending. Medicare/Medicaid and social security is mandatory. Those items are untouchable so I guess media leaders take the point of view that these items can't or shouldn't be reformed. Military and the other stuff is discretionary.

Either way, all this stuff requires our tax dollars.

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