The Most Plugged-In Budget Analyst In America Gives A Great Crash Course On How The Government Spends Its Money

douglas elmendorf cbo

Douglas Elmendorf, the universally-respected budget analyst at the helm of the non-partisan Congressional Budget Office, gave a guest lecture to an intro economics course at Harvard University. 

Called  “A Tour of the Federal Budget and Possible Changes in Budget Policy,” it’s an outstanding crash course in the changes the federal budget is undergoing. 

The role of government has been shifting subtly for years, and Elmendorf more than many others has been able to perceive this change. Less government money is spent on contracts and employees, while more is given directly to people and states. 

Elmendorf was kind enough to post a copy of the slide deck to Slideshare and the excellent CBO blog.

The final conclusion is guaranteed to make you wince. 

Elmendorf is the Director of the Congressional Budget Office, which is tasked with analysing the fiscal impact of new legislation.

As a result, Elemendorf might be the most plugged-in non-partisan person when it comes to budgetary issues.

The federal government is rather basic when it comes down to it. Spending can be broken into a few key blocks.

Mandatory spending is dominated by Medicare and Social Security.

Discretionary is about half defence and half everything else.

The payroll and income taxes are a huge part of what pays for all this.

However, incoming taxes haven't been enough to cover expenditures at the moment.

The way the government spends its money has been evolving over time.

The size of government has remained rather stagnant.

Taxes, too have generally decreased or stayed the same. Look at how volatile the top rate has been, though.

The current trajectory trends toward the government spending more on Social Security and Medicare than other things.

Looking at what is set to decrease and what is set to increase paints a fascinating picture of the changing face of government.

The government is getting bigger on both sides of the balance sheet.

Efforts to control the deficit — such as sequestration — are not long term solutions.

The debt is growing, for those who consider that an issue.

High debt is a problem for a number of potential reasons.

Looking long term, the U.S. is in very hot water.

Elmendorf's job comes down to scoring the fiscal cost of laws. Here's how he does it.

It's an approach that involves a balanced take, analysing all aspects of an issue.

Lots of people rely on the federal government in one way or another. It's not all about the bottom line.

Elmendorf remains non-partisan as part of his job. Here's his analysis of the GOP plan.

Then here's his analysis of the Democrat plan.

Both plans want something different from the federal government.

But neither Elmendorf nor the CBO can make endorsements or recommendations.

The CBO doesn't bother with plans like Simpson-Bowles.

When it comes down to it, the deficit is rising, slowly but surely.

There are two proposals for the future of the budget, neither of which the CBO can endorse.

But at the end of the day, it's going to take either tax increases or cuts to middle-class government benefits in order to fix the debt.

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