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Americas Spending Addiction

Federal spending is increasing at unsustainable levels, and there is no end in sight.

Spending Per Household

Washington will spend $33,932 per household in 2009–$8,000 per household more than last year. While much of this spending is a temporary result of the recession and financial crisis, President Obama’s 2010 budget would replace this temporary spending with permanent new programs. Consequently, by 2019–a time of assumed peace and prosperity–Washington will be spending $33,000 per household (adjusted for inflation), essentially making permanent this year’s $8,000 per household spending hike. These numbers do not even include the cost of the President’s health plan, estimated to be over a trillion dollars.

Budget and Deficit Growth

Since 2001, spending has grown across the board. Spending on Social Security, Medicare, and Medicaid has reached a record 13 percent of GDP. Other areas receiving large increases since 2001 include: anti-poverty programs (57 percent faster than inflation), K-12 education (169 percent), veterans spending (72 percent), and Medicare (59 percent). And despite all the pressing national priorities, lawmakers approved over 10,000 earmarks last year at a cost of $20 billion. Simply put, all parts of government are growing.

All that spending means Washington is estimated to run a budget deficit of $1.845 trillion ($18,297 per household) in 2009. While deficits naturally rise during recessions, one would expect them to eventually return back to the $100 billion to $400 billion range that prevailed before the recession. However, the President’s budget shows annual budget deficits averaging just under $1 trillion over the next decade–a period in which the national debt would double. These deficits would not only raise interest rates, they would also nearly quintuple the net interest costs of the national debt over the next decade.

Needed Reform

Real reform is needed. The President recently made a commitment to save $102 million this year. While the goal is laudable, $102 million is only .006% of the federal deficit, the equivalent of paying off 5 hours worth of the interest on our national debt. This type of savings plan is not going to make a dent in our nations spending problems. Unless Social Security, Medicare, and Medicaid are reformed, policymakers will eventually have to make some very hard choices such as:

Eliminating every federal program except Social Security, Medicare, and Medicaid; or

Increasing the national debt to unprecedented levels that could cause an economic collapse.

Our nation is on the brink of a crisis due to our spending addiction. Read The Heritage Foundations full report to learn more.

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