This morning, I hopped on facebook and found a message waiting for me there. A friend of mine, having seen a pie graph about discretionary spending floating about in FB land, asked me if the pie graph was skewed or not. Off I went to the source data as provided by the US Office of Management and Budget, where I was able to relatively quickly ascertain that yes, the pie graph was indeed accurate and made my own version of it using the very source data. Although I had finished the requested task, the numbers that I was seeing within the spreadsheet were grotesquely fascinating. I was hooked. I apologize in advance for the quick and dirty graphs but when I started doing this, I was thinking in terms of accuracy and haste. After all, this wasn't something that I was going to get graded on or paid for to do. It was purely out of sheer curiosity. The second caveat is that, although the OMB states that "to the extent feasible, the data have been adjusted to provide consistency with the 2013 Budget and to provide comparability over time", it doesn't say how far back and whether the numbers have been adjusted for inflation. Comparability over such a length of time would, however, require some form of inflationary adjustment so I am tentatively assuming that the data has been adjusted for inflation with a nod to the possibility that I could be wrong. With that being said, let's see what I found.
This was the initial pie chart that was asked to be recomputed and redone. This pie chart shows the discretionary spending of each program as a percentage of the total discretionary spending for the year. For programs showing 0%, that doesn't necessarily mean that there was no discretionary spending. It simply means that the amount was less than 1% of the total. The total discretionary spending for 2011 was a little over $1.3 trillion so we're talking about a whole lot of change with National Defense being the largest component of it. 96% of that "National Defense" is DoD-military discretionary spending and the other 4% is simply listed as "Other Defense". The information within the spreadsheet goes back all the way to 1962 so I thought that would be rather interesting to see as well.
Federal Discretionary Spending in 1962
Even from a distance, you can guess that yep, that big grey Pac Man is for "national defense". Surprisingly enough though, the percentage of national defense as a portion of total discretionary spending has actually decreased considerably between 1962 to 2011. But, before we all can start waving peace victory banners, what needs to be considered is that some of the other programs have been expanded over the years as the world has changed. What we're really seeing is that the number of programs utilizing discretionary spending has increased its use of it. On a humorous side note, the general composition of what constitutes "national defense" is relatively unchanged--even in 1962, it was 96% (rounded) DoD-military and 4% "other defense". Some things apparently don't change over time.
Thinking in terms of "over time" got me wondering about how just has discretionary spending changed over the past 49 years. I needed a new graph.
Total discretionary spending from 1962 to 2011
Scary!! Even from a distance you can see that this really is not a good thing. For those that get confused about the (in millions) thing--100,000 would be the equivalent of $100 billion and 1,500,000 is the equivalent of $1.5 trillion. At this point, even an atheist like me is praying that these numbers aren't actually adjusted for inflation after all because this just looks so ludicrous. A good question to ask at this point, however, is "just what the hell is discretionary spending?". Wikipedia provides us with a quick definition: "US government expenditures which are subject to annual review and authorization by Congress, as distinct from expenditures authorized by existing laws." (http://en.wiktionary.org/wiki/discretionary_spending). Okay then, discretionary spending is what money gets spent through Congress' discretion and not because of existing laws. I bet you that the president at the time probably has veto power on this, too, because that's how our government works--checks and balances. Apparently, though, the guys running the government just seem to be thinking of just checks.
We already know that national defense is a big piece of the pie so what has happened with that over the same time period? Hmmm, let's see:
National Defense Discretionary Spending from
1962 to 2011 Interesting. Well, it makes sense somewhat as these jumps are probably wars, right? Let's see...the US became involved in the Vietnam War starting in 1965 and ending in 1973 so a spike should be there, right? Hmmm, I guess it goes up a little. Well, okay...how about the Persian Gulf? That went on from 1990 to 1991 and that explains that spike in...hmmm, it decreased in 1990 but spiked in 1991. There's the spike! Hmm. Did something happen in the 80's? I'm confused. Afghanistan started in very late 2001 and Iraq in early 2003 but why is the spending getting ramped up again in 2000? If I was a conspiracy theorist, I'd say that the DoD has psychics on board, but no worries, I'm not. I just don't have any explanation for this at all. I'm not a member of the DoD--that's a matter of national security. We're not supposed to know what they're doing outside of spending a ton of money with very little historic explanation.
Let's go with what we do know historically. The growth in spending from year to year can tell us a lot because it's not dealing with numbers but simply the percentage of change. Therefore, we can compare the spending growth in the military involvements during the period available (1962 to 2011). And oh yes, I went there--lavender (has to match my blog!!)
Growth in national defense discretionary spending during wartimes
I give up. Where's my white flag of surrender? I have zero explanation for this. Keep in mind that any positive number means that they spent more than the prior year by that percentage amount. If it's negative, it means that the discretionary spending was less than the prior year. So, what we have is a decline in spending in the first years of Vietnam and the Gulf wars but not in the first year of Afghanistan (and they were already ramping up spending the year before!). In Vietnam, it started declining about mid-way through the operation whereas it's a constant growth during our last operations in Afghanistan and Iraq. It is nice to know, however, that this kind of spending declined the year after the Persian Gulf (it looked very lonely with it's little blip). That got me wondering though. How much has discretionary spending for national defense changed in the last 49 years? It has increased 129%. That's a lot more money being spent today today by the DoD than 49 years ago. Please, please tell me that it's not adjusted for inflation....please.
Stepping away from the defense spending and back to just Congress' spending. I thought it would be interesting to see what information I could find as far as how our deficits and surpluses are looking over the last 49 years. If Congress is spending a lot more, then it has to be because we can afford it, right? The ideal scenario for a government is to hover right around 0. Too much surplus means that wealth is being accumulated that isn't getting passed on to the citizens. Too much deficit means major trouble. (Think Greece, Ireland, Portugal and more as the extreme example of that). Luckily, the OMB had that information available, too.
US Federal Surplus and Deficits from 1948 to 2011
Really, very not good. You don't even have to click the link to know that this is really, very not good. It's heartbreaking. We were in great shape for so long. What the hell happened? Well, in the 1970's, there was a recession and the OPEC oil embargo but things start getting out of hand in the 80's. That's the handiwork of "trickle down" economics. Problem with trickle down economics is that they most likely didn't provide enough tax revenues to make sure that the natural growth in spending as the nation grows was balanced out. That's exactly what that says. Toss in increases to discretionary spending and it's gruesome. The surplus in the late 90's where it spikes up above the 0 ridge is Clinton tweaking the budget and vetoing line items within it. If you look back at the graphs of total and national defense discretionary spending, you'll see a plateau there. He was definitely trying to balance the budget and we ended up with a surplus. Hopefully, that surplus was used to pay down some of the accumulated debt. One can only hope....
In 2000, it drops back significantly below the 0 goal line with the election of George Bush but you can tell that they tried to reign it all back in again. And then, catastrophe strikes in 2008. A lot of people want to point fingers at Obama for that one and perhaps that is somewhat well placed. Discretionary spending was growing at a fast clip and seemingly unchecked. However, there is another way that we can compare this to decide what exactly happened to our nation's budget. We can look at other countries. Finding that kind of information in the same format is hard but looking for this kind of plunge should be pretty obvious. Thankfully, the website, Trading Economics, has a cool little feature where they will put all sorts of information in a graphical format.
First: Greece, one of the most financially bankrupt governments in the world
Second: UK Government Budget Deficits and Surpluses
Both Greece and the UK's deficits plunge horrifically in 2009 to 2010. The US plunged first in 2008. What happened in 2008 that could affect countries around the world similarly? It wasn't Obama being elected as president because Obama has nothing to do with Greece's or the UK's budgets. All that leaves is the Financial Crisis of 2007-8. It truly crippled the world.
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