where'd the money go?

I had a question that I never posted on Metafilter. Mostly because it seemed like such an easy question that I felt dumb for asking it. Thankfully, someone else did. Here it is:
This may seem profoundly easy to some of you, but I'm perplexed.
So I see that The President is asking for $2.77 trillion dollars for a budget. My question is this - if we're in a deficit where does the money come from? Yes, I know we all pay taxes and that sort but still - wouldn't that go to pay the current deficit?
posted by heartquake to law & government at 8:47 AM PST (4 comments total)
There were a few answers listed. But I feel unsatisfied. Anyone else want to have a go?


Anonymous Anonymous said...


i had steve cannell explain it once to me. i did not totally understand mainly because the way most non-deficit spending consumers think is contrary to how governments work.

apparently, t-bills and notes are what is used during a treasury auction to keep money rolling in to be paying off the defecit, the national debt or financing future entitlement programs (NIH, NSF, medicare, medicaid, social security, etc.).

also, the federal witholding that comes out of every pay check goes to the government and not technically intended to pay for or on the defecit.

many conservative policy makers are not worried about the federal debt mainly becuase it is around 3% of our current gdp. i bet they are more worried about the interest on the debt than anything else.

my big concern is how medicare and medicaid will be financed. i would be appalled if our gen x were to cut off the older generation's benefits without providing a suitable means for decent living.

the entitlement programs are the ones which make up a significant majority of the budget bush sent. i would like to know the percentage increase in the major areas from the previous budget. any increase in the defense portion is probably going to pay for our next target rogue nation.

i am sure this did not answer the question but i will post anyway and let you discern if it is to be removed


2/06/2006 12:53 PM  
Blogger e said...

matt--i'll never delete your comments. they may be over my head, but they're always appropriate :)

i've heard some of what you suggested before--t-bills, bonds, the low cost of the deficit--but i'm still left wondering: is the deficit a big deal or not? where are we "borrowing" the money from? do government employees get paid with "real" money, or is their money just a set of imaginary numbers that is being taken from imaginary banks?

if i "deficit spend" a portion of our budget, than in future months, i have to spend less--otherwise there will eventually not be enough money to pay insurance premiums and property taxes. is this the same concept the government works off of? is there actually a "spending cushion" that exists somewhere that gets dipped into to pay present budgets?

2/07/2006 1:07 PM  
Anonymous Anonymous said...


most economists will say that the defecit is a big deal, but not as big as the debt. the interest on the debt is the most paralyzing feature of our government.

money is mostly borrowed from the future obligation to repay treasury bills and notes. barring the unforseen lack of solvency in our governments ability to pay existing notes, we should be ok, but greta and her peers will experience the consequences of her grandparents budget fiascos.

the government workers get real currency. this is tied to the m2 and m3 money supply. i can get more info on this and post for you if you like. the m3 is what is available and m2 is what is circulated i think, but dont quote me on that yet.

you last sequence of questions relates to the way the omb functions. i would prefer if the omb, pres and his troopers would decide what needs to be spent and hold that figure each year. then, adjust the tax rates, thresholds and deductions so that we bring in just what we spend. that would be political suicide, but fiscal responsibility. also, it would tip the hand so to speak about what an administration deems the most worthy use of money and by extension, who they favor or disfavor in a real economic sense.

the spending cushion so to speak exists, but i dont know what it is called. for this recent pork-laddened mess, iraq, afghanistan and the hurricanes were limited to 50 billion i think. further requests will be made to increase it by 100 million. this seems like fuzzy math, but this 2.77 trillion budget would really be 2.87 trillion if the reality of those diasters were included. also, the smoke of the 40 billion cut back was really a drop from 2.81 trillion to the existing 2.77 trillion. 40 billion here and 40 billion there, eventually we are talking about alot of money.


2/07/2006 3:17 PM  
Anonymous Anonymous said...


here are some budget figures for you...


average spending as a % of GDP
1990-2008 (estimate) 19%
2000 20.8 high
2004 16.4 low
2006-2008 about 17%

average outlay as a % of GDP
1990-2008 (estimate) 20.5%
1991 22% high
2000 18.5% low
2006-2008 about 20.5%

Outlays in billion from 2006-2008

military $542 $537 $506
entitle. $1,457 $1,494 $1,562
debt interest $220 $247 $272


$2,709 $2,770 $2,814

$2,285 $2,416 $2,590

-$423 $-354 $-223

all of that to say that when will the president and congress take cuts in spending vs taxation seriously?

the unfortunate situation rests on our ability to sacrifice the benefit of tax cuts across the board in increasing revenue. the increase in revenue was aabout 5.5% but the increase in spending was 2.2%. this does not help us in paying down the defecit nor running a debt free budget.

as the one geek boy with brown hair and glasses in freaks&geeks would say, "the classic cordelli conundrum, you're screwed"


2/07/2006 3:45 PM  

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