By Donella Meadows

–February 2, 1995–

OK, wise guys.

You want lower taxes.  You want the government budget to balance.  You think Congress or the White House or both are made up of a bunch of dingalings.

Here’s your chance to straighten them out.  Let’s not be like those craven folks in Washington who are putting off budget balancing by going for a Constitutional amendment that won’t require any discipline till the year 2002.  Let’s show them how to balance the budget now, as every Congress and President has always had the power, but not the guts, to do.

All those billions and trillions can boggle the imagination, so we’ll reduce the budget to the average dollar the government spends — let’s call it a hundred pennies so we can subdivide it.  We have three problems: from whom do we collect the pennies; what do we spend them on; and what do we do about the fact that we’re taking in only 83 cents for every dollar we spend.

To start with the spending side, here’s where your average 1994 tax dollar is budgeted to go.

• Social Security 21.1 cents
• national defense 17.4 cents
• unemployment benefits, Medicaid, other welfare 14.2 cents
• interest on the national debt 14 cents
• Medicare 9.7 cents
• health (immunization, disease control, etc.,) 7.6 cents
• education 3.4 cents
• transportation (mostly federal highways) 2.5 cents
• veterans benefits 2.4 cents
• natural resources and environment 1.3 cents
• international affairs (including foreign aid) 1.2 cents
• science, space, technology 1.1 cents
• agriculture (including farm subsidies) 1.1 cents
• justice (federal courts, prisons, FBI) 1 cent
• running the White House, Congress, etc. 0.9 cents
• commerce 0.8 cents
• community and regional development 0.5 cents
• energy 0.2 cents

If you want a balanced budget, you have to cut 17 cents somewhere.  If you cut more than 17 cents, you can lower taxes.  If you cut less, you have to raise taxes or else go on adding to the national debt (and the interest item in future budgets).

It’s worth noting that when Newt Gingrich cut $40 million in House staff expenses, that saved a whole 0.003 cents on the tax dollar.  If we eliminate the Corporation for Public Broadcasting and the National Endowments for the Humanities and the Arts, we’ll save 0.04 cents.  Do away with foreign aid, we’ll save about a penny.  Clearly those “budget saving” proposals are more ideological than serious, especially when you consider that no one is talking about the 6 cents we could save by eliminating Medicare and Medicaid fraud, or the 2.1 cents in unnecessary weapons.  Eliminating the Lockheed F-22 fighter (built in Gingrich’s Congressional district in Georgia) would pay for the Corporation for Public Broadcasting for the next 252 years.

While you’re pondering what to cut, you might like to look at where the 83 cents comes from.  Estimates of government revenues for every tax dollar expended in 1994 are:

• individual income tax 37 cents
• Social Security and other payroll tax 31 cents
• corporate income tax 8 cents
• excise tax (on alcohol, tobacco, gasoline, etc.) 3.4 cents
• customs and other miscellaneous receipts 2.3 cents
• estate and gift tax 1 cent

Corporations paid 23 percent of federal taxes in 1950 — now they pay less than 10 percent. Social Security, you’ll notice, more than pays its way.  The excess is loaned to the government for general purposes, which means it becomes part of the national debt. Social Security tax is regressive, paid only on the first $55,000 anyone earns.  While lowering corporate tax and income tax on the rich, Republicans and Democrats in Congress and the White House have been raising the Social Security tax for years.

Every tax dollar is paid by someone and received by someone.  That’s the real point of the wrangling — not whether government is good or bad, but who pays and who receives.  As long as spending exceeds income, our policy is: we receive now, our children pay later.  With expenditures distributed the way they are now, we’re saying: the receivers shall be, in order of importance: retired people, workers for and vendors to the Pentagon, the unemployed and poor, owners of government bonds (most of whom are rich, some of whom are foreigners), and suppliers of health services to the elderly.  Our budget also says, by the way, that we think military threats are 15 times more important to our national security than threats from poverty, population growth, or the environment.

That’s the budget we have arrived at, through the pulls and tugs of our debased democracy.  If you’d like to work out a different one, you’ve got the numbers; go to it.  Since you’ve received no campaign contributions from defense contractors, tobacco companies, or health care providers, you have a wider perspective and a lot more courage than your elected representatives.  Send your budget off to them right away.  They need your help.

Copyright Sustainability Institute 1995