Column #437 January 12, 2024

When it comes to the Federal Budget “discretionary spending” requires an annual appropriation bill, which is a piece of legislation. Generally, Congress allocates over half of the discretionary budget toward national defense and the rest to fund the administration of other agencies and programs. These programs range from transportation, education, housing, and social service programs, as well as science and environmental organizations.

“Mandatory spending,” refers to spending enacted by law, but not dependent on an annual or periodic appropriation bill. Mostly it goes to entitlement programs such as Social Security benefits, Medicare, Medicaid, interest on the debt, and other mandated-by-law expenses.

Supplemental appropriations are appropriations enacted by Congress after the regular annual appropriations when the need for funds is too urgent to wait for the next regular appropriations. Funding for Ukraine for instance.^{1 2}

On Sunday, January 6, 2024, House Speaker Mike Johnson informed Congress that Congressional negotiators reached a topline spending figure in discretionary spending that should avoid a federal government shutdown that looms over us like the sword of Damocles.^{3 4}

The proposed new discretionary spending budget has a $1.66 trillion limit. In 2023, the federal government spent about $6.3 trillion, 27% being discretionary ($1.70T) and 73% ($4.60T) being mandatory. So, on the surface, taking into account inflation, the 2024 budget could be considered a slight reduction in spending. Currently, this discretionary spending budget is about the same as was proposed by former Speaker Kevin McCarthy. But unless revenues increase significantly, the annual deficit will be about the same or worse in 2024 as in 2023.

All of the other mandatory expenditures are inflexible and go up with inflation and higher interest rates. Social Security, Medicaid and Medicare, interest on the debt will increase in 2024 over 2023. Between 1973 and 2023, discretionary spending’s budgetary share fell from 53% to 28% of total federal spending because of the rapid growth of mandatory spending. Toss in emergency appropriations and it’s not likely that the 2024 fiscal deficit will be reduced compared to 2023.

This means our new conservative speaker of the house is quite similar to the Democrats when it comes to spending. You’d even think his do-not-rock-the-boat stance is meant to help Biden get reelected. If the powers-that-be are so reluctant to address overall spending and revenues, one can only guess that the objective of Congress is to avoid any contraction in total debt. In other words they want all debts to continue to expand for all sectors of the economy!

As of the end of Dec 7, 2023 total debts in the USA were $97.4T which is a few dollars shy of $100T. That’s up from about $76.8T in the past three years. The trend is definitely up. Our GDP cannot support the interest payments on so much debt.⁵

One of my major concerns, for about 20 years now, is that a Republican president will be in office when the debt bubble pops. That’s what happened to Herbert Hoover. He was elected president in the 1928 election and, in about six months into his presidency, the credit system imploded and the stock market crashed. The economy didn’t bottom until mid 1932. It was 30 years before another Republican was elected president.

More debt is not stronger debt. More debt is weaker debt. We have more debt today than at anytime in our country’s history. Piling on more debt at a time when the interest cost on the debt, is a staggering sum, only compounds the problem. According to the Committee for a Responsible Federal Budget, in the past 23 years the budgets were passed by both parties year after year. Who promoted this debt? Bipartisan support accounted for 77%, highly partisan Democratic actions 12%, and highly partisan Republican actions were 8%.^{6 7}

As we can see, discretionary, mandatory, and supplemental expenditures must be addressed. To do so will certainly cause a lot of gnashing of the teeth. They all must be reigned in. But the current elected representatives don’t have the stomach for it. They hope to collect their salaries and cushy retirement programs for representing us rather than cutting spending and risking the fallout. So we get what we vote for which is mismanagement.

The Rutherford’s recently explained why politicians are so corrupt in a recent commentary. “There is no difference between psychopaths and politicians. Nor is there much of a difference between the havoc wreaked on innocent lives by uncaring, unfeeling, selfish, irresponsible, parasitic criminals and elected officials who lie to their constituents, trade political favors for campaign contributions, turn a blind eye to the wishes of the electorate, cheat taxpayers out of hard-earned dollars, favor the corporate elite, entrench the military-industrial complex, and spare little thought for the impact their thoughtless actions and hastily passed legislation might have on defenseless citizens.”⁸

Unless debt and excessive spending are addressed in a businesslike fashion soon, at some point in time the debt-based monetary system will implode. Then if something stable isn’t set up quickly, the good old USA will be another full-blown banana republic. Whom we vote for matters.

To your health.

Ted Slanker

Ted Slanker has been reporting on the fundamentals of nutritional research in publications, television and radio appearances, and at conferences since 1999. He condenses complex studies into the basics required for health and well-being. His eBook, The Real Diet of Man, is available online.

For additional reading:

1. What is discretionary spending in the federal budget? by Moraa Ogendi and David Wessel from Brookings

2. How much has the U.S. government spent this year?

3. Speaker Johnson Announces $1.66 Trillion Bipartisan Package To Avert Shutdown from Zerohedge

4. OMB & CBO Release Memos on FY 2024 Discretionary Spending Limits by Other Spending from Committee for a Responsible Federal Budget

5. U.S. Debt Clock

6. From Riches to Rags: Causes of Fiscal Deterioration Since 2001 by Budgets & Projections from Committee for a Responsible Federal Budget

7. A Culture In Collapse by Victor Davis Hanson from American Greatness

8. Criminality In The White House: The Rise Of The Political Psychopath by John & Nisha Whitehead from The Rutherford Institute