What's your Budget IQ?

So have you ever been at a party, BBQ, or just sitting around with co-workers and friends and the one really opinionated person pipes up with some totally outlandish spending 'fact' or 'statistic' they heard from a friend of a friend who saw something on Glen Beck a few weeks back and you just know you are in for five minutes of trying to keep your blood pressure at a normal level while you quietly let the person relieve themselves of the said 'fact' and they attempt to enlighten the group on why America is going to hell in a hand basket? Ever happened to any of you? Anyone?

Of course it has. Why? Because we're all idiots! Our perceptions are our realities. The news media, pundits, and even politicians themselves highlight items, cases, stories, and statistics that grab your attention and prompt an emotional response. You hear enough of these stories attached to an emotional reaction then they start to become your reality. Politicians and media pundits then capitalize on these new realities and use your feelings; often of anger and fear to keep you watching or listening to their shows or to keep voting for them.

Consider this poll from CNN on America's Budget IQ. Here is the accompanying article: American's flunk budget IQ test.

Let's take one item, say Foreign Assistance; What percentage of the budget would you say America spends on Foreign Aid? According to the poll on average people say we spend 10% of the budget on that one item (1 in 5 say we spend 20% on it). The truth? It's about 1.65%. Are you surprised? If so, why? Why do you think it's higher than it is? Is it because aid programs in Haiti, or parts of Africa, or other places around the globe get so much media attention?

Or is it cases closer to home like Congressman Chaffetz highlighting the inefficiencies of USAID in Haiti? "The relief effort is not progressing fast enough - why are we spending soooo much money there?" That's the message right? Does that make you angry? Of course it does. Are we wasting money in Haiti? Maybe. But would holding hearings and then cutting aid to programs like USAID really make a dent in the deficit? At 1.65%, and I'm guessing USAID isn't even a 10th of that, cutting that whole program wouldn't even be a blip on the radar. Yet you feel like our representatives are working on cutting the graft - trimming the pork right?

Wrong.

To get a sense - a true sense of where cuts need to happen take a look at this graphic for the 2012 proposed budget. It (see graphic at top of this post) gives you a nice visual of the largest programs and puts the smaller (yet often most highlighted) spending programs in context. What are the biggest spending items? Social Security at 20.04%, National Defense at 19.27%, and Medicare at 12.86%. Those three items are over half the total budget alone(!). Scroll over the various items to see their amounts.

So the next time your uneducated yet very opinionated associate starts in on how much the US is spending on what, you can chime in and say 'Oh yeah? If we're ever going to make a real dent in spending, you should take a look at those darn entitlement programs." Or when they say "We're spending 5% on NPR!" You can say; "Actually, it's only one tenth of one percent...If you really want to make a difference we should think about what it's costing us to fight wars on two fronts. 19.27% of our budget goes to national defense..."

Yeah, try giving them a dose of that reality. And the real reality is, that's where the discussion should be, not on earmarks, not on roads to nowhere, not on foreign aid programs. It's time to reform Medicaid, Medicare, Social Security, and come up with a cohesive national defense strategy.