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Where does that $3 trillion go?

"Where Does the Money Go?: Your Guided Tour to the Federal Budget Crisis" by Scott Bittle and Jean Johnson

TEXT OF INTERVIEW

Kai Ryssdal: We covered inflation at the wholesale level up at the top of the broadcast; here's an item about just plain wholesale inflation.

This morning, the federal government told us health care prices are going up at a rate of almost 7 percent a year and that nine years from now, health care will eat up 1 of every 5 dollars in the federal budget.

Scott Bittle's spent some time looking into Washington's spending habits. His new book is called "Where Does the Money Go?"


Ryssdal: Scott, welcome to the program.

Scott Bittle: Thank you for having me.

Ryssdal: Alright, so give it up: where does the money go? I mean, you know, it's a $3 trillion budget.

Bittle: Well, it goes to all kinds of things. It doesn't usually go the places people think. The fact is the federal government spends about two-thirds of its money on just five things: Social Security, defense, Medicare, Medicaid and interest on the money we've already borrowed.

Ryssdal: Where ought we start as we try to think about the federal budget and how to get our brains around it?

Bittle: Well, I think the best starting point is that for 31 out of the last 35 years, we've run a deficit. Every time the government runs a deficit, they borrow the money. That adds to the national debt. The national debt's now up to $9 trillion. As we go forward, we've got huge expenses coming up. As the baby boomers retire, they'll need Social Security and they'll need health care from Medicare. Combined with the fact that health care costs are skyrocketing means that the entitlement programs have the potential for really getting out of control, particularly Medicare.

Ryssdal: Here's the problem though: all this budget stuff... it's really boring.

Bittle: Tell me about it! We took our best shot in the book at making it interesting, but the bottom line is even though it's dull, it's not that complicated and also, it's fundamental. Everybody has something they want the government to do and the fact is, the American people really have to take ownership of how the government spends their money. Otherwise, how can they possibly get what they want?

Ryssdal: Well, if you want the budget to get fixed though -- and objectively, that's a good thing -- what's step number one?

Bittle: Well, step number one is getting the year-to-year budget under control and then you've got to do something particularly about health care costs, because there's no way you can control Medicare without controlling health care costs.

Ryssdal: Well, that brings up an interesting point actually, that the deficit problems we have will eventually -- and in some way, they are in this election cycle -- driving policy choices.

Bittle: Absolutely. Nothing gets done without money. The most insidious part of the way our federal finances are going is that the logic of the numbers slowly robs the public of their ability to set priorities. If we do nothing, by 2040, there would be no money left in the federal budget for anything other than Medicare, Social Security and interest on the national debt. You couldn't get anything else done at that point.

Ryssdal: Let me do a little point-counterpoint here for just a second. There are plenty of people who will say, "You know what? We need entitlements in this country because that's what this country is all about. If we have to run up a structural debt to do that, well, than that's what we have to do."

Bittle: And there's nothing wrong with saying as a priority "taking care of senior citizens is a critical priority," but the thing is, you have to do it in ways make sense financially.

Ryssdal: Scott Bittle is the editor of Public Agenda Online. His latest book with Jean Johnson is called "Where Does the Money Go?" Mr. Bittle, thanks a lot for your time.

Bittle: Thank you for having me on.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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