Budget 2023

The government gets money from two sources. First the Fed can create money and then expand that through the banking system or second they can collect taxes. This years budget collects $4.639 trillion in taxes and spends $5.792 trillion leaving a deficit of $1.153 trillion. The spending can be broken down into three main categories. Social spending $4.229 trillion, defenses spending $1.167 trillion and interest of $396 billion. Interest payments are just money down a rat hole while defense spending creates many more jobs than social spending. The two big sources of income are $2.846 trillion from personal and corporate income tax and $1.510 trillion from social security and Medicare tax. Income tax is progressive in that the tax rate increases as income increases while social security at 6.2% tax and Medicare at 1.45% are regressive meaning the rates are stay the same for everyone. With a deficit of $1.153 trillion and income tax collections at $2.846 trillion, taxes would have to increase by 60% to balance the budget. This is too big a hill to climb so some spending cuts are needed. A good compromise would be one dollar decrease in spending for every dollar increase in taxes. The decrease in spending would hurt the low income people the most and the increase in taxes would fall mostly on the wealthy.