Americans are in a budget cutting mood, and that's a good thing. They are, said another way, engaged in cost-benefit analysis. They know what government costs -- about $3.7 trillion this year. They're not sure the benefits are worth it. We must be able to save money and still get what we need -- without raising taxes -- or so the thinking goes.
Two problems quickly emerge as we get out the budget cutting knives. First, while Americans know that Uncle Sam spends a lot, they don't always have an accurate sense of what the money buys. For example, almost three-fourths of Americans in a 2010 Zogby Poll think we spend 6% or more of the federal budget on foreign aid. More than a third think we spend 11% or more. We actually spend about 1%. Needless to say, cutting foreign aid -- often the most popular choice of Americans to fix the budget, wouldn't make the dent in the deficit we might think.
The other problem is that Americans often don't know how they personally benefit from federal tax and spending policies. A 2008 study by Cornell's Suzanne Mettler found, for example, that 60% of those who claim the mortgage-interest deduction report that they "have not used a government social program." Percentages for student loans (53.3%), social security (44.1%) and Medicare (39.8%), to cite three other examples, highlight the fact that those who attack "social spending" are attacking their own benefits in many cases.
In the spirit of making citizen efforts to bring solid reasoning to where they would cut the federal budget, here's a proposal.
The government should send every American a single sheet of paper each year, perhaps in early January before the new budget goes to Capitol Hill and while we are preparing our tax returns. On the front side of the paper, there would be two simple pie charts. The first would how much of each tax dollar in the preceding year went for the following: Social Security, Medicare, Medicaid, Defense and Homeland Security, education, foreign aid, "other assistance to low income families," interest on the debt and "all other programs." So, if Uncle Sam spent 21% of the budget on Social Security, that would appear as 21 cents. Below the pie chart, the same nine areas could be listed with the actual dollars in billions. The second pie chart would show what percentage of the budget came from tax collections and what percentage came from borrowing (debt).
On the flip side of the sheet there would be a more personal message. It would say something like: "During the past tax year, the federal budget provided the following benefits for you and/or your family." After this statement, there would be two sections on the page. The first would list federal programs in which the recipient and anyone on his/her tax return was a direct beneficiary of government spending and tax policy. This would be drawn from information on the tax return and would include any federal program for which the tax return itself had supplied information. So, if you reported Social Security income, the fact that you benefited from Social Security would show up. The same would be true if you reported taking a mortgage interest deduction. (In time, this section could be even more informative if it also included a report on benefits using information the government has (because you supplied your Social Security number in obtaining benefits) but that might not be clear from your tax return -- for example, if you got Medicare benefits. This would have to be done as a second phase of such an effort since distrust of government is now so high that including information not already evident on one's tax return would involve sharing across government agencies that is either illegal or would raise public concern.
The second list on this page would include two things. One would be a list of other programs that benefit all Americans. For brevity, only major ones might be listed (e.g. flight safety, food safety, interstate highway system, drug interdiction, etc). Finally, five examples, differing each year, of other benefits you get as a taxpayer would be described in no more than a sentence each. Over time, a lot of programs would be covered but the focus here would be on just a few each year so as not to overwhelm the reader. For example, in one year, the form might show: the number of recalls to prevent food borne illness, the miles of bridges refurbished or built with funds from the National Highway Trust Fund, the number of free-lunch meals provided to American school children, the amount of disaster relief funds provided as grants and loans to Americans, and the number of illegal immigrants deported.
The intent of this two-page "Where Are Your Tax Dollars Going?" sheet would be solely to inform the ongoing debate on budget cutting and tax and entitlement policy, a debate which we all agree needs to happen. This is neither an effort to persuade the public that they should be damned happy with paying their taxes nor an effort to convince them that they should be mad as hell. But being happy or mad would be fine, when based on solid data.