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This is just false. Giveaways to non-workers are a lot more than half the budget:

http://www.concordcoalition.org/publications/2011/0906/op-ed-government-‘-people’-gets-more-expensive

Wrong the IRS only contributes a portion of the federal governments budget.

No, I am not wrong. I did not say that the IRS provides all of the federal income, just most of it. In fact, it provides nearly all of the federal budget and has done so continously since 1894 (although at that time I don't know if it funded the majority of the federal budget or not). For a summary of the federal income for 2007, see this page. For more references, see the links at the bottom of this article. If you really want to see the details, check out the offical 2008 budget which is online. I believe you meant to say that personal income taxes only provide 40% of the federal income, not the IRS. The IRS collects income from corporate sources as well, which is another 13%. I believe social insurance tax funels through the IRS as well which is another 32% of the federal income. The only money the federal government receives from other sources (such as tarifs and US Treasury securities to pay for the federal deficit) only adds up to 12% of the income.

I don't feel like nor have the time to debate the effectiviness of the FED here. If you want to see my side of the argument, read Alan Greenspan's book 'The Age of Turbulence: Adventures in a New World'.

People always believe things are more efficient at the local level which, while usually true, is not always the case. For example, a ton of money was given by the federal government to Louisiana after Katrina. This money had almost no strings attached so the state and city of New Orleans could do with it as they wished. What happened? Due to lax oversight and local corruption the money went to various projects that had nothing to do with getting people back home or rebuilding the community.

One thing most people forget about the federal budget is that most of the 'pork' is in the form of earmarks distributed at the local level. Larger, federal programs have much stronger auditing and oversight that prevent spending irregularities. And Ron Paul was one of the biggest beneficiaries of earmarks, receiving millions of dollars over the years for his district (see his interview on Meet the Press for details).

One major problem with cutbacks to the federal budget is that spending oversight (by auditors) is usually cut in higher proportions than the federal budget. I have a friend that has worked as a contract auditor for the feds for 7 years or so. In those 7 years their workload has quadrupled due to downsizing. How can they possibly achieve the same level of oversight with such little manpower?

Typical ./ reaction, hands wringing, Oh dear, Oh my!

Well, let me be the first then to suggest:

http://www.taxpayer.net/

http://www.taxfoundation.org/

http://www.concordcoalition.org/issues/scorecard/i ndex.html

Each spin a different way and I'm sure there's a few dozen more groups out there. One of which is bound to have a message that you agree with.

Ah Fear, what ever happened to Lee Ving anyway?

Yet the numbers tell a different story. You are being swindled, pal.

And your numbers are?

I'm quite well aware of people writing up reports saying that there is nothing to worry about. Some say, for example that the assumptions of the models that predict bankruptcy are excessively pessimistic. But unless you point us to what you are using as the basis for your statement that we're being swindled, we can simply assume you are just blowing rhetoric.

On the other hand, I'm looking at a $20B hedge that one of financial history's most consistent performers has placed against the dollar. That is 15% of market cap on Berkshire Hathaway. Even more interesting, that is over 50% of the company's cash position, what it really took to position that hedge (he still has the cash, but it is a real pain in the ass to manage multiple currency positions like that). He is not the only one taking short positions against the dollar, just a trader who is well known to the mainstream. In his entire career, he has only ever made one other investment of comparable magnitude, and that is when he bought GEICO, which rocketed BRK.A to the top by essentially giving him a private venture fund to capitalize purchases of other income-producing assets. There is a first time for everything, and Buffett might be wrong, but odds are he knows something you don't.

Talk is cheap, but 50% of cash in the billions backs up a metric assload of talk. And Buffett is saying we're borrowing too much. He doesn't give specific prescriptive advice, but when you look at what we are spending on well, it doesn't take a genius to figure out that even if we dropped defense to zero, we still won't dig out of our hole fast enough; and that's just the public debt. You want to talk about Social Security? Sure, let's talk unfunded liabilities. You think our current public debt hole is manageable? Okay, I'll give you a hole so deep, it exceeds the total net worth of the nation. In equities terms, the "book value" of the nation cannot cover the unfunded liabilities. The Social Security and Medicare Trustees' annual reports have to be off by almost 100% to make the unfunded liabilities even match the net worth of the nation.

Naturally, when you are talking about what you owe versus what you have, prudence dictates that you don't risk more than 10% of capital on any one class of expenditures. So you probably want the Trustees to be off by a factor of 10 to be relatively prudent. The only reason our creditors are not running screaming in the other direction is because we don't have to pay these unfunded liabilities right away, so it is not yet impacting our ability to pay them back. It's someone else's problem at this time, in other words.

I don't know what reports you're reading, but I'm looking through the Trustees' own words. If you can point to analyses that can demonstrate how the Trustees' numbers are off by an order of magnitude, hey, I might think history is being made and Buffett will make the biggest mistake of his trading career. The swindle I believe history will write, is upon the enstupidated and innumerate American voting citizenry, for believing they can get something for nothing. Thank God that we have intrinsic strengths that have not been totally destroyed yet, so we are unlikely to see Chinese Cultural Revolution scale deprivation and slaughter when the bill comes due. But make no mistake about it. If Buffett and a hell of a lot of other traders are right, we are in for an incredibly tough, whipsaw ride starting around 2010 or so. And going on for anywhere from 5 years to possibly decades, depending upon

Take another look at the chart on p. 60 of the 1040 instructions from the IRS. Note that Social Security spending is 33% of federal spending today before the Boomers retire. That will only grow. Net interest on debt cannot be tapped, and all other categories are dwarfed by entitlement spending. There simply is not ``plenty of discretionary spending'' to re-assign to save SS.

I also have to ask if you have any clue just how enormous the unfunded liability of our entitlement programs is -- $20 Trillion. We aren't going to come up with that shortfall by saving dimes and pennies on other programs. The orders of magnitude simply do not compare.

Oh, well, yes, the US has had a "budget surplus" this year, but that is only because of the extra money that is going into the "Social Security Trust Fund". If you took that off budget, which legally it is supposed to be, we would have and a "hefty budget deficit" this year. ("hefty" being defined as being about the same size as the surplus that you call "hefty").

The US government went about $113 billion futher in debt last fiscal year, when everything is totalled up. Check out the Concord Coalition web site for more info. They are a group made up of both democratic and republicans that know all too well how washington works.