NCPA - National Center for Policy Analysis

Just What Does A 1 Percent Budget Cut Amount To?

November 4, 1999

The Republican attempt to cut about 1 percent of discretionary spending out of the federal budget suggests the question of what this would amount to if a median-income worker was to cut his or her budget by that percentage.

The Tax Foundation looked into the question and came up with these results:

  • Take the $28,547 annual income of a median worker and deduct mandatory spending -- $10,298 for taxes, $2,693 for food, $1,404 for clothing, $5,833 for shelter, $3,829 for health and medical care and $2,568 for transportation.
  • That leaves $1,922 for discretionary spending -- and 0.97 percent of that comes to $18.64 a year, or a nickel a day.

The Tax Foundation then applied the formula to the 1997 income of a median family of four:

  • It started with $53,350 and deducted 36.1 percent for taxes, 9.4 percent for food, 5 percent for clothing, 20.4 percent for housing, 13.4 percent for health, and 9 percent for transportation.
  • The remainder amounted to $3,591 for discretionary spending -- of which 0.97 percent would be almost $35 a year.

Analysts point out that the cut passed by Congress is a cut in the projected growth of the 2000 budget over the 1999 budget. It is not a cut from last year's spending. Even if the bill were to become law, the federal government will still spend 5.8 percent more on discretionary items in 2000 than it did last year because of increases enacted in previous Congresses.

Source: Editorial, "A 1 Percent Dilemma?" Investor's Business Daily, November 4, 1999.

 

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