Here is a chart from kff.org that shows a breakdown of government spending. Understanding the federal budget is important when we hear about where spending cuts will be targeted. The only area being targeted so far is “Discretionary non-defense” spending, which represents just 19% of the total budget.
Looking at the chart below, you can see why Social Security, Medicare, and Medicaid are blamed for budget deficits, as they total 43% of the federal budget. Medicaid pays 75% of states’ Medicaid costs.
Medicare and Social Security are seen as contracts between the government and seniors, so cutting these programs is a political hot potato. Defenders of Social Security say money that is paid out is covered by Social Security taxes that are paid into the system each year, so this does not add to the deficit. In 2010, for the first time, Social Security payouts totaled more than Social Security taxes collected. This was because of high unemployment and more people choosing to start collecting their Social Security at age 62.
Social Security defenders also point out that Social Security has a about 2.5 trillion dollars in IOUs because the government has used surplus Social Security revenue for other programs over the years. Now the government must make up the difference between payouts and tax receipts by paying off some of their Social Security bonds.