Red Ink: Inside the High-Stakes Politics of the Federal Budget by David Wessel

Feb 08, 2013 Zach rated it 4 of 5 stars · review of another edition

If you're looking for a basic overview of the United States federal budget, you can't do much better than this book. David Wessel, an economics editor for the Wall Street Journal, explains several key aspects in regards to the federal budget: how we got here, where the money goes, where the money comes from, and why this can't go on forever.

A subject as far-reaching as the federal budget is bound to include budget-related aspects from various fields. For example, Mr. Wessel goes into the finance...more If you're looking for a basic overview of the United States federal budget, you can't do much better than this book. David Wessel, an economics editor for the Wall Street Journal, explains several key aspects in regards to the federal budget: how we got here, where the money goes, where the money comes from, and why this can't go on forever.

A subject as far-reaching as the federal budget is bound to include budget-related aspects from various fields. For example, Mr. Wessel goes into the finances for Medicare and Medicaid, which are naturally tied into health-care spending. While these two social insurance programs already consume an alarming 21% of the federal budget, the real fiscal hole is coming from the ever-building liabilities promised to future retiring seniors of the baby boom generation. With the Congressional Budget Office forecasting a 75% rise in Medicare spending over the next decade, it's no surprise that Mr. Wessel emphasizes the pressure that health care is weighing on the federal budget. This skyrocketing spending, as Mr. Wessel states, "is not just a result of more and pricier procedures ... among these costly legacies is a decades-old embrace of fee-for-service, an approach to paying for medical care that tends to encourage more, but not necessarily better, care."

It's impossible to understand the federal budget without also considering how and where the money comes from. Mr. Wessel dedicates a chapter to this subject, in which he explains that the federal government gets money in two ways: taxes and borrowing (I would also add in printing money as a third method, but perhaps Mr. Wessel is implying that printing money is a form of taxation). This chapter looks into a brief history of taxation to the extent on how we got to this point, as well as the politics of the current tax debate. Everything is covered briefly from types of taxes to how much the wealthy pay relative to the rest of the country. (I also have to be nitpicky here and point out that his claim of a top tax rate of 35% on earnings above $338,350 is incorrect. The actual number is $388,350.)

While seeming like a book on taxes at times, I believe Mr. Wessel is correct for including a brief lesson on taxes--from the federal income tax to the Alternative Minimum Tax--to fully understand from where and how tax revenue is flowing into the federal budget. The numbers in the tax burden section are also an eye-opener. When considering who pays what share of federal taxes, Mr. Wessel points to a Tax Policy Center study that the wealthy pay a disproportionate amount of federal taxes relative to their percentage of national income. This study was also supported by a report five months after "Red Ink" went to press, where the Congressional Budget Office reported that the top 1% paid an average tax rate of 28.9%, compared to the middle quintile's 11.1% and the bottom quintile's 1.0% federal tax rate. Mr. Wessel cites a 2011 Pew poll showing 55% of Americans that think the tax system isn't fair in the sense that "people's frustration is not how much they themselves pay, but rather the impression that wealthy people are not paying their fair share." Whether this is an accurate assessment is better left to details outside the realm of this book, but Mr. Wessel does a fine job summarizing the tax debate, the fairness issue, and how they relate to the federal budget.

It's obvious at this point that the federal budget of the United States is a monster full of complex issues. Mr. Wessel makes the plethora of numbers and complexity a simple read that any American can understand. While "Red Ink" won't turn you into an budget expert, it will help you better understand what may be one of the most important issues our country faces in the foreseeable future. (less)

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Nov 28, 2012 Breakingviews rated it 4 of 5 stars · review of another edition

Review by Rob Cox

To understand the current state of the U.S. federal budget - and the policies the next president will be forced to pursue from day one - there are two pieces of required reading. The first is a two-year old wonky white paper entitled “The Moment of Truth,” by the National Commission on Fiscal Responsibility and Reform. The second is “Red Ink,” David Wessel’s handy new guide to understanding the politics of the federal budget.

If the race between President Barack Obama and former...more Review by Rob Cox

To understand the current state of the U.S. federal budget - and the policies the next president will be forced to pursue from day one - there are two pieces of required reading. The first is a two-year old wonky white paper entitled “The Moment of Truth,” by the National Commission on Fiscal Responsibility and Reform. The second is “Red Ink,” David Wessel’s handy new guide to understanding the politics of the federal budget.

If the race between President Barack Obama and former Massachusetts Governor Mitt Romney is going to be about anything substantial, it should be a technocratic debate over how to fix the troubled balance sheet of the American republic. “The Moment of Truth,” otherwise known as the Bowles-Simpson plan for the names of its lead co-authors, and Wessel’s book offer two sides to the same coin. The first presents the danger to American power and prosperity from failure to address fiscal issues and proposes specific policy solutions. Wessel’s book explains why even the simplest and least painful of these will be so incredibly difficult to pursue.

Wessel, a Wall Street Journal columnist, could not have better timing. Romney’s selection of Paul Ryan as his running mate has the potential to turn the presidential race into a discussion of two competing visions for balancing the American checkbook. Ryan, chair of House Budget Committee and a central character in Wessel’s compact (162 page) study, was a member of the Bowles-Simpson commission. The bipartisan group of 18 members including six senators and six representatives tried to address the country’s fiscal challenges, but Ryan refused to support the majority’s findings. President Obama also declined to put his full weight behind the suggested policies.

The reason that the commission’s advice was not taken becomes apparent in Wessel’s accounting. While nobody loves the cost of government, everybody cherishes the things it specifically does for them - sending 11 aircraft carriers to ply the seas, putting a man on Mars or providing medical care to the poor and elderly. The last, along with the cost of Social Security and Medicaid, should be of greatest concern to future generations. At $555 billion, Medicare is already costs more than the Federal government spent in 1951 budget, adjusted for inflation. This reflects the wastefulness of the system rather than a doubling of the population. Last year this health insurance for the elderly consumed 21 percent of America’s total budget. If recent health care cost trends continue, the bill will rise by 75 percent over the next decade.

Wessel sums up the politics succinctly. “These diverse financial arrangements have one thing in common: at the end of the pipeline is some American who is getting a check or a promise. Most are convinced they deserve the money.” For example, the farmers who receive the $15 billion in annually farm subsidies, much of it in the form of no-strings attached “direct payments,” and $10 billion in crop insurance relief resist cuts, even though about half of the money goes to families with annual incomes higher than $100,000.

On the other side of the ledger from spending are taxes, specifically $1.1 trillion of deductions, exemptions or loopholes, or as Erskine Bowles, co-author of “Moment of Truth” with retired Republican Senator Alan Simpson, terms them “backdoor spending through the tax code.” Eliminating them could raise revenue nearly equal to half of the U.S. government’s top line. Getting rid of corporate loopholes alone would allow the overall tax rate paid by companies to fall to 28 percent from 35 percent.

But as Wessel notes, such tax increases are no easier than reducing beloved spending programs: “Congress and presidents have discovered something simple: giving people a tax break makes them happy without increasing government ’spending’ and can accomplish the same objective,” even though there’s no economic difference to Uncle Sam’s income statement.

Bowles-Simpson may offer a more clear-cut blueprint for righting America’s fiscal ship. But devoid of the political realities of a highly polarized Washington, it also oversimplifies the task the next president, and Congress, will face. Wessel’s book is the livelier, more readable companion to “The Moment of Truth.” Both shed valuable light on the inevitable political and legislative wrangling in the run-up to November’s election, and beyond.(less)

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Aug 07, 2012 Jorge rated it 4 of 5 stars · review of another edition

Shelves: politics-economics

Red Ink: Inside the High-Stakes Politics of the Federal Budget by David Wessel

“Red Ink” is a very solid and concise book that provides the public with an essential understanding of how the Federal Budgetary process works. Pulitzer prize-winning author and economics editor for the Wall Street Journal, David Wessel takes the readers on a smooth ride through the US Federal Budgetary process. A book about the budgetary process can be dry and dull but Wessel's command of the topic and lucid prose ma...more

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Dec 19, 2012 Christopher rated it 3 of 5 stars · review of another edition

Shelves: fareed-zakaria-gps-book-of-the-week, politics

With the election concluded in Pres. Obama's favor and the media political attention focused on the so-called "fiscal cliff," this little book on the federal budget is as timely as it is informative. Mr. Wessel, who previously wrote about the Federal Reserves' actions to ward of the Great Recession in

In FED We Trust: Ben Bernanke's War on the Great Panic, writes a book aimed at enlightening the general populace on that byzantine product Congress has to produce every year and has lasting conseq...more

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Oct 19, 2012 Schnaucl rated it 4 of 5 stars · review of another edition

Shelves: borrowed, e-book, non-fiction, read_2012, recommended_reading, october

4.5 stars.

My dad recommended this book and loaned me his Nook to do it.

This offers a fairly comprehensive but easy to understand explanation of how the US ended up with such a large debt.

As far as I can tell it was pretty even handed except that it kept the number the banks borrowed to TARP levels, which Matt Taibbi and Nomi Prins (among others) would argue is way too low a figure. He also perpetuates the myth that the banks have paid back TARP, which, while it may be technically true, ignores...more

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Sep 01, 2012 Kent rated it 5 of 5 stars · review of another edition

Shelves: politics, economics

In a successfully non-partisan way, Wessel provides keen analysis and powerful insights on the challenging budget situation facing the United States. His ultimate assessment of the budget debate is the crux of this book. The assessment is outlined in the summary chapter, the heart of which comprises the last 5 to 6 pages of the book. It is based on inputs and strategy discussions of the most informed and engaged analysts and advisers working on budgetary issues, including many of the Simpson-Bow...more

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Sep 09, 2012 Nicole rated it 3 of 5 stars · review of another edition

Disclaimer: I work for a U.S. Congressman. I spend months and months of my work year looking at the federal budgets for the Department of Commerce, the Department of Interior, the Department of Agriculture, and the Department of Energy (those are the government agencies in my "issues portfolio"). The news is continuously on the TV that is mounted on my desk right by my two monitor computer set-up (the monitor on the left is a mosaic of WSJ, NYT, WaPo, CNN, etc.). I use words like budget baseline...more Disclaimer: I work for a U.S. Congressman. I spend months and months of my work year looking at the federal budgets for the Department of Commerce, the Department of Interior, the Department of Agriculture, and the Department of Energy (those are the government agencies in my "issues portfolio"). The news is continuously on the TV that is mounted on my desk right by my two monitor computer set-up (the monitor on the left is a mosaic of WSJ, NYT, WaPo, CNN, etc.). I use words like budget baseline, spending offset, kick the can down the road, fiscal cliff, and continuing budget resolution on a daily basis. I fight to keep the programs my boss supports from being cut to increase spending somewhere else.

My point of giving you a little insight to my professional life: I understand more about the budget than the typical American. I know about discretionary versus mandatory spending and why the mandatory spending is what is getting us in trouble. I know the main tenets of the Republican and Democratic parties when it comes to deficit reduction and the fundamental differences in both. I know that both R and D plans require a perfect storm of Congressional harmony.

For someone who doesn't have the intimate, every day interaction with our budget as I do (97% of the people who pick it up, probably) this book is a great overview of the budget and deficit issues we are currently facing. However, it is very much a 30,000 foot view. The writing is clear, concise, and helped along by a frugal number of graphs and charts when appropriate. I think this book is a quick, fairly nonpartisan (I think there is a little leaning, but not much) snapshot of the important issues driving the budget.

For me personally, I greatly appreciated the history of how we got into the current fiscal boondoggle. It was nice to better understand how we went from a budget surplus in the late 1990's to the annual deficit we currently operate under. However, I think I am ready for a more detailed explanation of what different deficit reduction plans actually entail and how that translates into various forms of savings.

For example, yesterday, I spent a substantial amount of time researching the political ads that say ObamaCare is being funded by cuts to Medicare. I don't need to know the nitty gritty, but I do want to know why one political party says this while the other doesn't while they are both looking at the same numbers and, in fact, both made the exact same proposed cuts to Medicare. Also, the only reason I have time to do things like this is because we're in August recess - those magical 5 weeks every year when all members of Congress go home to work/campaign and staffers stress level drops significantly as they actually have time to do research and become well-versed on platform planks.

This whole rant was a long-winded way of saying: this is a good book that explains important fiscal issues that will be more and more in the spotlight as we ramp up to November 6. If you have a good knowledge of the current issues, this book won't be a waste of your time, but it may not give you the satisfaction you were hoping for.(less)

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Oct 24, 2012 Justin rated it 3 of 5 stars · review of another edition

A concise, and easy to follow depiction on how the U.S. has sunk into the Red. The book really doesn't give any clear "cut" (pun intended) ways to get back into the black (however, a country should NEVER be in the black as that means they are not spending what they bring in). The author tries to stay middle of the road, but often starts to veer of course to the right a bit. If you're looking for a short read on why we are in debt, how the debt is made up, and some things that can be done, give i...more

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Dec 10, 2012 Lumpenprole rated it 4 of 5 stars · review of another edition

Shelves: 2012, borrowed, economics, politics

I think this may be the first time in my life I might actually have wanted more information on the whole federal budget mess than the author provided. I think Wessel didn't want to lose readers in a 6,000 page forest of small type, confusing buzzwords and tables and charts straight out of bizarro-world. And in that he does an excellent job. But, like I said I came away with a curious feeling that there's quite a bit more going on than Wessel was able to squeeze into this book. Either because he...more

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Mar 20, 2013 Kasandra rated it 4 of 5 stars · review of another edition

A great explanation (concise and understandable) about how the federal budget works, how we got to where we are now, and various suggestions and ideas that could reduce the deficit over time (it's gonna hurt, no matter what, but it's doable, if both sides could meet in the middle/ agree that big changes are needed in both taxing and spending). Rational and objective information that doesn't get covered in depth in the news, this shows how difficult choices are necessary to get us out of the debt...more

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Sep 19, 2012 Kevin rated it 4 of 5 stars · review of another edition

This was an excellent book that explained the whole Federal budget process from beginning to end. It clearly explained how the President's proposed budget is the opening kickoff for a proess that ends in spending that, more often than not, adds to the red ink and our growing national debt. As i found out, so much of our spending is on autopilot--nearly 63%--and doesn't require an affirmative vote of Congress on an annual basis. By law, social security benefits get deposited, Medicare pays medica...more

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Jan 19, 2013 David James rated it 5 of 5 stars · review of another edition

Debts & Deficits for Dummies. This brief and clearly written book explains the mess we are in and what we can expect if we don't fix it. Wessel earns bonus points for doing what few are capable of in this hyper-partisan era: he documents our most pressing political challenge without once resorting to partisan rancor. That's because he recognizes that both sides are driving the problem.

There are no earth shattering revelations here, just the simple facts. Essential reading for anyone who thin...more

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Aug 13, 2012 Tiffani rated it 4 of 5 stars · review of another edition

Interesting read on the federal budget. Wessel gives a short history and explanation of how the federal government's funds are generated and where those funds are spent. The figures are overwhelming but any reader would find the book informational. The most powerful quote from the book comes from the CBO's director Doug Elmendorf, "The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans,...more

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Nov 23, 2012 Camille Tesch rated it 4 of 5 stars · review of another edition

Shelves: public-policy

This is a well-written, concise account of the federal budget, including key players, challenges, and politics involved. It clearly explains where federal revenues come from and where the money is spent. If you've ever wondered where your tax dollars go, this would be a good book for you to read. The federal deficit and budget are so poorly understood by the American public, but so important to our current and future economic health. Americans who care about the economic future of the country sh...more

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Nov 11, 2012 Patrick rated it 5 of 5 stars · review of another edition

Shelves: economics, politics, history-long-periods

The book is small in size, the print is fairly centered on the page, and its 162 pages are a very quick read. I loved the concise explanation of the history of the debt from FDR to Reagan to Bush Jr. to Obama.

The obviously advocates for doing something about the debt, saying it will cause very large problems if we kick the can down the road any further. BUT, I don't think he takes potshots at anyone or either political party. I thoroughly enjoyed this right after the election where you can't be...more

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May 14, 2013 Sally rated it 4 of 5 stars · review of another edition

A quick read and a nice one in tandem with Dirty Wars as there are consistencies is both journalists characterization of Obama, though Wessel doesn't discuss Bush at all, only acknowledges what a mess Obama inherited. I first heard of this book because I heard the author speak last fall. He makes a strong argument for both raising taxes and slimming down programs, that everyone will have to give to make real improvement to reduce the national debt.

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Sep 19, 2012 Jud Barry rated it 4 of 5 stars · review of another edition

Even-handed, clear, comprehensive, objective, authoritative ... and brief! The Federal deficit is a big issue in the 2012 Presidential contest, but neither side in this interminable campaign will spell out the issues and alternatives unabashedly the way this book does. If only we could cancel the campaign (including all advertisements) pending the nationwide required reading of this book, then resume for a week of campaigning, then vote.

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Mar 07, 2013 Libby is currently reading it · review of another edition

Shelves: policy

So far hasn't given even glancing notice to tax expenditures.
The amount of personnel in the military surprised me: p.22 "About 35 percent are uniformed military personnel and another 29 percent are civilians working for the departments of Defense, Veterans Affairs, and Homeland Security."
Alright, I forgive. Tax expenditures get their time on p. 28.

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Oct 28, 2012 Ntb rated it 3 of 5 stars · review of another edition

Shelves: politics

An okay book with a misleading title. This book is more a general overview of the federal budget and less about the politics behind it. It does a nice job of laying out the basics--where the money goes and how we get money. For the novice, it's good, but if you already follow the budget and politics, you probably will not find much new information.

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May 30, 2012 Crown Publishing Group rated it 5 of 5 stars · review of another edition

Shelves: business

David Wessel, the Pulitzer-Prize-winning reporter, columnist, and bestselling author of In Fed We Trust, dissects a topic--the federal budget--that is fiercely debated today in the halls of Congress and the media, and yet is misunderstood by the American public.

In a sweeping narrative about the people and the politics behind the budget, Wessel looks at the 2011 fiscal year (which ended September 30) to see where all the money was actually spent, and why the budget process has grown wildly out of...more

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Nov 09, 2012 Michael rated it 3 of 5 stars · review of another edition

Good book, a bit wonkish for me. It truly shows how complicated the National Debt is and how hard it will be to solve. Basically we cannot have a gigantic military and reduce the debt, and we can't keep enrolling folks in Medicare and reduce the debt. long story short, people don't want to pay for the gov't they have, whether it local, state & federal level.

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Feb 03, 2013 John Ethier rated it 5 of 5 stars · review of another edition

This should be required reading for all and definitely for all civic's classes (assuming they still have such classes). This is a fact based book that provides details to the current US budget and all related issues. It is not political. As an aside it does lay out why spending cuts alone will probably not provide the answer - the math doesn't work.

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Jan 04, 2013 Chuck rated it 4 of 5 stars · review of another edition

started and finished in one day. Good insight to budget horrors and why the outlook for reducing deficit is so poor. Makes you appreciate how the terrorists did a lot to destroy our economy by their actions on 9/11/01, all the money spent since then on wars, homeland security, etc.

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Dec 21, 2012 Tim rated it 1 of 5 stars · review of another edition

This book is perfect for a middle school class. I did not like the writing style, the grammatical and spelling errors, the uninspiring information on offer, and the lack of anything new or insightful. If it wasn't the only thing I had on the plane I would of stopped reading it.

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Sep 08, 2012 Tom Blumer rated it 4 of 5 stars · review of another edition

A good primer on the current fiscal deficit we are running as a country. Written by a WSJ writer, it is a very balanced look at how we got here, the inability of our politicians to find compromise solutions, and what will happen if we don't address the problem. A quick, but very informative read.

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Dec 27, 2012 Jerry Hilts rated it 3 of 5 stars · review of another edition

Shelves: politics

A good, brief overview of the budget and our debt issues. Fairly non-partisan, there is plenty here to piss off both hardcore Republicans and hardcore Democrats. Definitely worth investing a few hours to read in light of the enormity of the issue and its impact on us all.

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Aug 10, 2012 Robert rated it 4 of 5 stars · review of another edition

Good book, very insightful. Mr. Messel certinaly knows his field and shows it here. I wish the book had delved deeper into some of the topics, but it certinaly provides you with a very good understanding of the Federal Budget and a lot of the "politics" around it.

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Aug 06, 2012 Sarah added it · review of another edition

I haven't finished it yet but what I've learned from this book so far is eye popping. If you have any interest in learning about how the US got to this level of federal deficit you should read Red Ink. Though I should warn you, it's a little depressing.

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Nov 26, 2012 Susan Janke rated it 4 of 5 stars · review of another edition

I found this book to be very easy to read, and helpful in understanding the key issues with the Federal budget and the "fiscal cliff". I highly recommend this book to anyone who wants an unbiased account of the situation our country is in.

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Aug 12, 2012 Noah rated it 3 of 5 stars · review of another edition

A good and necessary book. Wessel tries to cut through the fearmongering and get a handle on the realities of the budget and its future. I was surprised it was so short, though; the book ended rather abruptly and I was hoping for a lot more.

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