Surviving on a Low Food Budget

It Costs Too Much to Eat Healthy?

It often comes up that a celebrity or Congressman raises an issue that the poor can't afford food.  Globally, this is true and this latest announcement by Bridget Moynahan is an example.  Living on $1.50 a day using US prices is not something that you can do for more than a week without suffering nutritional consequences.  That's $10.50 a week, so it is less than 1/3 of what the rest this post considers.

If we look at the US and SNAP benefits, the question is whether that is sufficient money for a person or family?  Snap benefits start out at about $45 for a single person and then start sliding downward somewhat as the number of people in the household rise.  Presumably they are recognizing it is easier to buy things in bulk as a family, and that generally reduces the price of food.  For a family of 4, SNAP benefits are about $40.

For this post, I wanted to look at whether you can have a healthy diet on $40 dollars a week.  I originally started with $30 a week, and I think my conclusion is that most people would be in calorie deficit or nutritional deficiency at that level.

Caveats:   I am accepting of the fact that Food Deserts exist and that you could have people without access to the food that you'll see later in this post.   At the same time, in a city like Atlanta, there are places like DeKalb Farmers Market or Buford Highway market where the food is cheaper than what I'll be listing, and also it is easier to buy in bulk at those places.  I'm also not trying to exhaustively illustrate the point with the numerical part of this post.  If you don't like Kale, then substitute with some other healthy vegetable.

Basic rules:  No processed food.  No empty calories.  No "prepared" meals.  You have to cook it all yourself.  Get a slow cooker!

The Numbers / Diet Model

Most of these number for cost and types of food came from my shopping at Trader Joe's and Whole Foods today.  These are places not known for super low prices, and if I shopped at the places listed above, I could have easily saved 10 - 20% on the overall total.

The diet / model isn't intended to list every possible food item that you might want to eat.  It does show that if you buy certain items in bulk one week, you'll have leftovers or unused food that makes it cheaper the next week.  Week 1 costs $31.59 and Week 2 costs $27.20.  That means if you're planning ahead, you can easily keep your food costs per person under $40 per week.  For example, you could buy a 5 lb bag of potatoes with the excess $12.80 in week 2, and then eat them over the next 3 weeks (the highlighted rows show the 'carryover' items).  The same would apply to things like spices, garlic, butter, etc.  Anything that you use a small amount per day or week could easily fit within the budget allocation.

The initial calorie count appears a bit low, although 1800 calories might be fine for some people.  Note, however that this is based on not spending the entire $40.

For more details on the exact calorie counts and nutrition data that you'll see below, please see this link.  Nutrition Data is a great resource for analyzing your own diet.

http://nutritiondata.self.com/facts/recipe/3590259/2

Calories vs Cost

Since I quit before spending the full $40, this table shows that you can actually get to calorie counts of between 2300 and 2700 if you continue buying things using the same basic principles.  Of course, if you're full, then don't eat more than you want!

What Can I Eat?

The basic rules are that you only eat fresh foods, canned foods, or frozen foods.  Like Michael Pollan says, shop the perimeter of the grocery store.  "If it comes in a bag or a box, don't eat it" (e.g.  potato chips).  Also avoid any processed foods.  They are generally much more expensive and don't have the nutrition.  For example, Trader Joe's has 2 breakfast burritos for $2.99.  I guarantee that is a waste of money for someone on a low budget and also not something that is nutritionally dense.

Don't Do It!!!

Meat

I put a simple set of grass fed beef, ground turkey, and albacore tuna into the mix.  I also added eggs.  Eggs are a nutritional powerhouse and would be a key staple in a low budget diet.  There's a lot of rotational options here.   Also, it would be possible to buy larger, lower cost cuts of meat like a beef shoulder roast that you could put in a slow cooker and eat all week - like this one:

http://connectitecture.blogspot.com/2013/01/massive-pot-roast.html

Vegetables

Sorry about the pictures coming out sideways, but for some reason Blogspot is "too smart" about the pictures I took with my cell phone and refuses to render them in the proper orientation.

Here are a couple of rules for buying vegetables.  In general, we're looking at buying canned or frozen (see next part) foods because they are much cheaper.  Another important factor to consider is that both canned and frozen foods are much more nutritious that what you buy "fresh" in most grocery stores.  For more on this topic, I highly recommend Jo Robinson's book Eat Wild that breaks down the often multi-week journey that food takes on the way from the farm to the grocery store - losing nutrients all the way.  In contrast, canned foods and frozen are picked at the peak of ripeness and retain 3 - 5 times more of the key nutrients like anti-oxidants.

As noted above, frozen foods are often more nutritious than fresh and are also cheaper.  You can get 1 lb of numerous types of vegetables for $1.99 or less.  Load up!

Grains and Legumes

Rice, lentils, and beans make up a large part of this model diet.  I used "raw" versions of rice and lentils in the Nutrition Data section, so that makes a big difference in the calorie count.  (A cup of dry rice is much different than a cup of cooked rice).  I'm not sure the model diet is realistic in terms of the amount of rice that you'd be eating, but you can add rice to almost any meal, so it might work out.  I'd probably lean more toward the beans and lentils just because they are more nutritionally dense than rice - more vitamins and minerals than rice.

Fruit

Hey, who doesn't love a banana?  Well, if you don't then I'd try to get used to eating them anyway.  They are probably the cheapest fruit on the market, much cheaper than apples, for example.  (there's probably a trade subsidy lurking in the banana market).  I also added some strawberries in the model diet - again frozen because they're usually much cheaper than fresh.  But, if you find things on sale, by all means go with fresh for better texture and taste.

Fats

I am a huge fan of TJ's Olive Oil.  This one is probably one of the best tasting oils that you'll find and it is "unfiltered".  Without going into a lot of details, unfiltered is the way to go.  If you want to know why, buy Paul Pitchford's book Healing with Whole Foods and dig into Chapter 10.

Another fat that is key coconut oil.  You could either buy coconut milk or cream in a can like this, or else buy coconut oil in a 16 oz jar once in a while.   You can add this to a stew or something you put in a slow cooker and it is a great source of MCT's (medium chain triglycerides).  And, don't worry, if you add a can of this to a beef stew or other recipe, the other flavors and spices will overcome this and it won't taste "coconutty" at all.  (It does taste really good in a smoothy that you might make with the frozen strawberries).

A Treat

Yes, look!  Chocolate.  Don't go crazy on sweets, but you could break this bar into 1/4ths and then enjoy it once a week.  (Okay, I know most women would eat the whole thing at once - that's your choice).

Is It Nutritionally Balanced?

The bottom line on this model diet is that it is possible to eat a nutritious diet on a budget of between 30 and 40 dollars per week.  There are a few areas where it could be a challenge, so a bottle of multivitamins might be in order just to make sure.

Overall, the nutrient balance works out to a "high carb" diet - 59 Carbs / 23 Fats / 18 Protein.   I'm a Paleo Diet type of person, so this would not be something that I think is healthy, but it is broadly in line with official guidance such as from the USDA or AHA.  If I had to adjust to this level of spending, I would lean towards more fatty types of meats, less rice/more beans or lentils, and get the carbs below 50% of the mix.

Let's look at a few more factors (On all of these, for any percentage figures, you need to divide by 7 to get the daily numbers.  On the Nutritiondata.com page, I added the entire week's food together in one "recipe")

Nutrient Balance

Looking pretty good on vitamin coverage, but maybe maybe a few adjustments are in order to rotate more foods into the mix than my model diet.  We're doing very good on protein, getting close to 100g a day as well, which is plenty for almost anyone.

Vitamins Detail

On vitamins we get most of what we need.  For vitamin D, get out in the sun for 15 minutes a day and you're all set.

Minerals

Even dividing all these number by 7, you can see this does very well with the exception of Calcium.  Adding more leafy greens would help.

Fats

Note here that the Omega 6 to Omega 3 ratio is actually pretty good - only 7 to 1.  Most Americans are in the range of 12 or 15 to 1, and that is considered a pro-inflammatory diet.  Look up Chris Kresser on this topic if you're interested in understanding why the ratio matters.  Adding more fish and less poultry would help considerably.

Conclusions

It is possible to eat a healthy diet on $30 to $40 a week if you focus on the right kinds of foods.  Avoiding empty calories and processed foods is key to a successful diet.  Even if you aren't trying to stretch your food dollar, this diet is probably more healthy than most of what most Americans are eating today.

Cancel All Student Loans?

Well, this didn't take long...  Once Elizabeth Warren and Bernie Sanders and President Obama get together on an issue, the populist troika is guaranteed to result in something that hits the Taxpayers.

But, before you sign up, how about a little review of history (and economics)?

How Did We Get Here?

Here's a brief history of the student loan program, courtesy of the Treasury.

Key elements of the Federal student loan financing in the last 25 years:

• 1990: IHEs were given restrictions on eligibility for federal student loan financing, based on Cohort Default Rates (CDRs). Today, an institution loses its eligibility for the FFELP and Direct Loan programs if the most recent 3-year CDR is greater than 40% and / or if the three most recent 3-year CDRs are each 30% or greater.  
• 1998: Federal student loan debt cannot be discharged in personal bankruptcy. Private sector student loans cannot be discharged in bankruptcy after 2005.  
• 2008: Federal student loans could be discharged for permanently disabled people who have “no substantial gainful activity” (similar to the Social Security definition for disability) 
• 2010: The Student Aid and Fiscal Responsibility Act (SAFRA) of 2010 ceased the origination of federal student loans by private lenders, and as of July 1, 2010, all federal student loans are made directly by the Department of Education and funded by the U.S. Treasury Department. Newly originated federal student loans since July 1, 2006 are fixed rate loans.
• 2013: Introduction of Income-Based Repayment (IBR) alternative repayment schemes

As a result of the changes in 2010, 86% of all student loans are now backed by the taxpayer.  Further, more than 75% of these loans are made with no credit underwriting.   This is just as bad as the "no doc" or liar loans made during the housing crisis.  It is incredibly difficult to judge who will be a good credit risk, and the only way to manage the risk is by charging an appropriate interest rate.

Interest Rates and Risk

Do we charge an effective rate?  Let's see, according to this Internet meme, we're charging too much interest.

Using 6.8% as the rate, we'd have to have a very low default rate on the loans in order for the system to be solvent.   What kind of default rate do we have?  Let's ask the Treasury/Department of Education.  We're only charging 6.8% interest while we have a 9% default rate and another 23% at risk of default.  

Of course, you have to be careful about which headline you read to understand how much this will cost us.  Often, Congress passes laws that require novel or convoluted financial calculations to obscure the cost of programs.  That's what leads to a statement like:

CBO estimates that the program as currently designed yields budget savings of $135Bn from FY15 to FY24 (1) 

• Based on the current accounting methodology as prescribed by the Federal Credit Reporting Act of 1990 (FCRA). 

However, under fair-value accounting, the program results in an $88Bn cost to taxpayers 

• FCRA discounts expected future cash flows of the loan program using current UST rates, without accounting for market risk. 

• In contrast, under the alternative fair-value accounting approach analyzed by the CBO, “estimates are based on market values…which more fully account for the cost of the risk the government takes on.” 

 Given that you have seen the current 9% default rate and the 23% of at risk loans, what do you think?  Are we going to see that $135B savings, or are we going to drastically exceed the $88B cost once we "more fully account for the risk the government takes on?"

We actually have an estimate of that risk, courtesy of the Treasury as well:

Take the stock of FFELP loan balances ($402.5 bn as of FY Q3:2014) and multiply by the delinquency and default rate (37.5%). Then the contingent liability is $150.7 billion, if the Federal government is assumed to be the ultimate backstop for indirect loans.

Did Anyone Predict This?

Why yes, warnings have been sounded since right after the housing crisis as economists saw the preconditions for a bubble.  (This is the kind that neither Bernanke nor Krugman can spot until after it bursts).  For example:

While everyone is focused on housing right now, financial history tells us that another bubble lurks beneath the surface. Indeed, it was only eight years ago that we stood panicked at the prospect of dot.com companies going out of business and the chance to buy a house through innovative loan products seemed like a prudent decision. Predicting exactly where the next bubble lies is difficult, if not impossible. But given our research, we believe that a persuasive case can be made that higher education and the student loan industry are inflating a massive bubble. Trying to reform this bubble before it explodes should become a priority for lawmakers.  -  Richard Vedder, 2008

Of course, almost anyone could look at this chart and see that something strange was happening.
  

How Did College Get So Expensive?

Tuition increased dramatically, much faster than the rate of inflation.

The 61 percent increase in inflation-adjusted federal loans over the last decade leaves virtually all their students capable of paying more in tuition. The schools can either raise tuition, using the additional money to help build a better (more prestigious) college , or could leave tuition unchanged in an inflation-adjusted sense. The decision they made is obvious from U.S. Department of Education data. Over the last 10 years, after adjusting for inflation, tuition is up 48% at public schools and 24% at private schools.

Oh my god.  You mean if you pump money into a system that a bubble might form?  Just like the housing crisis, with the interest rates are too low, we find that people are enticed into making bad investments only later to find that there are no jobs for social science majors who would have been better off starting off working at Starbucks in the first place, rather than incurring $40K in debt and then starting their barista career. 

Defaults and Forgiveness

People might think that defaulting on the loan is an option.  Unfortunately, the laws were changed to make that a less palatable option.  For example:

• Tax Refund Offsets: IRS can offset the borrower’s income tax refund until the defaulted loan is paid in full. A number of states also have laws that authorize state guaranty agencies to take state income tax refunds.  

• Federal Benefits Offsets: The government can offset certain Social Security benefits to collect government student loans. Just as with other types of student loan collection, there is no time limit on Social Security offsets, according to a 2005 Supreme Court Case.  

• Wage Garnishments: The government can also garnish wages as a way to recover money owed on a defaulted student loan. The United States Department of Education or a Student Loan Guarantor can garnish 15% of disposable pay(1) per pay period without a court order.  

• Effect on Credit History: Adversely affects credit for many years. If borrower defaults, loan will be listed as a current debt that is in default. The default will also be listed in the historical section of borrower’s credit report, specifying the length of the default.  

• License Revocations: A number of states allow professional and vocational boards to refuse to certify, certify with restrictions, suspend or revoke a member’s professional or vocational license and, in some cases, impose a fine, when a member defaults on student loans

The Politics of Democracy

Of course, most of these issues simply add more motive for people to ask the government to step in and forgive them for their mistakes.  Politicians, who bear none of the consequences of the financial aspects of these decisions are glad to jump on the bandwagon and make promises that win votes and popularity contests.

What is missing from this graphic is the amount of money that the taxpayer will contribute to this loan forgiveness.  If, for example, you cap the monthly payment, that delays the recovery of the loan, and someone has to pay for that.  Further, if you then grant forgiveness after 10 or 20 years, then we have to write off the principle of the loan as well.  Who takes that loss?   Well, we'll know in 10 or 20 years, which is light years in election cycles.  And how many votes could be at stake?  How about we look at the number of possible voters by state, keeping in mind their families are also influenced by these policies.  Can you spot any Election 2016 "swing" states in this list?

At the same time, those poor students who took out these loans will have to learn about the consequences of compound interest, and it might as well be young in life.

The benefit for this poor soul is that she may also realize that saving and investing has the same compound effect, and if she saves just $59.47 a month and earn a decent return, she could have quite a bit of money set aside after 20 years.  (At 6% interest, that small savings amount would turn into over $28,000)

Is It About Improving Education?

I am a big fan of a good night's sleep and enjoy living in comfortable surroundings.  However, as the quote above shows, when the universities are showered in money, they don't direct it to research and education.  Instead, it results in the misallocation of capital due to the hand of the government in directing the economy.  

Today’s universities are congested with vast bureaucracies that stifle innovation and waste resources. Princeton University recently constructed a fancy dorm that cost $70,000 more per bed than the median home price. 

Some universities have taken and extra step and issued Century bonds to fund similar largesse.  100 years!   Imagine the compound interest calculations on that.

• President Barry Mills of Bowdoin College showed chutzpah last year in announcing that the school would borrow $128 million by issuing century bonds (at an average interest cost of more than $6 million a year, or about $3,400 for every student)
• Ohio State University borrowed $500 million for 100 years, mostly to build new dormitories. 
• The University of California issued $860 million in century bonds last year and, as an encore, an additional $2.39 billion in conventional debt recently. (If that sounds like a huge amount, consider that Harvard University, which has about 22,000 students compared with the UC system’s more than 225,000, is more than $6 billion in debt — about $300,000 for every student.)

So, cheap credit is fueling more wasteful investment that will eventually lead to the failure of the institution, or even higher tuition as they struggle under the debt burden because they made such short sighted decisions today.  Don't any of these universities have a decent Finance professor?

Consequences

Don't forget the human toll that this crushing debt is going to have on millions of people and their families.  

Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days.
Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But, she said, even she didn’t know what the true balance was; like a car buyer who focuses on only the monthly payment, she wrote 12 checks a year for about $1,100 each, the minimum possible. She didn’t focus on the bottom line, she said, because it was so profoundly depressing.

And

Student loan debt doesn’t only hurt the young. More seniors are carrying their college debt into retirement.
The total outstanding debt load held by seniors grew to $18.2 billion in 2013, up from $2.8 billion in 2005, according to a report released by the Government Accountability OfficeStudent loan debt doesn’t only hurt the young. More seniors are carrying their college debt into retirement.
The total outstanding debt load held by seniors grew to $18.2 billion in 2013, up from $2.8 billion in 2005, according to a report released by the Government Accountability Office....
As a result, more seniors are seeing a portion of their Social Security benefits garnished to pay back the debt. The number of people whose benefits were cut to pay for student loan debt grew to 155,000 in 2013 from 31,000 in 2002. Among those age 65 and older, the number grew by 500 percent over that time period, to 36,000 from about 6,000.

So as you sign that petition for loan forgiveness, just try to learn something from this fiasco and remember that even if you benefit from something in the short-term, it is hurting all of us in the long-term, often in ways you might not see.

References:

http://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/November%202014%20QRCombined%20Charges%20for%20Archives.pdf

http://www.zerohedge.com/news/2015-03-14/cancel-all-student-debt-petitions-begin

http://www.zerohedge.com/news/2015-03-10/next-mega-bailout-deck-white-house-studying-new-bankruptcy-options-student-loan-borr

http://www.aei.org/publication/student-loan-changes-worthwhile-but-little-more-than-rearranging-the-deck-chairs/

http://www.aei.org/publication/whos-struggling-to-pay-back-their-student-loans-hint-it-may-not-be-who-you-think/

http://www.aei.org/publication/thomas-sargent-incentives-and-student-loan-forgiveness/

http://www.aei.org/publication/why-student-loans-might-be-the-next-recipient-of-a-taxpayer-bailout/

http://www.aei.org/publication/170000-student-loan-debt-ends-engagement/

http://www.aei.org/publication/the-next-market-bubble-student-loans/

http://www.washingtonpost.com/news/get-there/wp/2014/09/11/more-seniors-are-carrying-student-loan-debt-into-retirement/

A Few Facts About Transfer Payment Program Sustainability

I was just reading Robert Higg's article from 1994 concerning consequences of income redistribution.  While this is a fashionable topic today, it's clear this has been going on for quite a while.  In the article, he says the following:

"Since the creation of the Social Security system in 1935, especially during the past 30 years, the amount of income overtly transferred by governments has risen dramatically. In 1960 government transfer payments to persons amounted to $29 billion, or 7 percent of personal income. In 1993 the total came to $912 billion, or nearly 17 percent of personal income.¹ In other words, one dollar out of every six received as personal income now takes the form of old-age, survivors, disability, and health insurance benefits ($438 billion), unemployment insurance benefits ($34 billion), veterans’ benefits ($20 billion), government employees’ retirement benefits ($115 billion), aid to families with dependent children ($24 billion), and miscellaneous other government transfer payments ($280 billion) such as federal subsidies to farmers and state and local public assistance to poor people."

I thought it would be interesting to see how those statistics have changed from 1994 to today.  More importantly, I wanted to look at the difference between tax receipts and transfer payments.  People often call for the "rich" to pay more, and I thought it would be interesting to see just how much more they'd have to pay to get the system in balance.

Data Sources (*** note these are not the same sources as Higgs)
The Federal Reserve keeps data on transfer payments here.  The data set I used is called: 

Federal government current transfer payments: Government social benefits: To persons, Billions of Dollars, Annual, Seasonally Adjusted Annual Rate  (B087RC1Q027SBEA).

Here's the first 5 years of data in billions of dollars:

observation_date	B087RC1Q027SBEA
1947-01-01	8.4
1948-01-01	7.2
1949-01-01	8.2
1950-01-01	10.2
1951-01-01	7.9

And here's the last 5 years:

2010-01-01	1710.1
2011-01-01	1727.3
2012-01-01	1767.0
2013-01-01	1806.8
2014-01-01	1863.4

Next, I went to Tax Policy Center and pulled a data set entitled:  Summary of Receipts, Outlays, and Surpluses or Deficits (-) 

And the data looks like this:

	In Current Dollars
Fiscal Year	Receipts	Outlays	Surplus or Deficit (-)
1940	6.5	9.5	-2.9
1941	8.7	13.7	-4.9
1942	14.6	35.1	-20.5
1943	24.0	78.6	-54.6
1944	43.7	91.3	-47.6
1945	45.2	92.7	-47.6

Or, more recently:

2010	2,162.7	3,457.1	-1,294.4
2011	2,303.5	3,603.1	-1,299.6
2012	2,450.0	3,537.0	-1,087.0
2013	2,775.1	3,454.6	-679.5
2014	3,021.5	3,506.1	-484.6

The GRAPH
How does this look?

Can We Afford to Close the Gap?
One interesting note is that there is NOT a single year where tax receipts exceeded transfer payments.  Another interesting fact is that the cumulative deficit over the past 10 years is $9.072 trillion dollars, or ~50% of last year's GDP. Or, if we just look at 2014, we find the transfer payments were 6.89% in 2014 (vs. 8.45% using Higgs' figure of $912B vs a GDP of $6.879T in 1993).

2014 looks a little better than 1993, but the overall trend is what matters.  Over the past 10 years, the deficit has been an average of 6% of GDP

	Transfer Payment vs Tax Receipts Deficit as % of GDP
2004	-6.20%
2005	-7.47%
2006	-8.31%
2007	-8.73%
2008	-7.76%
2009	-3.41%
2010	-3.03%
2011	-3.79%
2012	-4.43%
2013	-6.08%
2014	-6.89%
Average	-6.01%

Over this period, the average deficit has been about $907B.  There are some who say that we can tax the Top 1% and everything will be okay.   However, this nice table from TaxFoundation.org shows that would require the group who is already paying 35% of all income taxes to have a 58% tax rate on all income earned (not a marginal tax rate as is sometimes discussed). (Lee Ohanian has a good video tax fairness here, or you could watch a much funnier version by David Angelo here.

Table 1. Summary of Federal Income Tax Data, 2011
	Number of Returns*	AGI ($ millions)	Income Taxes Paid ($ millions)	Group's Share of Total AGI (IRS)	Group's Share of Income Taxes	Income Split Point	Average Tax Rate
All Taxpayers	136,585,712	8,317,188	1,042,571	100%	100.0%
Top 1%	1,365,857	1,555,701	365,518	18.7%	35.1%	> $388,905	23.5%
1-5%	5,463,429	1,263,178	223,449	15.2%	21.4%		17.7%
Top 5%	6,829,286	2,818,879	588,967	33.9%	56.5%	> $167,728	20.9%
5-10%	6,829,285	956,099	122,696	11.5%	11.8%		12.8%
Top 10%	13,658,571	3,774,978	711,663	45.4%	68.3%	> $120,136	18.9%
10-25%	20,487,857	1,865,607	180,953	22.4%	17.4%		9.7%
Top 25%	34,146,428	5,640,585	892,616	67.8%	85.6%	> $70,492	15.8%
25-50%	34,146,428	1,716,042	119,844	20.6%	11.5%		7.0%
Top 50%	68,292,856	7,356,627	1,012,460	88.5%	97.1%	> $34,823	13.8%
Bottom 50%	68,292,856	960,561	30,109	11.55%	2.89%	< $34,823	3.13%
*Does not include dependent filers.

Some would argue that it would be justified to raise the Top 1%'s tax rate to 58%, but all it would do is take capital that is invested in the economy and turn it into consumption. In other words, the rich are not sitting around on yachts with piles eating caviar and lighting cigars with $100 bills.  Instead, they are making investments in businesses that make up the "structure of production" to use a term from Austrian economics.  In other words, without constant investment of people's savings, the economy would crash.  There would be no sustainable "business" if all savings were turned into consumption. 

Consumption is as unsustainable as the graph above showing the perpetual deficit due to the transfer payment programs.  Note that these don't add up to the Federal budget deficit because these programs are "off books" for accounting purposes.  If we did bring these programs "on the books", the Federal present value of the deficit would be as high as $200T.  Laurence Kotlikoff has done some great work on this topic his part starts at 5:04 in the video or here is his testimony to the Senate Budget Committee in 2015.  To understand the difference between on or off books accounting:

... were we to go back in time and re-label all past Social Security taxes as borrowing, official federal debt held by the public would not be $13 trillion, but $38 trillion, which is 211 percent of U.S. GDP.  

If we wanted to fix both the transfer payment programs and get rid of the fiscal deficit, we'd need to add them together ($900B + $1299B in 2011) for a total that exceeds the income of the Top 1%.  Using the $434B fiscal deficit of last year would put the tax rate on the Top 1% at about 85% of income (not a marginal rate).

Summary

People have been sounding warnings for decades concerning the unsustainable nature of transfer payment programs.  Even if the fiscal budget deficit was closed ($434B last year), that would NOT fund the additional $900B per year that would be required for the current year of the transfer payment programs nor would it make any payments on the cumulative deficits that already exist.  The government accounting figures for these programs do not transparently report their cost or their unsustainable nature to the public.  No politician is going to point this out during his or her election campaign.  

Now you know a bit more about transfer payment programs and their unrealistic financial situation.