![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
This image encapsulates what's wrong with the government's fiscal policy:

For a less funny analysis, check out Time's article on the deficit.
Assuming we want the government to do something other than these four things, this is not sustainable. We need to cut expenditures, or raise revenues, or both. That is all.

For a less funny analysis, check out Time's article on the deficit.
Let's look more closely at budget revenue and outlays. In a normal year, our federal tax system takes in around 17% of GDP — less in the current recession and more in years of financial bubbles, when capital-gains-tax collections are high. It's important to understand what that revenue buys us. Military spending accounts for around 5% of GDP. Health spending (including Medicare, Medicaid and veterans' health) is around 5% of GDP, as is Social Security (retirement, disability and veterans' benefits). Interest payments on the debt will soon reach 2% of GDP. In short, the Federal Government collects tax revenue sufficient to cover just four budget items. The rest of the budget is funded by borrowing.
Assuming we want the government to do something other than these four things, this is not sustainable. We need to cut expenditures, or raise revenues, or both. That is all.
no subject
Date: 2010-02-10 03:43 pm (UTC)no subject
Date: 2010-02-10 03:47 pm (UTC)no subject
Date: 2010-02-10 03:46 pm (UTC)Hey, everybody (i.e. the electorate) likes services. Let's keep services!
Hey, everybody (i.e. the electorate) likes tax cuts. Let's cut taxes!
High fives all around the Capitol.
no subject
Date: 2010-02-10 03:47 pm (UTC)I don't disagree with the premise that we should raise taxes and cut defense spending. If you can suggest a way to do that with one of our two relevant political parties having spent two generations on an all-out effort to prevent either one from happening and feeding the public a bunch of wishful-thinking falsehoods about marginal tax rates, I am all ears.
Realistically, I see this problem being solved when the outsized Baby Boom generation dies off. "In the long run, we're all dead" is actually a message of hope for the future in this particular case.
--- Ajax.
no subject
Date: 2010-02-10 03:56 pm (UTC)Even though it was no use, Cassandra still had to tell what she knew.
no subject
Date: 2010-02-10 05:46 pm (UTC)That will not change until they start to hurt badly enough to stop listening to the Limbaughs and Becks and Hannitys. I don't know exactly what that point of pain will be or when it will occur, but I see it coming and it will be ugly.
no subject
Date: 2010-02-10 03:53 pm (UTC)This is fine for the rich who can afford private health, insurance, security, jets and fences. But everyone else, who presumably still aspires to be rich, can go hang with substandard social care.
I like the idea of a Tobin tax to restrict to speculation in capital and redirect some of the stupid profit to where it's needed.
But of course, you live a socialist state now so you're going to get all this redistribution and death panels.
no subject
Date: 2010-02-10 03:56 pm (UTC)--- Ajax.
no subject
Date: 2010-02-11 03:24 am (UTC)Glad to hear that you have a fiscally conservative side! Here are some statistics that should aggravate you...
In 2008, US government spending per capita was $17,824. 50 years before that, in 1958, US government spending per capita -- adjusted for inflation, of course -- was $5,739. That's an increase of 211%. Again, that's per capita and adjusted for inflation. Note that prior to 1933 -- except for two years of WWI -- spending per capita was fairly flat. (Don't even get me started on the Depression and Roosevelt!)
What's even more surprising is what that money's being spent on. Here are the comparisons between 1958 and 2008:
Notice a) that Health Care, Education, and Pensions cost more than Defense and b) that Defense hasn't changed much in 50 years while the previous three have skyrocketed. Lest someone think I cherry-picked the data, let me mention that between 1947 and 2008, defense spending has fluctuated between $1,203 (1948) and $2,906 (1968). During WWII, defense spending jumped to $8,013 (1945), dropping back to $1,529 after the war (1947).
Defense spending was eclipsed by pensions in 1991, by education in 1993, and health care in 1994. Given that government spending has been steadily rising since the late 1920s, my recommendation would be to cut expenditures...
Donovan
(Statistics courtesy of USGovernmentSpending.com)
no subject
Date: 2010-02-11 04:43 am (UTC)(What's protection? Are we paying the Mafia or something? "It'd be a shame if Nebraska fell off the shelf and broke, eh?")
no subject
Date: 2010-02-12 06:58 pm (UTC)no subject
Date: 2010-02-12 07:09 pm (UTC)no subject
Date: 2010-02-11 03:11 pm (UTC)Wait a minute -- are you saying that if wages go up 100% that it's okay for the government to raise taxes by 200%? What happened to the "grumpy fiscal conservative"?
Donovan
no subject
Date: 2010-02-11 04:09 pm (UTC)1958: $14802 (in 2005 $)
2008: $43714 (ditto)
An increase of 195%. Quite close to the increase in spending you decry. Over 50 years, the growth rate of spending has been 2.269%, while the growth in GDP has been 2.164%. (So the actual increase in tax rate amounts to 0.1% annually. If only we'd avoided that, the world would still look like Leave it to Beaver.)
Anyway, fiscal conservative means different things to different people. When I use a word, it means just what I choose it to mean -- neither more nor less.
To many it means to be a pre-transformation Scrooge. To me it means that you should not spend more than you earn. There is nothing inherently wrong with spending a lot of money for something you want very much. But there is something wrong with doing so without a viable plan to pay for it.
no subject
Date: 2010-02-12 07:04 pm (UTC)But by 2012 the threat posed by deficits will loom large. The annual deficit will still be above 5% of GDP, and public debt will exceed 70% of output. With this persistent flow of red ink, rising interest rates may become a threat to continued recovery. Mr Obama would have been wiser to carve out resources for job creation by trimming back waste elsewhere.
That concern aside, this budget provides a needed lift to the labour market at an acceptable cost to the short-term budget picture. But none of Mr Obama’s plans may survive scrutiny by Congress, especially one where the Democrats are starting to lose their grip.
The longer budget view is far bleaker. The president’s challenge in the 2011 budget was clear—begin the push towards medium-term deficit stabilisation, with an eye towards a long-term budget fix. Here he has come up woefully short.
A substantial amount of deficit reduction—from 10% of GDP to 5% by 2015—is baked into the budget, based on the hoped-for economic recovery and the ending of the stimulus. It is in cutting from 5% to 3% of GDP that the tough decisions must be made. Mr Obama had hoped to get most of the way there through economic growth and reforms to the health-care system. The passage of any health bill now looks highly doubtful (see next story), but this did not stop the administration from writing $150 billion in health-care savings over ten years into its budget. Many analysts doubt whether those savings would have materialised anyway. Even if all miraculously went right, the product of a year’s worth of back-breaking legislative work would amount to about 1.5% of the total 2010-20 deficit—a drop in the ocean.
This graph scares the crap out of me :