Usually I blog my flaming social liberal side - here's my grumpy fiscal conservative side

[essentialsaltes]

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.

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.

Comments

[(Anonymous)]

Mike,

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:

Category          1958     2008    Increase
--------------   ------   ------   --------
Health Care        $195   $2,967    1,422%
Education          $717   $2,896      304%
Pensions           $418   $2,850      582%
Defense          $2,205   $2,458       11%
Other              $702   $1,647      135%
Welfare            $340   $1,606      372%
Protection         $112   $1,207      978%
Transportation     $460     $755       64%
General            $108     $362      235%

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)

[essentialsaltes.livejournal.com]

Yes, well, per capita income from 1967 to 2006 grew (in 2006 dollars) grew 107%, so a 211% increase in per capita spending from 1958 to 2009 doesn't scare me all that much, especially when we consider the passage of the Civil Rights Act of 1965 (adding Medicare & Medicaid, contributing to that whopping 1422% increase). Repealing Medicare would be pretty helpful for getting expenditures down, and would be a bold step in reforming healthcare in the US. But I don't think either party is going to step up to the plate on that one.

(What's protection? Are we paying the Mafia or something? "It'd be a shame if Nebraska fell off the shelf and broke, eh?")

[rizwank.livejournal.com]

What exactly is 'Protection'?

[essentialsaltes.livejournal.com]

It's police/prisons/fire department