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

[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?")