Social Spending Flat

[kalm]

There are a ton of areas where we can cut spending, but I was surprised to find out that we basically haven't increased discretionary social spending since the last Clinton Budget. But we did cut lots of taxes while waging lots of war.

"Although non-defense discretionary spending in nominal dollars has increased, when taking inflation and population growth into account the amount contained in the [2011 budget] represents no increase over what we spent in 2001, a year in which we generated a surplus of $128 billion," said chairman Daniel Inouye (D-HI) in a prepared statement. "So the right question to ask is: Are we really spending too much on non-defense programs?




In the wake of the Bush tax cuts, and the Great Recession, tax revenue has fallen through the floor to near-historic lows. As a percentage of GDP, it's fallen 24 percent since 2001, and if you correct for inflation, the government is collecting nearly 20 percent less per person than it was a decade ago. At the same time, the population-adjusted costs of mandatory spending programs -- driven by Medicare, including its new prescription drug benefit, and Medicaid -- have increased by over 30 percent. And, of course, defense spending has skyrocketed. But if you isolate domestic discretionary programs, a decade later we're spending no more on a per-person basis than we were back then.

http://tpmdc.talkingpointsmemo.com/2011 ... hp?ref=fpb" onclick="window.open(this.href);return false;

[GannonFan]

Just throwing this out there - what good is it to separate "discretionary" spending from populated adjusted "mandatory" spending? Heck, the article you quote even acknowledges that the mandatory spending has increased 30% in the past ten years. And I'm willing to guess that non-discretionary, i.e. mandatory spending was already a larger quantity to begin with than discretionary was so now we're spending 30% more of a bigger number. If that goes up like it has, wouldn't that spending on mandatory social spending crowd out the money left for discretionary social spending?

And as for revenues as a pct of GDP being at or near historical lows, how accurate is that? What history are you comparing it to? I just pulled up a webpage, of which I have no idea of the reliability of (I picked something I didn't know and steered away from the obvious political-leaning-one-way-or-the-other sites) and while revenue as a pct of GDP is down versus 10 years ago, it's not any lower than it was 20-30 years ago, and far higher than it was for any period before that. http://www.usgovernmentrevenue.com/revenue_history. According to that, it wasn't until 1970 that we ever got to current levels of revenue compared to GDP.

[Ivytalk]

GF's comment is right. This is a big yawn because everybody knows that the real money is in the entitlements. And the dropoff in tax revenues is attributable to the recession: there's simply been less income to tax. Using TPM -- a self-described "left of center blog" -- and quoting free-spending Dan Inouye doesn't help the fiscal sanity cause, either.

[JohnStOnge]

"So the right question to ask is: Are we really spending too much on non-defense programs?

To me the answer is "yes." To me, ANY "social spending" is too much. To me, government shouldn't be involved in that, period. Also, to me, there shouldn't be any such thing as "mandatory" spending with the exception of spending on agreed upon compensation for retired employees. If someone agreed to a job, the terms were set, and the employee finished out his or her career in good standing, then the terms should be honored.

Of course for the future we could change the terms for new employees to provide flexibility. So that doesn't need to be indefinitely "mandatory" either.

Another thing is that if "mandatory spending" includes things like Social Security and Medicare I consider those things to be "social spending" as well.

[kalm]

Just throwing this out there - what good is it to separate "discretionary" spending from populated adjusted "mandatory" spending? Heck, the article you quote even acknowledges that the mandatory spending has increased 30% in the past ten years. And I'm willing to guess that non-discretionary, i.e. mandatory spending was already a larger quantity to begin with than discretionary was so now we're spending 30% more of a bigger number. If that goes up like it has, wouldn't that spending on mandatory social spending crowd out the money left for discretionary social spending?

And as for revenues as a pct of GDP being at or near historical lows, how accurate is that? What history are you comparing it to? I just pulled up a webpage, of which I have no idea of the reliability of (I picked something I didn't know and steered away from the obvious political-leaning-one-way-or-the-other sites) and while revenue as a pct of GDP is down versus 10 years ago, it's not any lower than it was 20-30 years ago, and far higher than it was for any period before that. http://www.usgovernmentrevenue.com/revenue_history. According to that, it wasn't until 1970 that we ever got to current levels of revenue compared to GDP.

Here's another source - the OMB:

http://www.whitehouse.gov/sites/default ... s/hist01z2" onclick="window.open(this.href);return false;.

And another:

In 2009, tax receipts accounted for 14.8 percent of GDP. According to the table, tax receipts as a share of GDP were always higher all the way back through 1950, when they accounted for 14.4 percent of GDP. That would be 59 years -- not quite 60, but very, very close.

The recession factors into the tax revenue statistic as well. Both the 2008 stimulus package under President George W. Bush and the 2009 stimulus under President Barack Obama included tax breaks as a major component.
http://www.politifact.com/truth-o-meter ... gdp-60-ye/" onclick="window.open(this.href);return false;

We could have weathered the storm much better and been far less in debt had we chosen to pay cash for our wars and stowed a little away as rainy day fund.

And btw, I fully recognize that spending is an issue too.

[OSBF]

Tax revenue collected by the federal govt, inflation adjusted, expressed as % of GDP, are at their lowest post WWII level. To get out of this mess we MUST have a combination of spending cuts and an increase in revenue. We have to attack both sides of the ledger.

[GannonFan]

Just throwing this out there - what good is it to separate "discretionary" spending from populated adjusted "mandatory" spending? Heck, the article you quote even acknowledges that the mandatory spending has increased 30% in the past ten years. And I'm willing to guess that non-discretionary, i.e. mandatory spending was already a larger quantity to begin with than discretionary was so now we're spending 30% more of a bigger number. If that goes up like it has, wouldn't that spending on mandatory social spending crowd out the money left for discretionary social spending?

And as for revenues as a pct of GDP being at or near historical lows, how accurate is that? What history are you comparing it to? I just pulled up a webpage, of which I have no idea of the reliability of (I picked something I didn't know and steered away from the obvious political-leaning-one-way-or-the-other sites) and while revenue as a pct of GDP is down versus 10 years ago, it's not any lower than it was 20-30 years ago, and far higher than it was for any period before that. http://www.usgovernmentrevenue.com/revenue_history. According to that, it wasn't until 1970 that we ever got to current levels of revenue compared to GDP.

Here's another source - the OMB:

http://www.whitehouse.gov/sites/default ... s/hist01z2" onclick="window.open(this.href);return false;.

And another:

In 2009, tax receipts accounted for 14.8 percent of GDP. According to the table, tax receipts as a share of GDP were always higher all the way back through 1950, when they accounted for 14.4 percent of GDP. That would be 59 years -- not quite 60, but very, very close.

The recession factors into the tax revenue statistic as well. Both the 2008 stimulus package under President George W. Bush and the 2009 stimulus under President Barack Obama included tax breaks as a major component.
http://www.politifact.com/truth-o-meter ... gdp-60-ye/" onclick="window.open(this.href);return false;

We could have weathered the storm much better and been far less in debt had we chosen to pay cash for our wars and stowed a little away as rainy day fund.

And btw, I fully recognize that spending is an issue too.

But what's interesting in the data and table you show is that all the way up to 2009, there wasn't a problem with govt revenues as a pct of GDP - they were actually amazingly consistent and very much in line with the rest of the history stretching back to WWII. If the Bush tax cuts were so damaging, why would it take 7 years for them to impact tax revenues?

I agree that the Bush stimulus and then the much larger Obama stimulus certainly accounted for some of the revenue dip as they were very heavy on short term tax cuts and the unemployment rate clearly indicated that a significant group of people saw reduced or eliminated incomes. The unemployment, though is probably the biggest hit to the revenue side. Until that is fixed, it will hard or impossible to have the revenue come back up.

[JohnStOnge]

Tax revenue collected by the federal govt, inflation adjusted, expressed as % of GDP, are at their lowest post WWII level. To get out of this mess we MUST have a combination of spending cuts and an increase in revenue. We have to attack both sides of the ledger.

There is no great physical principle of the universe that says we "MUST" have an increase in revenue. An alterntiave would be ditching the idea that government is responsible for ensuring individual well being.

I also think that the "taxes as a percent of GDP" thing is deceptive. I think a better perspective as to what's been happening is offered by looking at taxes and spending per unit population; such as "per capita."

To do that you can use data from the Census Bureau page at http://www.census.gov/history/www/throu ... facts.html" onclick="window.open(this.href);return false; and the page on historical Federal receipts and outlays at http://www.taxpolicycenter.org/taxfacts ... opic3id=23" onclick="window.open(this.href);return false; . If you do some math you can determine that, in inflation adjusted terms, per capita revenue in 2010 was about 153% higher than it was in 1950 and about 8,969% higher than it was in 1940. And you can determine that per capita Federal SPENDING in 2010, in inflation adjusted terms, was about 276% higher than what it was in 1950 and about 10,144% higher than it was in 1940.

So why is it that the Federal government MUST spend over 11 times as much in inflation adjusted terms per person in the United States now than it did in 1940 (10,144% higher is 11,144% of the value)? It's nonsense. We don't HAVE to do it. And if we were spending what we were spending per capita even in 1950 in inlation adjusted terms right now we would have more than enough revenue to cover expenses and be making progress on the national debt.

Of course I think government was already trying to do too much in 1950. We should be talking about totallly phasing out the idea that government is responsible for making sure that you, me, or our kids have enough to eat, a place to stay, medical care, a decent retirement, etc. That should not be viewed as government's role. Government's role should be to provide the basic infrastructure to faciliate us pursuing those things on our own.

[OSBF]

Tax revenue collected by the federal govt, inflation adjusted, expressed as % of GDP, are at their lowest post WWII level. To get out of this mess we MUST have a combination of spending cuts and an increase in revenue. We have to attack both sides of the ledger.

There is no great physical principle of the universe that says we "MUST" have an increase in revenue. An alterntiave would be ditching the idea that government is responsible for ensuring individual well being.

I also think that the "taxes as a percent of GDP" thing is deceptive. I think a better perspective as to what's been happening is offered by looking at taxes and spending per unit population; such as "per capita."

To do that you can use data from the Census Bureau page at http://www.census.gov/history/www/throu ... facts.html" onclick="window.open(this.href);return false; and the page on historical Federal receipts and outlays at http://www.taxpolicycenter.org/taxfacts ... opic3id=23" onclick="window.open(this.href);return false; . If you do some math you can determine that, in inflation adjusted terms, per capita revenue in 2010 was about 153% higher than it was in 1950 and about 8,969% higher than it was in 1940. And you can determine that per capita Federal SPENDING in 2010, in inflation adjusted terms, was about 276% higher than what it was in 1950 and about 10,144% higher than it was in 1940.

So why is it that the Federal government MUST spend over 11 times as much in inflation adjusted terms per person in the United States now than it did in 1940 (10,144% higher is 11,144% of the value)? It's nonsense. We don't HAVE to do it. And if we were spending what we were spending per capita even in 1950 in inlation adjusted terms right now we would have more than enough revenue to cover expenses and be making progress on the national debt.

Of course I think government was already trying to do too much in 1950. We should be talking about totallly phasing out the idea that government is responsible for making sure that you, me, or our kids have enough to eat, a place to stay, medical care, a decent retirement, etc. That should not be viewed as government's role. Government's role should be to provide the basic infrastructure to faciliate us pursuing those things on our own.

You try to live in the world TODAY with what a wage earner of your ability/capacity was making in 1945.

That's exactly what we are asking government to do.

I'll bet you couldn't do it either.

[Cap'n Cat]

GF's comment is right. This is a big yawn because everybody knows that the real money is in the entitlements. And the dropoff in tax revenues is attributable to the recession: there's simply been less income to tax. Using TPM -- a self-described "left of center blog" -- and quoting free-spending Dan Inouye doesn't help the fiscal sanity cause, either.

Real money is in the military.

[JohnStOnge]

You try to live in the world TODAY with what a wage earner of your ability/capacity was making in 1945.

That's exactly what we are asking government to do.

I'll bet you couldn't do it either.

There is a little something to that in that the per capita income in 1945 was $1,237 and that is only $14,985.29
in 2010 dollars. However, that does not entirely account for it. Let's go back to 1940 since that's a Census year. The US per capita income in 1940 was $595. That is only $9,267.38 in 2010 dollars according to the inflation calculator at http://data.bls.gov/cgi-bin/cpicalc.pl? ... year2=2011" onclick="window.open(this.href);return false;.

However, government spent 11.144 times as much per capita in 2010 than it did in 1940 in inflation adjusted terms. I can't find a 2010 Census per capita income estimate posted yet. But there is a 2009 estimate of 27,041. In inflation adjusted terms that is about 3 times (2.97) the per capita income of 1940.

So per capita income is about 3 times greater now than in 1940 but government spending per capita is about 11 times what it was in 1940. I just don't think the factor you're talking about can reasonably account for the increase.

Besides, what I describe above brings another question to mind: If people are making about 3 times per capita now than they were in 1940, why is it necessary for government to be spending more money at all? And 11 times more?