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February 14, 2007

Our Changing Federal Budget

Michael Blowhard writes:

Dear Blowhards --

In a good column, the WashPost's Robert Samuelson drives home how dramatically the makeup of the Federal budget has changed in the last 50 years. In 1956, defense spending and interest on the federal debt made up 67% of the budget, while Social Security accounted for 22%. Today, payouts to individuals (ie., Social Security, Medicare and Medicaid) and interest on the federal debt together make up 68.5% of Federal spending, while defense spending now accounts for 20%. We've done a total 180.

A nicely-balanced passage from Samuelson:

The welfare state has made budgeting an exercise in futility. Both liberals and conservatives, in their own ways, peddle phony solutions. Cut waste, say conservatives. Well, network news reports of $20 million federal programs that don't work may seem -- and be -- scandalous, but like Amtrak they're usually mere blips in the total budget. For its 2008 budget, the Bush administration brags it would end or sharply reduce 141 programs. But most are microscopic; total savings would be $12 billion, or 0.4 percent of spending. Worse, Congress has previously rejected some of these cuts.

Liberals have their own cures. Cut defense, some say. Okay. In 2006, military spending (including the war in Iraq) totaled $520 billion, slightly less than Social Security. If it had been halved, the savings would have just covered the deficit ($248 billion). Little would be left for new programs. Raise taxes on the richest 1 percent, say some. Okay. The richest 1 percent pay about a quarter of all federal taxes. In 2006, that was about $600 billion. To cover the deficit would require about a 40 percent tax increase. Needless to say, neither proposal is politically plausible.

Annual budget debates are sterile -- long on rhetoric, short on action -- because each side blames the other for a situation that neither chooses to change. To cut spending significantly, conservatives would have to go after popular welfare programs, including Social Security and Medicare. To raise taxes significantly, liberals would have to go after the upper middle class, a constituency they covet (two-thirds of all federal taxes come from the richest fifth). Deficits persist, because neither side risks its popularity, and, indeed, both sides pursue popularity with new spending programs and tax breaks.

Samuelson isn't cheery about the possibility of this logjam breaking up either.

Mark Thoma criticizes Samuelson for wanting us to call Social Security and such "welfare" programs. For Mark, these are "insurance" programs. Mark also sees a nefarious rightwing agenda in Samuelson's column that I fail utterly to discern.



posted by Michael at February 14, 2007


The American Republic will endure, until politicians realize they can bribe the people with their own money.
- Alexis de Tocqueville

There won't be a solution until the debt causes a serious crisis in America. As long as politicians can borrow from the future voters to give to the current voters, the current voters will vote for them.

In the meantime, you have to go with the less irresponsible party, which at least since Reagan has been the Dems. How they borrow-and-spend Republicans have managed to maintain the image that they're the fiscally responsible party for so long, I have no idea.

The Dems are willing and able to raise income (taxes) while maintaining or reducing spending. The Republicans are not willing to raise income and not able to maintain or reduce spending.

Posted by: JewishAtheist on February 14, 2007 12:55 PM

Name ten Democrtatic senators who are willing to cut spending on anything but defense or defense-related items. Name ten who don't want to increase health care outlays significantly. Name ten who are willing to seriously examine social security...

It's ironic - for almost fifty years, the Left assured us that we didn't have to worry about deficits - after all "we owe it to ourselves" in the words of the New Dealers. But suddenly, when Reagan starts running them, they become a threat to the Republic. Either they were always bad, under FDR and Johnson as well as Reagan, or they were never as bad as posited. Given the performance of the U.S. economy since 1945, I'd choose "B"...

Europeans have no problem in seeing Social Security as "welfare". But that word has acquired bad connotations in America, hence the distaste for the use of the word.

Posted by: tschafer on February 14, 2007 1:22 PM

Name ten Democrtatic senators who are willing to cut spending on anything but defense or defense-related items. Name ten who don't want to increase health care outlays significantly.

I didn't say Dems were willing to cut spending. Those who want increases in spending propose some sort of revenue (usually taxes, to be fair) to cover it. Republicans simply spend and let our children and grandchildren worry about paying for it.

Posted by: JewishAtheist on February 14, 2007 2:43 PM

Please don't forget that our Free Education (i.e. Public Schooling) costs over $800 Billion a year when you add up Federal, State and Local spending.

Posted by: Ian Lewis on February 14, 2007 6:08 PM

Note to everyone: Stay out of debt! When this house of cards implodes, those who are debt free will survive best.

Posted by: Bob Grier on February 14, 2007 7:51 PM

Please spare us the fiscally responsible democrat BS. If you want examples of republican fiscal conservativsm, look no further than the Congress of 1994-2000. I think the irresponsiblity of the past 6 years is ridiculous, but at least get the story straight. After all, LBJ started the whole ball of idiocy rolling, and Congress was solidly democratic for many years prior to '94. Democrats have no problem with borrow and spend. They're just using it as a campaign tactic to try to get into the Oval Office so they can take over the entire health care system and ruin that too. Democrats are fiscally responsible? What a joke!

Posted by: BIOH on February 15, 2007 2:47 PM

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