The most amazing thing I take away from that chart, having lived in both Europe and the U.S., is how little the U.S. taxpayer gets for their money in comparison, I'm guessing because spending crept up slowly without any real planning. For example, the U.S., Canadian, and Norwegian governments each spend about 40% of GDP, but somehow Norwegians and Canadians get a much stronger set of social services (including state-provided healthcare and much cheaper education) within the same budgetary level.
It seems U.S. spending has gotten to similar levels without actually having any sort of solid planning, so taxpayers are left in the worst of both worlds: 40% of GDP spending, but somehow you still have to buy everything yourself (like health insurance or college), because the state hasn't figured out how to provide it for that price. There are some exceptions; e.g. healthcare for the elderly is covered, and the interstate highway system is good. But not as much as I would expect for that size budget.
There's a very simple explanation: Unlike all the countries you mention, the majority of our US tax dollars goes toward military spending.
The npr graph from the parent post is extremely misleading, and understates the US military budget by roughly a factor of 2. Huge portions of the "non-military" budget entries are covers for military spending.
For example, the npr graph counts $141 billion dollars in VA health care for soldiers, but this isn't listed as part of the military budget. The same games are played with weapons r&d (often budgeted to the Dept. of Energy). Our recent Dept. of Homeland Security contains a great deal of military spending as well.
When one separates the budget by spending intent rather than the politicized department budgets in the above graph it becomes quickly apparent why we don't have good social services -- we're spending it all on military.
A big part of our problems are the calculations that were used to justify Social Security and Medicare (over half our budget). Neither program was built to last more than two generations. The politicians that created them didn't care about that (FDR and LBJ), in typical intentional short-sightedness. Both programs were designed to be flush early so they could be plundered. Instead of having trillions sitting in a sovereign fund earning interest, we have a blackhole of entitlement liabilities.
In other words, the biggest problem with our social systems is theft. The money was used over two generations to buy votes.
edit: it's interesting to try to calculate it roughly, but, it seems fair to estimate that the politicians have spent an inflation adjusted $30+ trillion beyond their means over the last 70 years ($16 trillion public debt, plus the money that should have been put aside and earning interest from SS and Medicare etc).
That's just not true with regards to Social Security. 100 years of projected life before dragging on other Federal finances and one major reform so far (another will be needed) is usually the sign of a successful government program. It's not in dire crisis: we will start to see it drag on other government finances in 20 years, as FICA will only fund about 75% of payouts once the trust fund is exhausted.
Medicare on the other hand is a different story. Costs are growing too high to make it sustainable. But that doesn't have to do with the efficiency of the program itself vs. other insurance companies - it's actually quite a bit efficient than private insurers. The problem seems to be the broader U.S. system of health cost/benefits compared to other countries. We spend more and get less.
That seems like a problem for the regular budget to sort out: Soc. Sec. basically has the money it needs for some decades, but the rest of the budget either needs significant cuts or tax hikes so that it can pay back Soc. Sec. what it owes it.
I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along, contrary to Reagan's assurances in 1983 that he wasn't making a regressive change to the tax code, because of the bonds. If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.
> That seems like a problem for the regular budget to sort out
I agree. My point is that the problem exists now.
> I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec.,
I didn't suggest default. I'm just pointing out that the "drag" has already started.
> and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along
It's not a regressive tax because of the payout is capped too.
In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible.
That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners.
> If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.
Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights.
Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS.
If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits.
I think that SS's designers got that part correct. The payout formula needs some tweaking.
Re: removing the cap, that was in the case, which is vaguely proposed on and off, that Social Security will never get the money back from its mythical "lockbox", and instead the money will be retroactively turned into just general-treasury money. If it's just general-treasury money, then the Social Security tax is a general-revenue tax (not one earmarked for Social Security benefits), but as a general-revenue tax it's a regressive one.
If the money really is going to be repaid to the Social Security system and used exclusively for benefits, then I agree it's a different situation, more of a quasi-retirement-account.
> but as a general-revenue tax it's a regressive one.
SS is not a general revenue tax - taxes don't have contribution-based payouts.
If you're suggesting that SS payouts should be completely means tested, you're opening the biggest can of worms. The SS recipients that complete means testing would most affect are among the most politically active people in America.
When I was younger, I used to argue against SS and the like as old-people welfare. I didn't see why my money should go to to folks who were better off than me. My age-cohorts disagreed.
> SS is not a general revenue tax - taxes don't have contribution-based payouts.
Did you miss this part of my comment?
> in the case, which is vaguely proposed on and off, that Social Security will never get the money back from its mythical "lockbox", and instead the money will be retroactively turned into just general-treasury money
Especially in the last Social-Security-reform debate a few years ago, there were serious proposals that the Social Security tax surplus notionally held in bonds will never be repaid to Social Security, and therefore reform proposals should be made which allows SS to be solvent under the assumption that it will never get its bonds repaid.
If that happens, a significant part of the past 20 years' Social-Security tax money will not be used for SS payouts, but will be kept by the general treasury. In that case, SS will retroactively have been, in part, a regressive general-revenue tax.
If 100% of the Soc. Sec. money collected is eventually used to pay Soc. Sec. obligations (i.e. SS is able to call its bonds), then my argument doesn't apply. I'm not confident that will happen, though.
> I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec.,
I didn't suggest that. I'm just pointing out that the "drag" has already started.
> and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along
It's not a regressive tax because of the payout is capped too.
In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible.
That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners.
> If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.
Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights.
Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS.
If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits.
I think that SS's designers got that part correct. The payout formula needs some tweaking.
That's the funding side, but what I'm wondering is why we don't get more for the money we do spend. Norway and Canada spend about the same amount on state-funded medical care as we do, but they manage to provide universal coverage, whereas in the U.S. we spend all that money but I still have to buy private health insurance! Instead it goes into this patchwork of uncoordinated programs: Medicare, Medicaid, VA hospitals, reimbursements for unpaid ER visits, etc.
Don't forget administrative costs. An interaction with a medical professional in the US can involve multiple billing departments (the clinic, the lab, the actual doctor in some cases), your insurance company, any medical reimbursement schemes you may be involved with (HSA, VEBA etc), and your own time dealing with this mess.
"The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system"
This probably doesn't even include the added cost to businesses of having to employee additional HR staff to coordinate the insurance and reimbursement accounts.
Every politician interested in job creation should be pro universal/single payer/socialised healthcare. The financial burden of administering and paying for private insurance has to be a significant burden for both small and large businesses.
Gas in many countries is far cheaper than in the US, and the reason it is more expensive in others is heavy taxation and regulation, not lack of coercive negotiations.
Yes, the Iraq war had much to do with protecting the world oil supply. While the oil and gas industry is heavily subsidized, that war did not give the US a better deal on oil than anyone else. While it may have impacted oil prices, it did so globally.
Good question. Does the "defense spending" category include the trillion dollar wars in Iraq and Afghanistan? George W. Bush's administration conveniently swept the wars' costs into a "supplemental" budget separate from the DoD budget.
No, the graph clearly does not include the supplementary spending. I ran the numbers for this a while back, and the supplementary extra-budget DoD spending in the Bush years raised the DoD expenses from 22% to nearly 40% in some cases.
Military expenditures are much higher than 22%, even in 2011. These budget numbers hide much military spending in other budgetary components -- for example, veteran's benefits or military scholarships will fit into another category (Medicare, everything else, etc). Statistics that put military spending at a quarter of our budget never include these costs.
A big part of this "change" comes from a budgeting game which hides military costs in other budgets. Contrary to claims in the article, VA benefits and medical claims did exist as an expense 50 years ago -- but they were directly part of the Defense budget at that time.
None of the graphs are from the Bush era, but the Iraq war was still active in 2011. I was asking whether the cost of the war's operation omitted from this graph's "Defense spending".
No, a lot of defense spending is not hidden under health.
$850x billion is spent on the military. That has doubled since the mid 1990s, and so has everything else roughly.
Now, if you want to consider whether the CIA is an arm of the military, that's a fair issue. If you want to look into the drug trade and how much money the US Government makes from that, that's another fair issue. Also, should the NSA be considered a military wing, because it has a $80 billion budget all by itself.... If you count those types of police state entities, then the military spending is another 5% of the budget.
There are many other mistakes. The author also says "Fifty years ago Medicare and Medicaid didn't even exist, and federal spending on other health-related services made up a tiny sliver of the whole"
This alone represents a false 20% reduction to the "Defense" budget, at the expense of increasing the appearance of social services budgets. If one adds up all defense related spending not by Federally published categories but by actual expenditures then the picture changes radically -- and it looks a lot closer to the budgets of yesteryear.
Anyone care to explain how medicare + medicaid (which don't apply to everyone) manage to consume 23.2% of the US budget - yet the UK's National Health Service, which does cover everyone, only takes up 10.7% of it's budget[1]. The NHS, for it's flaws, is starting to seem like a bargain.
Update: i'm an idiot and read the "Public net debt" row instead (just skimmed to the bottom row and presumed that'd be a sum). The actual percentage is 17.09% which is considerably higher than I originally had it, but still a great deal less than the US.
Yes, but it is just about to zoom up as the baby boomers start retiring over the next 20 years. It is a double wammy to the budget because they will switch from paying in to pulling out.
True, though Reagan somewhat planned for that with the 1983 Social Security tax hike, which was designed to pull in ~20 years of higher baby-boomer Soc. Sec. tax revenue to pay for their retirements. Hence the huge surpluses Soc. Sec. has been running for some years, to accumulate a few trillion out of which to pay for their retirements (if it weren't for that, Soc. Sec. tax could've been a lot lower over the past 20 years purely to break even year-to-year).
This is one of the reasons that I don't like graphs of governments spending shown as percentages. There is an inherent spin in the chart. If federal spending increases relative to GDP, but the constituent components of the chart remain relatively flat percentage-wise, then it misleads people to interpret the spending as flat, when it isn't.
Oh, I realize it's grown overall, just somehow I had thought it grew as a percentage of the budget as well, which seems not to (yet) be the case. Looks like healthcare spending (Medicare+Medicaid) is the main thing that's been gobbling up a bigger percentage.
People talk about how Social Security and Medicare are growing out of control and threatening to ruin any possibility of a sane federal budget. That is true, but it would also be true to say that school lunches plus Medicare or NASA plus Medicare is dangerously out of control.
In fact, Social Security is a tractable spending commitment. It is only Medicare that is growing like a crazy metastatic cancer.
And Medicare is growing like that because health care spending is growing out of control in the private sector, in the VA, in Medicaid, and everywhere.
The main drivers of health care spending are mostly not addressed by the Romney-Obama health care reform ('Obamacare') passed in 2010. Only a few minor tools to slow growth will be in the hands of federal bureaucrats and only if they have the courage to sieze them. Nobody is even talking about educating, licensing, and allowing immigration of more doctors; the USA has a very low level of practicing physicians for a first world country. Licensing regulations also prevent pharmacists and nurses from taking responsibilities for direct patient care that other countries allow them, exacerbating the problem.
So basically: less defense, more insurance, less infrastructure and research. This is the trifecta of basic public goods the federal government is well-suited to provide. Would be nice to tip the scales more in favor transportation infrastructure and basic research grants, with less spent on boondoggle defense programs (http://www.wired.com/dangerroom/tag/f-22/) and subsidizing out of control growth in health care costs vs. other first-world nations (http://www.washingtonpost.com/blogs/ezra-klein/post/why-an-m...) though.
A more accurate description would have been 3 years of government spending in 1 graph. We have the US budget for each of those 50 years, then why throw out 47 data points and keep arbitrary 3?
This graph with it's hand picked years and tweens between the dates seems to show a monotonically decreasing defense spending which is a very wrong way to think about it. We have had a lull in defense spending after the end of the Cold War, but the last 10 years have seen an increase of more than 50% in dollar values of the defense budget.
I don't want to attribute malice to the creator of the graph for their selection (and exclusion) of the data points, but I feel being manipulated.
I'd feel better about that graph if it wasn't so horribly spun. The vertical scale is showing a delta from the original value, not the value. It looks like an exponential explosion in spending when it's actually about 3.5x since 1970.
Honestly, if I were an investor and a startup tried to sell me that chart, I'd walk out of the room.
The broader point is valid, though. Education policy in the US sucks. But the details matter a whole lot -- we're spending on the wrong things (tests, security) and not on the things that are known to make a difference (e.g. teacher salary -- make it competetive with other professions and you'll get better teachers). It's far more complicated than the libertarian "Gov'mnt spending bad, hur, hur, hur." line.
No need to ridicule libertarians like that. There are different kinds of libertarians, different movements, and not all have such simple ways of thinking. At least libertarians invite criticism in the field of inflated government spendings.
I thought libertarians were a fringe group of idiots until someone on HN said they were libertarian while saying something sensible. It's been hard to fight the habit of ignoring them. It doesn't help that the Koches and their institute are cited in the stupid babbling of the more vocal ones.
Usually mass-media use the worst examples of libertarians to make fun of the whole concept/idea behind it. That's a common fallacy used to fight different kind of groups, when they are not mainstream and opposed to the current "approved way of thinking".
To be fair: the source of this discussion was a verifiably distortionist graph produced by a very mainstream libertarian think tank. To my mind, you're simply arguing the converse fallacy. The fact that there are smart people who hold any given opinion doesn't mean that the group associated with that opinion is worthy of praise.
Basically: Hayek being "right" about something doesn't make the Cato institute "not true libertarians".
It's not just about being worthy of praise. I am just making the point that "libertarian" is a too generic term to put everything and everyone in a single bag. There are anarcho-libertarians, libertarians who support the idea of a balance between government and private investment, and many other variations.
I think the only generic you can say about libertarians is that : they care about freedom of property and consider government intervention in private affairs with criticism. Beyond this point, the commonalities disappear, and there is a wider range of opinions among libertarians than in any other political group out there. There is no real "dogma", while Von Mises and Hayek are more or less recognized as Thought leaders for some of them.
I did not claim, by the way, that Hayek was "right" about anything, I just wanted to show one of the figureheads of some parts of the movement. Getting a Nobel Prize does not mean anything to me, and I personally feel very strongly that the recent Economy Nobel Prize Jo Stiglitz does not know what he is talking about (he's just an old school Keynesian, and even Keynes himsel admitted in being wrong later in his life). Stiglitz has a clear political agenda that has nothing to do with actual economic sense.
I didn't get my previous view of libertarians from mass media. I've seen people who I'm pretty sure are libertarian in this very thread arguing intelligently against extremist views. They usually go unchallenged outside HN, which is how people get a bad impression.
Libertarianism isn't well-served by letting anarchists call themselves libertarian unchallenged. I would like to see more of what I see on HN out in public view.
Should be titled '3 years of government spending in one graph' as it seems to completely fail in putting the figures into context by skipping intervening years, so we have no idea from this whether this is representative, or cherry picked for effect.
Unfortunately this graph primarily just shows that government handouts to citizens in the form of safety net programs, medicare, and medicaid have gone up in percentage, that defense has gone down in percentage, and that we don't spend enough (in my opinion) on public transportation- but it only looks at three years!
I am not sure exactly at what level you wish there would be more spending on public transportation, but spending money in that field could be a big waste of cash in the US. It's way too big and too decentralized. It makes sense in some countries (in Japan, for example, all cities are on the coast because nobody builds stuff in the mountains, so it's easy to connect the dots), but public transportation would not work well outside of a few big cities in North America.
Even in France, the bullet trains lines cost way too much versus their planned profits. Some will not be profitable for another 20-30 years! And that's assuming that, by then, it's still the best way to get from A to B. It's all about getting votes in the end, it does not make economic sense at all.
You have made a few simple basic errors of data that lead to some very incorrect conclusions.
The bulk of the US population live in areas that have population densities at or even sometimes (NYC) above European levels. The entire state of california (not exactly high density at all, given the bulk of the state is just open space) has an average population density slightly higher than Spain, a country that managed to build a national High speed rail network.
The entire eastern sea-board is at roughly european density levels as well. No one is suggesting we build a bullet train that goes to North Dakota.
As for "not being profitable for another 20-30 years", you are arguing from a very short-term mindset about national infrastructure, but also you are pre-assuming that infrastructure should be directly profitable. This is not a commonly agreed idea, rather there is fierce disagreement between fiscal conservatives who think the government shouldn't do ANYTHING, and those (like most of europe) who believe the government should undertake large "public-good" projects precisely because they are not directly profitable, but they are PUBLIC GOODS.
Universal health care is also "not profitable" directly, but the benefit to society of having everyone live decades longer is massive increased economic output, to say nothing of increased quality of life.
The network effect of having efficient rail transportation balloons the entire economy. This is why governments pay for big infrastructure: everyone benefits and the direct revenue and direct costs are high enough to be uninteresting for investors.
You don't get it. This isn't just about connecting urban centers (which we could, in fact, do a much better job of), it's about getting real, meaningful transit even in places like Los Angeles. Some of these cities rival many countries in population, and have density levels reaching toward Gibraltar.
New York is by far the "shining" beacon of mass transit in the US, but even its infrastructure is deteriorating.
We don't build transit here not because it wouldn't work, but because of purely political factors. It's a punching bag for the anti-tax brigade and the NIMBYs (most also in the anti-tax brigade) go apeshit if they think public transit might bring a brown person to their neighborhood. The horror!
Not true. A right wing lower taxes point of view 55 years ago was to drop the top taxes on rich people from over 90% to about 70%. A right wing lower taxes point of view now is to drop taxes on rich people from 15% to 10%. And anyone who thinks that having more tax brackets with much higher top tax rates is viewed as a radical.
Fiscally I think you're correct as people's views are heavily affected by economic cycles. As the current young generation gets old we'll remember how the recession affected us as we entered the workforce. We'll also have to deal with the debt by then resulting in a more fiscally conservative electorate than we have now.
Socially, we've been consistently getting more and more liberal since the country was founded. Gay marriage is the latest example. Despite North Carolina, polls have shown that support for gay marriage is very much generational.
Here is one here:
http://www.usgovernmentspending.com/spending_chart_1903_2010...