Just Don’t Take Mine

I wrote a little on the disturbing level of economic illiteracy I see throughout the country yesterday.  A CBS Poll came out on what Americans want done with Federal Spending and it just screams stupidity.  The overwhelming majority of people want spending cuts in the Federal Budget, but they can’t name many things that they want cut.  It seems like there’s this resounding chorus out there of give me my taxes back and do cuts on imaginary spending. Then, it’s just don’t cut anything I use or think is important. I’m going to cite this last paragraph in the article .  It’s probably the most relevant.  (There’s more discussion links on this at Memeorandum.)

Most Americans do not know exactly how the government spends its money. For example, when asked what percent of the budget goes to earmarks, 41 percent said they make up less than 20 percent of the budget, 13 percent said 20-50 percent, 4 percent said more than 50 percent and 42 percent didn’t know. Earmarks actually make up less than one percent of the budget.

I always hear students say they want to quit giving money away to other countries too.  We give less than one half percent of our budget to other countries.  The best place to look for budget information is the Congressional Budget Office website.  That’s where I got the graph you see in the upper right hand corner.  That’s a comparison of Federal Spending (green) and Federal Incomes (blue) since 1980.  The gap between the two at any one point in time is the federal deficit for that year.You can distinctly see the period during the Clinton Budget Surpluses because that’s where the blue lines is above the green line.  All other periods show more spending than revenues.   The Reagan and Bush years were years of explosive spending growth.  You can also see the huge gap that started around 2008 when the Great Recession took hold.  Nearly each of the down turns recently has been due to huge tax breaks combined with bad economies.

A pie chart shown on a Examiner.com breaks down the expenditures by the funded Department.  It also adds Social Security into the mix which is the number one federal outlay. (Ryan Witt’s chart analysis here. Read the comments and embrace the number of people that need to go back to school.)  Social Security–however–is sustained at the moment by more revenues than outlays.  The Department of Defense comes after that.  It gets about 19% of the overall budget.  Right now, because of the ‘cyclical’, mandatory spending that occurs due to our bad economy and our high unemployment, you can see that unemployment/welfare payments mandated by law come after that (16%), followed by Medicare which is also offset by payroll taxes at the moment (13%) then Medicaid/SCHIP funding (8%). The Department of Health and Human Services gets about 8%.

The next biggest expenditure is paying the interest on the National Debt.  Thankfully, interest rates are low so that amounts to around 5% currently.  You can compare this pie chart to the one below and see how lower interest rates combined with higher outlays really helped to push that percentage down.. The next most noticeable part is the Transportation department that gets about 2% of the budget. Most of the remaining major Departments like Homeland Security, Energy, Education, etc. get some where around 1-1 and 1/2%.  Veteran’s Affairs gets a fairly noticeable slice too albeit not huge.

I’ve also put a pie chart of Federal Outlays  for 2009 to  the left that is some what more general. Notice how huge the Treasury budget was because of TARP (now mostly paid back) and the other bailouts.  There are several reasons that the budget deficit has been so bad the last few years.  The primary reason is the bad economy because that forces revenues down and outlays up.  The second reason is the Bush taxes cuts that were just extended and expanded for the next two years.  We’re basically spending at relative levels right now that we’ve not seen since World War 2.  We are of course funding two occupations/wars and a ‘war’ on Terror. Some people want to conveniently forget that.   When the economy finally improves and we do actually shut down Iraq and Afghanistan, a lot of our budget headaches will go away.

The CBS poll shows that the majority of Americans do not want higher taxes. It appears, however, no one wants to pony up their share of that budget pie. They luck cuts but are at a loss for offering possibilities or they offer up something that’s negligible.  We should probably refer to this as the budget cake since most Americans want to have their cake and eat it too.  Plus, they want some one else to pay for that cake.

A CBS News poll finds that Americans strongly prefer cutting spending to raising taxes to reduce the federal deficit. While 77 percent prefer to cut spending, just nine percent call for raising taxes. Another nine percent want to do both.

Yet most Americans could not volunteer a program they’d be willing to see cut in order to reduce the deficit – only 38 percent could name a program they would support cutting. The top responses were military/defense (six percent), Social Security/Medicare (four percent) and welfare/food stamps (four percent).

If you break down the CBS poll into demographics–most notably party affiliation–you can see the red state/blue state war.  Reduction of Farm subsidies appears to be the only real shared value.

Democrats and independents were more likely to favor cuts to defense spending than Republicans, only 39 percent of whom favored cuts there to reduce the deficit. Republicans were most likely to favor reducing money for projects in their area (73 percent), reducing social security for the wealthy (66 percent), reducing farm subsidies (58 percent) and reducing money for student loans (54 percent.)

Democrats were most likely to support reducing social security for the wealthy (60 percent), reducing defense spending (58 percent) and reducing farm subsidies (55 percent).

Forty-seven percent say it will be necessary to cut programs that benefit people like them to reduce the deficit. Forty-one percent say it can be reduced without cutting programs that benefit them.

A plurality want to make Social Security means-tested which is really a radical idea. This takes social security out of the realm of a benefit that we all pay for to an entitlement.  I personally think that’s a dangerous idea because it makes it easier to hack away at.  I frankly support increasing and more frequently adjusting the ceilings for incomes that are exempt from the taxes.  I also believe that the current payroll tax exemptions was a very bad idea.  All of these discussions lead me to believe that the big discussion this year will be exactly how to ‘reform’ social security.  The bigger question and more necessary one is what should we do with Medicare now that the last administration blew the funding calculations out of the water by allowing Big Pharma to charge what it wants to on plans available to Medicaid patients.  Changing that law is vital in the next few years.  The Social Security conversation should wait until that mess they just made a few years ago is cleaned up.

My other issue is the war/occupation spending.  I’ll point to that interview with David Stockman, Republican, to further that argument.  We can no longer ‘occupy’ Germany, Japan, etc. and help them with their defense.  We need to get out of the cold war military base plan. We also need to question our presence in a lot of places and our military commitment to many other countries.

The first thing that needs to happen, however, is that the people of this country have to pull the heads up from wherever they’ve been hidden and find out what’s real and what’s just urban lore.  I don’t think we can have a conversation on any of this until people actually know where their tax dollars go.


13 Comments on “Just Don’t Take Mine”

  1. TheRock says:

    It’s absolutely stunning to hear how many people just don’t know what the government is spending money on. I asked the same question at work a couple weeks back and got the same dumb responses. It seems like everyone hates to see money spent on foreign aid or earmarks, but think that military spending is a necessary evil no matter HOW much is spent. Did you see the new debt value for the country? $14 trillion. Didn’t that one president in the 90’s get it down to $5 trillion at one point? I wonder what his name was……

    Asshats.

    Hillary 2012

  2. B Kilpatrick says:

    How do most people want to have their cake and eat it too when about half think that reducing the deficit will require cuts in areas that affect them?\

    I, personally, have a radical idea for reducing the deficit – just adopt Clinton’s last budget, or at least use the total amount as a spending limit.

    • dakinikat says:

      We could do that by ending the two big Bush bad ideas. Those tax cuts to the wealthy and the Iraq/Iran mess. Republicans would scream bloody murder and there’s enough DINO’s–including the one in the White House–that think Afghanistan is a good war and tax cuts on the wealthy is a good idea.

      I see your point on the cake and eat it too … I don’t think they realize their oxes will be gored if we do the things they want because they have no idea where the money goes. The military state is the big thing that needs to be dealt with and the other thing is the medicare plan. Just my two cents. They should negotiate tough prices with Big Pharma or take away their licensing privileges or just take the medicines that are in the public domain and pay some small factory somewhere to provide those drugs to medicare and medicaid patients at cost. I don’t think we need to subsidize more research in erectile dysfunction drugs and advertising frankly.

  3. Minkoff Minx says:

    “Ryans and tigers and bears, oh my!”

    Dak, I just saw this:

    FT.com / Comment / Analysis – America: Paydown problems

    It was the most startling of warnings. If the US does not get its finances in order “we will have a European situation on our hands, and possibly worse”, claimed Paul Ryan, the new Republican chairman of the House of Representatives budget committee.

    The consequences of not tackling the country’s mounting debt burden would be dire, he last week told an audience of leading budget experts and economists at a gathering in Washington. “We will have the riots in the streets, we will have the defaults, we will have all of those ugliness problems,” he said, referring to “French kids lobbing Molotov cocktails at cars, burning down schools because the retirement age will be moved from 60 to 62”.

    • bostonboomer says:

      Oh for Pete’s sake! LOL

      Ryan is a wingnut moron. I can’t believe FT published that.

      • dakinikat says:

        Frankly, I think they’re enjoying pushing the bed memes about us right now. They’re not happy about the way they’ve been treated recently. (NO one puts Her Majesty in the corner!!)

  4. Fredster says:

    Oh for Christ’s sake I am sooo tired of hearing the crap about Social Security. Where are all of the “i.o.u.’s” from when the govt. borrowed from Soc. Security? I think they are literally in a file cabinet in West Virginia or some place. Still, they are Treasury Notes and are supposed to be to be redeemed. And if Ryan and his ilk are so concerned about this they didn’t help the situation by coming up with the payroll tax “holiday”. The Republicans will scream bloody murder when it comes time to raise the rate back up, just as they will when it comes time to remove the Bush tax cuts.

    If they have problems with medicare then the repubs (courtesy of Billy Tauzin) can blame themselves for the biggest problem of that with not paying for Part D the drug plan for Medicare. And Obama didn’t help it when he helped to squash the drug importation bill last year. Mary Landrieu voted nay on that one and it’s something I’ll be discussing with her when she’s up for reelection and sending out her emails and solicitations. That, (allowing for importation of prescription drugs) would have been a biggie in helping the average American in bringing down their health care costs.

    Oh and btw, you did know that Paul Ryan is a Randian, requiring all of his staff to ready Ayn Rand’s books. 🙄

    • B Kilpatrick says:

      I doubt he’s a hard-core Randroid. Most of the Randroids are like what the Borg would be if the Borg liked money.

      • Fredster says:

        Oh I’m not so sure about that.

        http://www.tnr.com/blog/jonathan-chait/80552/paul-ryan-and-ayn-rand

        Earlier this year I wrote about Ryan and his deep devotion to the philosophy of Rand, particularly her inverted Marxist economic-political worldview:

        Ryan would retain some bare-bones subsidies for the poorest, but the overwhelming thrust in every way is to liberate the lucky and successful to enjoy their good fortune without burdening them with any responsibility for the welfare of their fellow citizens. This is the core of Ryan’s moral philosophy:

        “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand,” Ryan said at a D.C. gathering four years ago honoring the author of “Atlas Shrugged” and “The Fountainhead.” …

        At the Rand celebration he spoke at in 2005, Ryan invoked the central theme of Rand’s writings when he told his audience that, “Almost every fight we are involved in here on Capitol Hill … is a fight that usually comes down to one conflict–individualism versus collectivism.”

        And

        The core of the Randian worldview, as absorbed by the modern GOP, is a belief that the natural market distribution of income is inherently moral, and the central struggle of politics is to free the successful from having the fruits of their superiority redistributed by looters and moochers.

        Ross Douthat furiously objected, dismissing Ryan’s relationship as him having “said kind words about Ayn Rand,” as if he had merely offered pro forma praise at a banquet. I think at this point trying to deny Ryan’s attachment to Rand is pretty hard to sustain. He’s not requiring his staffers to read Ran because he thinks they need a good love story. And given that it’s not just a teenage fascination but the continuing embodiment of his public philosophy, it’s worth noting again that Rand is a twisted, hateful thinker.

      • dakinikat says:

        Fredster: What amazes me about these people is how easily the adopt Darwinism when it comes to economics and social things, but how they completely reject it when it comes to biology. It’s a totally upside world view.

  5. foxyladi14 says:

    it’s a royal mess.. and they are all to blame. 👿

  6. Sima says:

    This makes me depressed. But then what doesn’t these days? How the heck are we going to get out of this mess with under educated, mis-lead citizens and corrupt or stupid politicians?