So I haven’t done this in a long time but let’s take stock of what we’re spending and where:
To me, the discussion of tax cuts is wholly irrelevant until we get into a situation where spending is 17% of the national income or less as that seems to be the steady limit of what we can collect historically. Above that, we see avoidance, off-shoring and a reduction in economic activity.
SO… to the budget:
The first thing that sticks out is the total receipts have gone from $2.5 Trillion in 2008 to $3.7 Trillion in 2020. (That’s prior to Covid so no telling where we lined up in reality). We saw an increase in revenue under Obama of $700 Billion per year, though it dipped considerably in his first year to $2.1 Trillion, giving him a net gain in revenue of $1.1 Trillion over his tenure if you grant him the impact of the recession. Over the last 4, we’ve gone from $3.2 Trillion to $3.7 Trillion, or $500 Billion. I often hear about “paying for tax cuts” (that’s absolutely IDIOTIC terminology, you don’t PAY for a tax cut, you offset any impact with spending cuts) but we saw a bump in revenue that isn’t dramatically out of line with previous years budgets.
Compared as a % of the GDP, receipts have averaged about 17.2% in my lifetime. For 2020, it’s estimated at 16.7%. Where we get into issues is spending as a % of the GDP. In that same span, average spending has been 20.4% of the GDP. Over the past 12 years, it’s averaged 21.6%, which is exactly what it was slated to be for 2020. Obviously, I know it’s going to go through the roof with the Covid spending and pork they included with it… So what we’re seeing, is again not out of recent norms but it IS out of historical norms. The spending is the issue, not the taxation. We can bounce back and forth on taxes but I don’t think you’re going to collect more than 17% on a year by year basis with regularity without massive economic impact. For a year or two, sure.
So to SPENDING as a percentage of the budget:
2020
Defense: 15.1%
Human Resources: 70.5%
Physical Resources: 3.8%
Net Interest: 7.9%
Other Functions 5.0%
Undistributed offsetting receipts: -2.3%
2016
Defense: 15.4%
Human Resources: 73.2%
Physical Resources: 3.2%
Net Interest: 6.2%
Other Functions 4.5%
Undistributed offsetting receipts: -2.5%
Total spending:
2020 (In Billions)
Defense $724
Human Resources: $3,377
This includes $195 Billion for education, training, employment and social services, $640 Billion for Health, $699 Billion for Medicare, $529 Billion for income security, $1.09 Trillion for Social Security, $215 Billion for veterans benefits and services.
Total: $4.7 Trillion in outlays.
2016 (In Billions)
Defense $593
Human Resources: $2,820
This includes $109 Billion for education, training, employment and social services, $511 Billion for Health, $594 Billion for Medicare, $514 Billion for income security, $916 Billion for Social Security, $174 Billion for veterans benefits and services.
Total: $3.8 Trillion in outlays.
So the left bitches about Trumps increase in the military budget but it went up $131 billion while Human resources went up by $556 Billion.
The elephant in the room is Social Security, Medicare, Medicaid and other “mandatory” programs. Until we address these issues, we’re going to run massive deficits no matter who sits in Congress and who sits in the White House. The sad truth is we’re screwed until we tackle these programs. I fully expect that my benefits will be not available in 20 years when I retire as they’ll be means tested. (I plan to take benefits at 70.5) The sad part is I will have paid in max to SS for decades and I’ll get zero benefit out of it. Maybe I’m wrong but if I’m not, the entire country is screwed. SS/Medicare consume FAR too much of the national income and I get the idea of expanding the economy to try to lessen the impact but for the next 2 years minimum, the economy will end up contracting where it counts and that’s production. JMO of course.
