You Got to Be Kidding Me!

Budget Priorities

Posted in Economics, Politics by Stacy McMahon on February 14, 2007

When I was a kid, there was a popular bumper sticker that said “It will be a great day when the schools have all the money they need, and the air force has to hold a bake sale to buy a bomber”. Of course it was and is the case that it should have blamed entitlement programs more than military spending, as Robert Samuelson points out in today’s WaPo.

Despite the war in Iraq, defense spending is only a fifth of the budget; so-called entitlement payments to individuals are almost 60 percent — and rising. In fiscal 2006, the federal government spent almost $2.7 trillion. Social Security ($544 billion), Medicare ($374 billion) and Medicaid ($181 billion) dominated. There was $199 billion more for payments to the poor, including the earned-income tax credit and food stamps.

Social Security alone equals the entire defense budget, including the Iraq war. And everyone knows that social security is a pyramid scheme that’s on a demographic road to hell. But nobody does anything about it:

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.

It might help if Americans called welfare programs — current benefits for select populations, paid for by current taxes — by their proper name, rather than by the soothing (and misleading) labels of “entitlements” and “social insurance.” That way, we might ask ourselves who deserves welfare and why.

The British call welfare “the dole”, which strikes me as a fine emotive term. But then the UK is also the most socialistic welfare state in the Anglosphere. It may simply be the case that, in the words of Lazarus Long, democracy can function only until “the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, [and] they will do so, until the state bleeds to death”. Germany recently managed to at least make a dent in that process–hopefully the US can do the same before it’s too late.


10 Responses

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  1. Clint said, on February 15, 2007 at 10:05 am

    Keep in mind that we spend more on corporate welfare than we do on welfare for families. And the corporations sure as hell do not need it.

    And consider this — outside of the 60% entitlement spending, we have 40% left. If we spend 20% on military — that’s HALF of everything else.

    I say it’s a good thing that we spend more money supporting our people, than killing other people.

  2. Stacy said, on February 15, 2007 at 10:21 am

    Well technically, defense and postal mail are the federal government’s only constitutional jobs. I think the real problem is that 90% or more of total tax revenue is collected by the federal govt, which means they have to either give the states money for social programs, or do it themselves. Both of those options destroy federalism.

    My ideal solution would be to get rid of the federal income tax and shift the majority of revenue collection to the states. That way the federal govt could concentrate on national issues and the states could have the level of social programs that their residents wanted, ranging from laissez-faire libertarianism to big brother socialism.

  3. Stacy said, on February 15, 2007 at 10:22 am

    Oh, and you’re right that there is a lot of corporate welfare in various forms. I definitely include that in “bad entitlements that need to go”.

  4. Clint said, on February 15, 2007 at 5:03 pm

    The non-corporate welfare isn’t nearly so bad. I have far less of a problem giving money to, say, mothers of 10 who can’t get a job becaue they have no teeth and a criminal record, than to, say, McDonalds, so they can advertise in France.

    And I’m with ya on the tax. Keeping money local gives less dirty hands an opportunity to touch it.

  5. Matt said, on February 15, 2007 at 10:28 pm

    And another thing…of that 20% which goes to defense spending, so damned much of THAT is waste, too. The military is a government bureaucracy like any other, with the exception that it is *supposed* to go out to “kill people and break things,” instead of doing so accidentally, like some of the others do. 😉

    That means that it is account- and lawyer-heavy, just like any other federal bureaucracy. Most people don’t get that the military is composed of relatively few “shooters” and has a hell of a long logistical trail, which included whole legions of people whose worst war wounds are inflicted by improperly used staplers. That is why we’re currently having a hell of a time fighting a two-front war which may or may not spread even further; the military of the 1940s could do it, but there were 15 MILLION men and women in the ranks then, and we have what, probably about one-eighth of that now, if that? Our guys in the field can’t get enough ammunition and armor and God only knows what else, up to and including trained and experienced personnel, because ever since 1945 we’ve been trying to fight wars on the cheap. And yet we continually expect them to work miracles. And then we pay most of those people shit and force most of them to live well below the poverty level, down with the people these damn social programs are supposed to support!

    And finally, another huge chunk of that 20% is blown away on pork-barrel defense production and R&D projects housed in powerful Congressional districts. For every worthy new piece of equipment that’s developed there’s probably a dozen more that are total crap which never make it into the field (and maybe that’s for the best), and EVERY new system that goes out the factory door takes too long by half to “study” and “develop”. While I do sort of agree with the people who say that defense dollars could be better spent elsewhere, I’m much more inclined to say that those dollars which are allocated to defense could surely be spent far more wisely and effectively within the context of the defense budget itself.

  6. Clint said, on February 16, 2007 at 2:05 am

    Too true. See “The Pentagon Wars” starring Kelsey Grammer (Frasier). It’s a comedy movie about a true(?) storie of a vehicle that they took some 10 years to develop, because they kept changing their mind.

  7. Christina said, on February 16, 2007 at 5:29 am

    The problem with making taxes more local is that rich areas stay rich and poor areas are fucked. While it would probably cause less wasteful spending, there is the need to redistribute wealth, and as I see it, this can really only be done at a federal level, otherwise you’d see even bigger gaps forming between states like Mississippi, Alabama, etc. and say, Connecticut.

  8. Stacy said, on February 16, 2007 at 8:37 am

    The problem with making taxes more local is that rich areas stay rich and poor areas are fucked.

    I was thinking about it this morning and you’re exactly right. If different states have different levels of social spending, then the productive people will all move somewhere that has low taxes and services, and the needy people will move somewhere with high services (and high taxes) Result: the places that have money don’t spend it or need to, and the places that need to spend money don’t have it.

    My main problem with generous social welfare programs is that they distort incentives. If there were no safety net, then at least some of Clint’s toothless single moms with ten kids would be forced to have thought ahead and realized how screwed they would be if they didn’t take some responsibility. And to demonstrate my own self-awareness, the problem with that analysis is that there’s always that last, say, 2% that are just dumb and will make bad choices affecting themselves and others no matter what. And do you punish their kids for it?

  9. Clint said, on February 16, 2007 at 11:29 am

    “If there were no safety net, then at least some of Clint’s toothless single moms with ten kids would be forced to have thought ahead and realized how screwed they would be if they didn’t take some responsibility.”

    Human beings have notoriously bad foresight. Not everyone is as smart as us. Even smart people often lack common sense foresight — look at all the credit card debts many of us “smart” white-collar workers have.

  10. Christina said, on February 16, 2007 at 11:31 am

    Something I find interesting is that you don’t see high birth rates among the poorer areas of Germany, like you often do in the US, and Germany has a much higher unemployment rate than the US, in the former East it is 20% and some towns have rates over 80% (Brandenburg is one example). It has led to high alcoholism and drug abuse rates, but not high birth rates. You also don’t see high rates of teen pregnancy (it’s QUITE the opposite in fact). I’m not sure what the difference is, but there must be one. Germany has a strong social welfare system with health care for everyone. College tuition is zip here (you pay fees, but they are still lower than the fees at most state colleges in the US), so if you keep up your grades, you can go to college. Sex, pregnancy and STDs are very openly discussed, even to little kids – I was a bit shocked when I went to a zoo and saw a clearly made for small children poster describing in detail what the monkeys are doing when they’re doin’ it. Maybe these are some factors?

    I spent time walking dogs with the unemployed folks in government housing when I lived in Potsdam and sometimes their kids came along. I was really pleasantly surprised at how well the kids had turned out and how smart and philosophical they were. One woman, for example, had two kids, one was in university for computer science and was planning on going to grad school at Oxford, the other was an engineer at Siemens. I rode the bus to summer school one year in HS with the kids from Reston’s government housing area and can honestly say I was scared for my life most days.

    While there is a lot of extraneous spending done by the US government, do you really think less social programs is the answer? After living in Europe, I’m not so sure anymore.

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