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The author claims:

1. “Federal government revenues are projected to be 16 percent of national
output, compared with an average over the last three decades of 17.7
percent”

2. “For the preceding three decades government spending averaged 21.1 percent of national output.”

3. “In brief, the numbers flatly contradict the assertion that spending is “out of control.””

So, the government is spending on average 21.1% of GDP, while taking in on average 17.7% of GDP, yet spending is not “out of control”? This is a trend that cannot continue forever. These spending levels are unsustainable and therefore not in control.

A Like Reply 3 hours ago 8 Likes F .

James Thomas 1 comment collapsed Collapse Expand Henry Aaron is the worst kind of liar, the kind who twists data to fit his agenda.

With the exception of the Civil War and WWI government spending remained below 5% until FDR. Since then government spending as a percentage of GDP has risen: 10% just after WWII, 16% during JFK, 22% during Reagan and roughly 25.3% in 2011.

Question 3 is a lie hiding in the truth. SS is currently running a modest surplus ... which will evaporate and accelerate downward toward insolvency as Boomers retire.

And question 4 is simply a dumb question. Whether health care spending is up or down the fact remains that at nearly 20% of GDP, US health care spending per capita far outstrips that of other industrialized nations while results are poorer than many European nations that spend half as much.

I’ve got to give Aaron number 2. He’s correct, though I’m not quite sure what his point is. We may be collecting about the same tax receipts as a percentage of GDP but we’re borrowing to make up the difference. In 1970 debt as a percentage of GDP was half what it is today.

A Like Reply 2 hours ago 6 Likes F .

steveinch 1 comment collapsed
Collapse Expand Hmmm...well, let’s take these in order.

1. Well gee whiz, I guess we should be happy that it’s not the highest since WWII. Over the next 10 years, CBO projects that federal spending will average 22.1% of GDP. It is interesting that Mr. Aaron chose to look at a single year rather than the trend. It’s also interesting that that level of spending over a decade is the highest in the history of the republic for any decade (staring each in 00 and ending in 09). Now I’m sure the author isn’t cherry picking here.

2. Similar cherry picking appears to be going on here. Mr. Aaron quotes a number of 16% of GDP. No such number exists. For FY12 (last year) receipts was 15.8% of GDP. It is forecast to be 16.9% this year and 18.0% next year. For the decade, they are forecast to be 18.9%, the second highest on record. Indeed by FY2015, they are forecast to be 19.1% (the average under Clinton’s two terms) but what’s 3% of GDP among friends.

3. The SS argument relies on funky government accounting. To make it simple. SS tax receipts are below SS outflows. Interest on the trust fund bonds is larger than the gap. But interest on the trust fund bonds is paid for out of the general fund. So in cash terms, SS is now taking from general funds in order to meet its obligations. Leave the silly government accounting aside, this is what is happening.

4. We might all hope that the 40 year trend is wrong and the 4 year trend is right but there is nothing to say that this is so. Like the rest of the post, the author is cherry picking his facts but at least he’s more honest about it than he is in other parts of his perspective.

I also agree with the poster below. If we look over the next 10 years, real per capita spending is forecast to grow at 2.3% per year while real per capita taxes grow at 3.2% per year. And Washington wants us to believe that they have dramatically cut spending and need to increase taxes.

Apologists like this really don’t make much sense.

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