Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

A Pop Quiz About Federal Spending That May Surprise You (Are you really a high information voter?)
RCM ^ | 03/05/2013 | Henry Aaron

Posted on 03/05/2013 7:35:23 AM PST by SeekAndFind

Some years ago, former Senator and one-time Harvard professor Daniel Patrick Moynihan remarked, "It isn't what you don't know that hurts you. It's what you know that isn't so." In that spirit, readers: here is a short quiz. Please don't worry. The quiz is short. You won't be graded. And you may be surprised.

Question 1: The federal government is spending a larger share of national income than at any time since World War II - true or false?

Question 2: The federal government is collecting a larger share of national income in taxes than at any time since World War II - true or false?

Question 3: Social Security is currently running a deficit - true or false?

Question 4: Health care spending is outpacing the growth of income - true or false?

I suspect that large majorities of Americans would answer "true" to at least one, and perhaps to all four, of these questions. Yet, the correct answer to all four is "false." That you would answer ‘yes' to any of them shows the unfortunate success of the campaign of misinformation to which Americans have been, and are being, subjected to. And this misinformation is doing the nation profound harm.

Let's start with government spending. According to the Congressional Budget Office, the Federal Government will spend 21.7 percent of GDP next year under current policy. Were the U.S. economy operating at capacity, that share would be less than 20.6 percent, because output would be higher and spending for such items as unemployment insurance would be lower. For the preceding three decades government spending averaged 21.1 percent of national output. In brief, the numbers flatly contradict the assertion that spending is "out of control."

In fact, the reverse is true.

(Excerpt) Read more at realclearmarkets.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: deficit; popquiz; socialsecurity; spending

1 posted on 03/05/2013 7:35:32 AM PST by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

*sigh* see my tagline- it covers this story


2 posted on 03/05/2013 7:37:15 AM PST by Mr. K (There are lies, damned lies, statistics, and democrat talking points.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Mr. K

Can you be more specific regarding this story?


3 posted on 03/05/2013 7:40:33 AM PST by SeekAndFind
[ Post Reply | Private Reply | To 2 | View Replies]

To: Mr. K

EDIT TO ADD. The questions were in regards to FEDERAL GOVERNMENT.

He DID NOT INCLUDE State, City and Municipal government in the questions. Add those up and we’re really talking.


4 posted on 03/05/2013 7:42:24 AM PST by SeekAndFind
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind

Lesee. Congress is spending every dime Social Security takes in, either on Social Security or on Federal items. There is no trust fund, no banked money, nothing but some non-binding IOUs.

The money is not there and the IOUs are worthless, but they say that Social Security is not running a deficit. Only by accounting standards.


5 posted on 03/05/2013 7:48:34 AM PST by Little Ray (Waiting for the return of the Gods of the Copybook Headings.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

1. is only false due to the last two years being higher. I do not count the year 1946, which, while higher, is part of WW II spending.

http://www.usgovernmentspending.com/spending_chart_1902_2015USp_XXs1li011mcn_F0xF0fF0sF0l_Spending_in_20th_Century#view


6 posted on 03/05/2013 7:57:20 AM PST by Ingtar (Everyone complains about the weather, but only Liberals try to legislate it.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Little Ray

RE: Congress is spending every dime Social Security takes in, either on Social Security or on Federal items. There is no trust fund, no banked money, nothing but some non-binding IOUs.

_____________________________

Here’s the author’s argument... take a machete and hack away.

Social Security is projected to have reserves at the end of 2013 $41 billion higher than it had at the start of the year. At the end of 2014, its reserves are projected to rise by another $42 billion. In 2020, reserves are projected to be $285 billion higher than at the end of 2013.

What this means is that Social Security is currently running not deficits but surpluses. It means that talk of a pension crisis is poppycock.

To be sure, the rising flood of retiring baby-boomers mean that deficits will eventually emerge. Raising revenues or lowering benefits to prevent them from happening is vitally important. These changes are better addressed sooner than later, but cries of ‘crisis’ are baseless.


7 posted on 03/05/2013 7:57:55 AM PST by SeekAndFind
[ Post Reply | Private Reply | To 5 | View Replies]

To: SeekAndFind

I don’t believe a dam word of this. As Slick Willie once said: it depends on what is is.
The libs have taken to redefine words to mean whatever they want them to mean. Often the opposite of what they originally meant. Gay “marriage”, are you kidding me?


8 posted on 03/05/2013 8:00:25 AM PST by jakota (jakota)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Wouldn't it make sense that tax revenues are down since people aren't earning as much?

This doesn't mean that the percentage of taxes compared to income is down.

9 posted on 03/05/2013 8:01:38 AM PST by what's up
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

http://ycharts.com/indicators/govt_spend_gdp


10 posted on 03/05/2013 8:03:24 AM PST by Ratman83
[ Post Reply | Private Reply | To 3 | View Replies]

To: Little Ray
There is no trust fund, no banked money, nothing but some non-binding IOUs.

Since when are treasury bonds "non-binding IOUs"?

11 posted on 03/05/2013 8:05:26 AM PST by ksen (". . . organized greed always defeats disorganized democracy" - Matt Taibbi)
[ Post Reply | Private Reply | To 5 | View Replies]

To: SeekAndFind

I was thinking “Perhaps I was wrong” for about 30 seconds. Then I clicked on the writers name for a Bio. This is all that came up:

Henry Aaron is a Senior Fellow in Economic Studies at the Brookings Institution.

Looks like I was not wrong. Spin anyone?


12 posted on 03/05/2013 8:08:31 AM PST by marstegreg
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
RE :”Question 3: Social Security is currently running a deficit - true or false? “

There are billions of dollars in the’trust fund’ so it doesnt add a penny to the debt, both parties agree with this,.

They only thing that confuses me is why O said not extending the debt limit would hold up SS checks.
Why doesnt he pay for it with the trust fund?

13 posted on 03/05/2013 8:08:43 AM PST by sickoflibs (Losing to Dems and Obama is not a principle! Its just losing.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

More links, ask anyone numbers can be modified.

http://www.realclearmarkets.com/articles/2011/06/09/government_spending_and_the_18_of_gdp_myth_99063.html

http://globaleconomicanalysis.blogspot.com/2012/08/government-spending-as-percentage-of-gdp.html


14 posted on 03/05/2013 8:19:16 AM PST by Ratman83
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Pure propaganda and BS.

Oversimplification to attempt to sustain a narrative by selectively utilizing statistics to support claims that are nothing but damned lies.

Here’s a more objective and complete analysis: http://www.heritage.org/research/reports/2012/10/federal-spending-by-the-numbers-2012

Anyone with a brain knows that you’re not necessarily wealthier if your expenses have gone up in step with your income. Why is spending the same percentage of GDP on government a virtue? Think what might have happened had the growth in government services never happened, and instead that money spent on entitlements had been returned to the people, who could have used it to create new jobs and opportunities?

The Brookings Institute is one of the birthplaces of the nanny state that have got us where we are. What would you expect them to say?


15 posted on 03/05/2013 8:34:21 AM PST by bigbob
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

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.

A Like Reply


16 posted on 03/05/2013 8:40:19 AM PST by csmusaret (I will give Obama credit for one thing- he is living proof that familiarity breeds contempt.)
[ Post Reply | Private Reply | To 3 | View Replies]

To: SeekAndFind

I won’t bother looking at the quiz since all that matters right now is my bottom line. It’s gone from being able to afford little extras for our families to worrying daily how to make ends meet.


17 posted on 03/05/2013 8:56:52 AM PST by bgill
[ Post Reply | Private Reply | To 1 | View Replies]

To: ksen

Socialist security is a benefit not an entitlement. The government can deny you the money you paid in


18 posted on 03/05/2013 9:04:23 AM PST by South Dakota (shut up and build a bakken pipe line)
[ Post Reply | Private Reply | To 11 | View Replies]

To: SeekAndFind

I know what GDP is.

And, I also know what taxes are based on.

Why is the relationship between GDP and taxes often mentioned? We don’t tax on GDP.


19 posted on 03/05/2013 9:30:41 AM PST by ataDude (Its like 1933, mixed with the Carter 70s, plus the books 1984 and Animal Farm, all at the same time.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: South Dakota
Socialist security is a benefit not an entitlement. The government can deny you the money you paid in

That's nice, and how does that address how treasury bonds are considered "non-binding IOUs"?

20 posted on 03/05/2013 9:36:52 AM PST by ksen (". . . organized greed always defeats disorganized democracy" - Matt Taibbi)
[ Post Reply | Private Reply | To 18 | View Replies]

To: bigbob
Here’s a more objective and complete analysis: http://www.heritage.org/research/reports/2012/10/federal-spending-by-the-numbers-2012

"more objective and complete"

*posts link to Heritage Foundation*

lols ensue all around

Think what might have happened had the growth in government services never happened, and instead that money spent on entitlements had been returned to the people, who could have used it to create new jobs and opportunities?

Hahahaha, right. Just like they are creating millions of jobs and opportunities right now after seeing their share of income reach historic highs. That particular supply-side claim has been proven false many times over.

21 posted on 03/05/2013 9:46:18 AM PST by ksen (". . . organized greed always defeats disorganized democracy" - Matt Taibbi)
[ Post Reply | Private Reply | To 15 | View Replies]

To: bigbob

You linked approvingly to this analysis by the Heritage Foundation: http://www.heritage.org/research/reports/2012/10/federal-spending-by-the-numbers-2012

According to their numbers, the deficit has fallen in each of the last few years. They show (surplus or deficit in billions of inflation-adjusted dollars):
2009: -1,484
2010: -1,344
2011: -1,322
2012: -1,128

There must be some accounting subtlety here that I’m not catching. How can the deficit, even in constant dollars, be shrinking?


22 posted on 03/05/2013 10:17:59 AM PST by Eagle Forgotten
[ Post Reply | Private Reply | To 15 | View Replies]

To: SeekAndFind

Answers to those questions are not important. I have questions of my own:

1. When the government can tell you what kind of health insurance you MUST buy, it’s too big - true or false?

2. When the government can tell you what kind of light bulbs you can and can’t buy, it’s too big - true or false?

3. When there is no budget, in total contradiction to the law, and no one is held accountable for that, the government is too arrogant - true of false?

4. When the President and Attorney General choose to enforce only the laws they choose, and they are still in office, the government is out of control - true or false?

I could go on, and on, and so could every regular to this site...


23 posted on 03/05/2013 10:47:47 AM PST by HeadOn (With my last breath, I will pull the lever against the liberals. NEVER GIVE UP.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Eagle Forgotten

Just a wild guess, but if revenues go up more than spending, the deficit would get smaller. And, unless I miss my guess, some spending that is getting bigger is not counted... “off budget”


24 posted on 03/05/2013 10:52:21 AM PST by HeadOn (With my last breath, I will pull the lever against the liberals. NEVER GIVE UP.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: SeekAndFind

He didn’t say a thing about the cost of excessive regulation either.


25 posted on 03/05/2013 10:54:22 AM PST by tiki
[ Post Reply | Private Reply | To 4 | View Replies]

To: marstegreg

what a bunch of commies - you can’t believe a word they say


26 posted on 03/05/2013 4:02:44 PM PST by Psiman
[ Post Reply | Private Reply | To 12 | View Replies]

To: HeadOn
As to why the Heritage Foundation data at http://www.heritage.org/research/reports/2012/10/federal-spending-by-the-numbers-2012 show the deficit declining, you wrote:

Just a wild guess, but if revenues go up more than spending, the deficit would get smaller. And, unless I miss my guess, some spending that is getting bigger is not counted... “off budget”

I appreciate your attempt to help out, but I'm still perplexed.

On your first point, true in general, but the data cover the period through 2012, during which all the Bush tax cuts remained in full effect, PLUS there were additional tax cuts as part of the stimulus. So how did revenues go up during this period?

On your second point, what type of spending is growing and is "off budget"? Social Security used to be off budget but is now on budget. I think MAYBE the costs of the war in Afghanistan are off budget but those costs have been declining, not increasing, as troops are withdrawn.

Heritage wouldn't falsely assert that the deficit was declining, so I believe the basic data. I'm still puzzled about the "why," though.
27 posted on 03/05/2013 8:58:55 PM PST by Eagle Forgotten
[ Post Reply | Private Reply | To 24 | View Replies]

To: Eagle Forgotten

Yeah. It gets complicated pretty quickly, so I’m not sure, either. Like I said, it’s a guess on my part.

One thing, though, Reagan proved that when you cut taxes, revenues go up, which would partially answer your question. More people paying at a lower rate means more revenue. Again, that’s a simplification that may not be justified here.

Maybe you could write to Heritage... If you do, let me know what they say!

God Bless.


28 posted on 03/06/2013 8:54:26 AM PST by HeadOn (With my last breath, I will pull the lever against the liberals. NEVER GIVE UP.)
[ Post Reply | Private Reply | To 27 | View Replies]

To: ksen
Since when are treasury bonds "non-binding IOUs"?

Ask the bond holders of General Motors how safe bonds are. If you do not have the money, be it government or private enterprise to pay off your debts, your bonds are binding IOU's but totally worthless.

Obama changed the rules on the bond holders at GM are basically stole their money. He can do the same to the bond holders of US Government debt.

Next Question.

29 posted on 03/14/2013 8:09:00 AM PDT by cpdiii (Deckhand, Roughneck, Mud Man, Geologist, Pilot, Pharmacist. THE CONSTITUTION IS WORTH DYING FOR!)
[ Post Reply | Private Reply | To 11 | View Replies]

To: cpdiii

GM bonds are not equivalent to US treasuries.


30 posted on 03/14/2013 8:12:13 AM PDT by ksen (". . . organized greed always defeats disorganized democracy" - Matt Taibbi)
[ Post Reply | Private Reply | To 29 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson