A Pop Quiz About Federal Spending That May Surprise You (Are you really a high information voter?)

RCM ^ | 03/05/2013 | Henry Aaron

[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.

[ksen]

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.

[Eagle Forgotten]

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?

[HeadOn]

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...

[HeadOn]

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”

[tiki]

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

[Psiman]

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

[Eagle Forgotten]

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.

[HeadOn]

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.

[cpdiii]

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.

[ksen]

GM bonds are not equivalent to US treasuries.