We are told every day that we have a spending problem. That may be true. But not for the reasons you think.
We have a spending problem because the budget surpluses - and the $5.6 trillion in projected surpluses - we saw in 2001 were given away in tax breaks. When this is combined with our war time spending binge (and other unfunded programs) it's much easier to understand how we flushed trillions in projected surpluses down the toilet.
While not intending to Charles Blahaus, senior research fellow at the Hoover Institute, agrees. Before I get to Blahaus let's take a look at three of the reasons why we now have a spending problem.
#1: When Income Disappears Spending Becomes a Problem ...
We were running budget surpluses in 2001. Then we went on a tax cut binge after 2001, which stripped away revenue and collapsed our national income ...
#2: We need to spend more on defense to protect us from our enemies ...
Not if you consider what the competition is actually spending. When it comes to military budgets we spend far more than any nation on earth. Take a look at what the next nine (or the top 15) spend on their military budgets ...
#3: The War on Terror Means We Need to Spend More on Defense ...
No we don't. In part because of how the "war on terror" has been managed and sold (we're constantly told to be afraid) we are now on the verge of creating a national security state with a military budget that is eating up our national income. Simply put we now have a military spending problem ...
This is especially the case when you consider what we actually spend ($994 billion) on the military ...
At the end of the day, we do have a spending problem. But not for the reasons you might think. What we really have is a revenue and military spending problem.
Even Conservatives Agree (without actually knowing that they do)
While it definitely wasn't his intention (he was trying to provide cover for Bush era tax cuts) conservative author Charles Blahaus effectively makes the point that declining revenues, military spending, and other Bush era policies are to blame for our budget woes. Check out his relatively well written report, "How Did Federal Surpluses Become Huge Deficits? (Hint: It Wasn't Because of Tax Cuts for the Rich)".
While Blahaus generally focuses on tax revenue, increased spending, and projection inaccuracies, a closer look inside the data makes it clear that the primary reasons for the deterioration of projected budget surpluses after 2001 are tied to collapsed revenue (Bush era "tax relief"), increased military expenditures (contained in "increased spending"), and the costs associated with unfunded bailouts and Medicare Part D (and the effect the recessions and other data projection problems).
So, again, we might have a spending problem. But it isn't because of the reasons we are told. What happened after 2001, as Charles Blahaus helps us understand, is tied to shrinking revenue (24%) unfunded expenditures tied to defense, bailouts and new programs (49%), and other "unanticipated" developments (27%).
- Mark
We have a spending problem because the budget surpluses - and the $5.6 trillion in projected surpluses - we saw in 2001 were given away in tax breaks. When this is combined with our war time spending binge (and other unfunded programs) it's much easier to understand how we flushed trillions in projected surpluses down the toilet.
While not intending to Charles Blahaus, senior research fellow at the Hoover Institute, agrees. Before I get to Blahaus let's take a look at three of the reasons why we now have a spending problem.
#1: When Income Disappears Spending Becomes a Problem ...
We were running budget surpluses in 2001. Then we went on a tax cut binge after 2001, which stripped away revenue and collapsed our national income ...
#2: We need to spend more on defense to protect us from our enemies ...
Not if you consider what the competition is actually spending. When it comes to military budgets we spend far more than any nation on earth. Take a look at what the next nine (or the top 15) spend on their military budgets ...
#3: The War on Terror Means We Need to Spend More on Defense ...
No we don't. In part because of how the "war on terror" has been managed and sold (we're constantly told to be afraid) we are now on the verge of creating a national security state with a military budget that is eating up our national income. Simply put we now have a military spending problem ...
This is especially the case when you consider what we actually spend ($994 billion) on the military ...
At the end of the day, we do have a spending problem. But not for the reasons you might think. What we really have is a revenue and military spending problem.
Even Conservatives Agree (without actually knowing that they do)
While it definitely wasn't his intention (he was trying to provide cover for Bush era tax cuts) conservative author Charles Blahaus effectively makes the point that declining revenues, military spending, and other Bush era policies are to blame for our budget woes. Check out his relatively well written report, "How Did Federal Surpluses Become Huge Deficits? (Hint: It Wasn't Because of Tax Cuts for the Rich)".
While Blahaus generally focuses on tax revenue, increased spending, and projection inaccuracies, a closer look inside the data makes it clear that the primary reasons for the deterioration of projected budget surpluses after 2001 are tied to collapsed revenue (Bush era "tax relief"), increased military expenditures (contained in "increased spending"), and the costs associated with unfunded bailouts and Medicare Part D (and the effect the recessions and other data projection problems).
So, again, we might have a spending problem. But it isn't because of the reasons we are told. What happened after 2001, as Charles Blahaus helps us understand, is tied to shrinking revenue (24%) unfunded expenditures tied to defense, bailouts and new programs (49%), and other "unanticipated" developments (27%).
- Mark
No comments:
Post a Comment