Friday, August 28, 2015

Three Parts of Tax and Spend

I posted this comment over at MP Paulsen.  Thoughts?

3 Topics Here
  1. How much of our economy is collected and spent by the politicians? My preferred target is ~33% of GDP. That leaves 67% for citizens to use as they wish.
  2. Who is taxed to pay that 33% or other? Currently successful people pay a lot more in taxes to support and care for the citizens who are not successful. Makes sense since they have the money and the poor do not. (ie no getting blood out of a turnip)
  3. What the politicians choose to spend that 33% or other on? I am somewhat indifferent as long as they over time stay within their budget and keep America secure. (some deficits / some surpluses) Unfortunately even in these good times they are spending more than they take in and our kids will need to pay for it in one way or another. Keep praying that interest rates stay low. :-)

G2A Political Self Awareness
Total US Govt Spend History

15 comments:

jerrye92002 said...

My preferred target is 5% of GDP. That "provides for the common defense" and has enough left over for police and courts to "establish justice." Throw in a pittance for the operation of Congress, let them meet for 3-4 months a year and go home.

John said...

That is likely why Liberals think Conservatives are crazy folks who would be happier in Somalia. Since the cost in 1900 was about 7% of the GDP, a lot of poor people had to beg or go hungry, industry was spewing pollution into rivers, industry could work employees to death, special needs kids/people struggled and/or died, etc, etc.

I think you should probably rethink your target.

Unknown said...

This "My preferred target is ~33% of GDP. " makes no sense to me. I think every part of the budget should be determined by the need. For example take Title one funding that provides educational support for low income kids. At my school about 95% of the 400 students are low income. Our pass rate on the mca is about 15% for reading. Current title funding allows for two teachers to provide small group reading and math intervention, that's about 200 students for each teacher, I don't know how many students they each try to serve, I am pretty sure it is below 50, which means a great many of our students are not receiving needed support services. They don't serve any of our middle school students. Btw, title funding has been cut and we have one less title teacher this year (who served middle school students last year.)

I believe many other areas in the budget are also underfunded. I would increase both taxes and spending from our current levels.

jerrye92002 said...

Laurie is right, but her idea misses one thing. Just increasing spending (and taxes) does absolutely NOTHING to meet the "needs" the society has. What is needed is a strong Republican idea called "zero based budgeting," where every program in the budget is evaluated every [two] year[s] and funded based ONLY on whether it is "working" or not. Looked at from that perspective, the state budget could probably be reduced by 50% or more, with vastly better results. Just the Mpls and St. Paul schools would provide that much. You graduate 50% of the kids, we cut your budget by 50%. (Not all at once, obviously, and that's a GOOD thing. Gives them a chance to improve, during which time their budget would be cut by 50% but have an "improvement incentive" added back in. Improve enough and your budget doesn't get cut at all.)

John said...

Laurie,
According to my link the Total Government Spend is:

$6,230,000,000,000 = $6.23 TRILLION

I think between truly prioritizing expenditures better, improving government effectiveness, etc there is plenty of money there to fund the functions of government.

By the way, with the government commandeering $6.23 TRILLION. That leaves us 300+ million citizens only $11.7 TRILLION to use as we wish.

Unknown said...

24% of federal budget went to social security for seniors to spend as they wish.

24% went to healthcare (Medicare, Medicaid, CHIP, and marketplace subsidies) which I believe is spending that people prefer. I chose to spend my $ on healthcare.

11% went to Safety net programs which allows low income people to spend as they wish.

the last 20% includes benefits to veterans and retirement benefits to retired federal employees. Which allows these two groups to spend as they wish.

that leaves about 15% that people cannot spend as they wish.

I don't think there is nearly as much room as you believe for improving government effectiveness and saving money. As I said earlier, I think I stronger case can be made that more money is needed.

John said...

Laurie I think you are forgetting that the funds are taken from someone so they can be given to another. Thus removing some freedom for the fund provider.

Total Spend Pie Chart

As I said, I am pretty okay with 33%. I want them to just make better use of what they are already spending. Where as the Liberals seem to just want to give them more of our money.

Why don't you and the 150 million other Liberals just write extra checks to the Treasury if you think the government can make better use of your money than yourselves?

John said...

Most people understand that there is a lot of waste in government, that is why they fund charities instead. That is where my donations go...

Sean said...

What you spend on is just as important as how much you spend. I'm not going to spend much time debating a 33% number that was picked because it "sounded good".

jerrye92002 said...

Laurie, your math (federal budget only) is not too far off, but...

Social Security and Medicare are supposed to be self-supporting programs. They are likewise grossly inefficient and not a Constitutional function of government, so they don't count. Likewise with other Medical "entitlements." So that's a 48% cut.

Likewise with the NON-medical entitlements (aka welfare), so that's a 59% total cut.

the 20% for veterans and retired federal employees seems very high. Cutting the government size by 50% would at least halve this number. Total 69% cut.

If the remaining "15%" is truly discretionary we could cut half of it. Of course, since your math overlooks that there is actually 31% left, we should cut at LEAST half of that and "lose" nothing, For a total an 84% cut, applied to federal spending, which brings us to 5%! Marvelous, isn't it, when we can agree like that?


But let's do this the other way, using John's chart.
Start with just the necessary items: defense-13%, "protection" (police and courts) of 4%, half of "government operations" of 1%, and you have 18% of 33% or 5.9%! So John agrees with our number, too, under the correct (IMHO) assumptions!

However, since I have been considering only federal expenditures, we must add back in the 13% spent by state and local governments on education, meaning total government spend SHOULD be about 10% unless we are willing to say that our public education system is ALSO grossly inefficient and ineffective, in which case THAT could be brought down.

Support for any other level of spending is likely based in one of two camps; the fatalist "we've done it that way so long we can't change" and the liberal conceit "government can spend your money more wisely (and more compassionately) than you can."

jerrye92002 said...

Back on topic, your concerns are far too small. Right now, a newborn baby in this country has an outstanding debt of somewhere between $333,000 and $666,000, depending on how the "unfunded liabilities" are tallied. Now where's a kid that age going to get that kind of money?

Look at it another way: if government was required to meet ERISA standards on funding of benefits, there would need to be a federal tax rate of 100% for roughly 8 years. That's NO exceptions, no deductions, NO other government, personal or corporate spending. All we have to do is figure out what we can eat for, say, 8-10 years while we pay off on these promises.

John said...

Sean,
We have Jerry who wants to take us back to a basically pure Capitalistic Model (<10%) from 1900 where everyone fends for themselves. And we have Liberals like Bernie / supporters who want to take us to the Dem Socialist model (>60%) where government collects and distributes money/benefits arbitrarily. (ie irrespective of effort or contribution)

I am thinking the 33% is sounding even better of late.

jerrye92002 said...

Rather than tossing labels about, how about we attempt a more fundamental approach to establishing a reasonable size for government? That is, for what percent of total economic activity is government the most efficient and effective allocator of resources, compared to individuals or other groups? In what few (IMHO) areas can government "spend your money more wisely than you can"?

By the way, I tire of the notion that government is more capable of charity than are charitable institutions. Pretty easy to be "charitable," as well as grossly ineffective, when you are spending somebody else's money, forcefully extracted.

John said...

Unfortunately our charitable society failed to take care of the unfortunate, disabled, children, elderly, etc when the government spend was at ~10% that is why it grew.

The SS and Medicare forced savings and insurance payments accomplished 2 goals. 1. Everyone was forced to contribute to the plan. 2. Everyone got something back later in life.

Then came Welfare and Medicaid...

G2A God Works in Mysterious Ways

jerrye92002 said...

"Unfortunately our charitable society failed to take care of the unfortunate, disabled, children, elderly, etc"

So, that makes it right to FORCE normally charitable people to "give" their charity to government, instead? Charity didn't "fail. Government usurped the role and stole the money.