Saturday, June 25, 2011

HERITAGE on GOVERNMENT SPENDING AND REVENUE

by James Craig Green


The Heritage Foundation recently released its 2011 BUDGET CHART BOOK on Federal Spending, Federal Revenue, Debt &Deficits; Deficits and Entitlements; each of which comprise major tabs at the top of its main page. Please note there are two Chart 5's below, one from the Debt and Deficits tab (with presidents' pictures) and one for Federal Revenue. Following are some excerpts to illustrate high points:



Please note these figures, up to about $36,000 per household by 2020, do not consider the tens of trillions of dollars that have been promised to future recipients of social security, medicare and medicaid which would increase them about tenfold. Heritage does deal with these later, conceding to them ten percent of GDP forever. Please don't make the mistake of confusing these figures for total government spending with amounts received by households. See my April 2011 blog post on WHO BENEFITS AND WHO PAYS FOR GOVERNMENT? to see that 40 percent of Americans pay into government more than they receive, while the remaining 60% majority gets more from government than they pay in. Is this what Karl Marx meant by "winning the battle of democracy?"









Please note that under Republican presidents, government spending has been much greater than under Democrats... that is, before Obama. Most recently, George W. Bush became the first president in more than 100 years to not veto a single spending bill in his first term in office. Also, his enthusiastic support for the 2003 Medicare prescription bill he signed into law was called "the most irresponsible law since the sixties," by U.S. Comptroller General David Walker. But, Obama is becoming the all-time champion of U.S. presidents for increasing government size regulation and scope, while punishing the markets that produce all wealth.


This Chart 5 is from the Federal Revenue section, not the same as Chart 5 from the Debt and Deficits section. This Chart is the very best argument against Obama's recent claim that "taxing the rich" can significantly increase government revenue. In 1945, the year of my birth, the highest individual tax rate was 94%. In 1950, the rate was 91%. It declined to 70% in 1965, 50% in 1982, 28% in 1988, up to 40% in 1993 and finally down to 35% in 2003.





My Criticism of the Heritage Plan:

First, to concede half the federal budget to entitlements forever is the height of both stupidity and naivete. Stupidity because of the repeated falure of socialist governments around the world (based on entitlements instead of production) and naive because of the tendency of government to grow much faster than projections. However, unlike anything we've seen from a pathetic, anti-free-market Republican House of Representatives, at least the Heritage budget includes real cuts, instead of just trivial reductions in future spending growth. That's probably because none of the Heritage study authors (to my knowledge) are trying to get elected to Congress.

Second, please note on the last graphic there are no cuts for so-called Defense Spending. As I have been pointing out for three decades, very little of what I prefer to call Military Spending is for national defense. Too many of my conservative friends are locked into the idea that everything in Washington, D.C. is bureacratic, inefficient, wasteful and largely fraudulent, EXCEPT FOR the military and its contractors... and, of course, their own jobs.

As the last graphic shows, military spending has declined from about 6-8% of GDP during the Vietnam War to about 5% of GDP today. Well, since the Soviet Union finally collapsed of its own weight, I would hope so. But, as long as conservatives refuse to see the same bureaucratic, inefficient, wasteful and largely fraudulent forces at work in the U.S. military as with every other portion of government, no department should retain its current funding.

When it was called the Department of War, its purpose was defense.
Now that it's called the Department of Defense, its purpose is war.

--Jack Swigert, former Apollo 13 astronaut, just before his election to Colorado's Sixth Congressional District (1982).

The U.S. military, annually funded by Congress, has become an instrument of the President's foreign policy with little concern for the U.S. Constitution which Congress, the President and Supreme Court are sworn to uphold and defend. Today, U.S. military forces are in more than 170 countries around the world, with broad, nebulous and often conflicting missions. As Congressman Ron Paul has pointed out repeatedly, its purpose should not be nation-building or serving as the world's policeman, but should be focused on defending the U.S. from attack. It has become just another jobs program for bureacrats, military contractors and politicians who keep funding and building more sophisticated weapons designed to defeat the armies of the past. The fact that Republicans cannot find one dollar to cut from this bloated monstrosity is a testament to their insincerity toward solving the problems of the federal budget. Today's annual military spending budget is about the same percentage of GDP as Social Security.

While I applaud the Heritage plan for its breadth, much bolder than any elected official can accept, it's clearly partisan, and as such, insures its own failure in Congress.

Despite my criticism, I encourage you to consider the details of the Heritage plan, as it contains some very good ideas if America is ever to get back to its libertarian roots instead of the welfare/warfare state it has become.

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