Wednesday, July 24, 2019
Taxes and Spending
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Via Kevin Drum, two lovely charts that show our budgetary realities. Above, Federal spending as a percentage of GNP. Below, Federal taxes as a percentage of GNP. You can see that measured this way spending has been basically flat while taxes have gone down quite a bit. The uptick in the spending graph around 2009-2011 was mainly due to economic contraction, not increased spending; spending went up only a little. The debt is certainly rising but that is basically because nobody cares; Obama worked hard to make an increase taxes/cut spending deal, but really neither Republicans nor Democrats wanted it and since he left the scene everybody has said damn the debt, full speed ahead on spending increases and tax cuts.
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- John Bedell is an archaeologist, historian, and father of five living in Maryland. He has self-published two novels and is writing a third.
3 comments:
"The uptick in the spending graph around 2009-2011 was mainly due to economic contraction, not increased spending"
The GDP did shrink, but the government also bailed out the banks to the tune of $700 billion, or about 5% of the GDP for 2008, the year of the crash - which you will notice is just about exactly the size of the spike.
Also, the GDP only dipped very slightly and very briefly. It was 14.72 trillion in 2008, 14.42 in 2009, and had already recovered and grown to new heights of 14.96 by 2010, and it has only ballooned ever since.
The numbers flatly refute your claim. Perhaps Mr. Drum's graphs are accurate, but the conclusions he is leading people such as yourself to draw from them are wholly incorrect. Our national production barely dipped - all the real chaos of the economic crisis was in the shuffling of wealth around, bailing out the rich by squeezing the poor ever tighter.
The banks gambled recklessly with other people's money, and taxpayers faced the consequences and then footed the bill to boot. Taxes may be down overall, but essentially the whole of the difference has come from tax cuts for the richest portions of society. The great American long con continues apace, redistributing wealth from the many millions at the bottom and instead amassing it in the hands of the very few at the very top. We're producing more as a nation than we ever have before, and yet the common man is getting poorer and poorer day by day.
The Troubled Asset Relief Program had a total budget of $700 billion but the maximum disbursement was actually $426 billion and the government ended up making a profit of $15 billion on the program as a whole. I am not sure about the timing but I do not think we had the whole amount invested at any one time. I suppose the spending could have contributed to the 2008-2009 uptick but not $700 billion worth. Remember that the economy would not have to actually shrink to drive the spending number upward, just not grow as fast as spending.
(https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program)
@John
You're making totally contradictory claims now.
"The uptick in the spending graph around 2009-2011 was mainly due to economic contraction, not increased spending"
"Remember that the economy would not have to actually shrink to drive the spending number upward, just not grow as fast as spending"
Which is it? Did the economy shrink rather than spending increase? Or did the economy NOT shrink, and spending instead grew? It can't be both!
The economy DID shrink, as the numbers I provided prove, but only to the tune of $300 billion. If we then take your claim of a $426 billion disbursement at face value, then it becomes apparent that those two numbers dovetail nicely together - a total of $726 billion. What a familiar number...
You could easily argue that the 5% uptick on the graph is indeed the product of both factors combined, but in that case it's abundantly clear that the uptick is not at all "mainly due to economic contraction, not increased spending" - it is in fact the total opposite, being mainly due to increased spending, and only partly due to economic contraction.
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