Factoring Out the Recession

Just as an additional note, the economy itself is not to blame for a $1.3 trillion deficit in 2011. According to this graphic in the New York Times, based on CBO budget projections, the recession is responsible for $480 billion of the loss in government revenue. Likewise, this chart pegs the recession's responsibility at about $400 billion or so.

Of course, I admit that the situation is very complex. One could potentially argue that if George W. Bush hadn't lowered taxes during the last decade, the recession might have been worse—although I would certainly find this argument a tough sell. But it still shows that even if the economy suddenly started chugging along with steady growth, we'd still be at best $800 billion in the hole.

Now, repeal the Bush tax cuts, and that helps a little more, bringing us up another $300 billion or so. Save another $200 billion by getting us out of Iraq and Afghanistan. If those two things happen, we're still a good $300 $600 billion in the red.

So, in a rosy world with strong economic growth, Clinton-era taxes, and no wars, we still have some pretty tough choices to make. Now, what do we do with the real world?

Updates: As I learned in this NYTimes Editorial, apparently the proposed 2011 accounts for letting the Bush-era tax cuts expire at the end of 2010.

The 2011 Budget

For numbers geeks like me, today's interactive diagram in the New York Times of President Obama's proposed 2011 budget is just about the equivalent of heaven. Here are, in rough but much more accurate numbers, a breakdown of 10 of the largest parts of the $3.69 trillion federal budget, along with a remainder category:

• Defense spending: $740 billion
• Social Security: $740 billion
• Medicare: $580 billion
• Income Security: $430 billion, of which about 80% is various "welfare" programs and 20% consists of various working- and middle-class tax credits
• Medicaid: $260 billion
• Interest (debt service): $250 billion
• Veteran benefits: $130 billion
• Federal employee retirement and disability: $125 billion (split roughly 60/40 between civilian and military)
• Highway funding: $45 billion
• Student financial assistance: $40 billion
• Everything else: $350 billion

Here's an exercise for all of you Republicans out there. The projected deficit for 2011 is $1.3 trillion. Balance the budget without raising taxes or cutting anything from defense spending, Social Security, Medicare, or debt service. Give it a try, and let me know your solution.

Who's Socialist Now?

 I wanted to quickly present a few numbers about the George W. Bush administration. (These numbers are rough and rounded, but they work well enough for my purposes.) Under Dubya, adjusted for inflation:

• The size of the federal budget increased by 33%, the largest increase since L.B.J.;
• Defense spending increased 67%, the largest increase since World War II;
• Education spending increased 36%, the largest increase since Johnson;
• Spending on income security programs increased 36%, the largest increase since the Ford administration;
• Spending on general government operations increased 25%, the largest increase since Nixon; and
• The size of the federal budget increased 33%, the largest increase since Johnson.

So, basically, Bush II was the biggest spending president since Lyndon Johnson, who had a couple feathers in his cap—like Medicare and the original Elementary and Secondary Education Act—as well as a very large black eye (Vietnam).

Now, people might say that this doesn't prove anything, because the Tea Partiers have repudiated George W. Bush as a drunken fratboy on a spending spree. There's only one problem in this argument: The Republican Congress that rubber-stamped W.'s agenda.

If you look again at those numbers, but look only at the first six years of Bush's presidency—when Republicans controlled Congress—all but one of those comments remain true. For the overall size of the federal budget, the comparison no longer remains true, because Bush is narrowly edged out by—oh, Irony!—Ronald Reagan.

So, if you want to point fingers at who were the people to expand the size of the federal government by its greatest increases since the Great Society, look no further than John Boehner, Mitch McConnell, and Bush's other lapdogs in Congress.

Is the Federal Government Really Too Big?

The New York Times published a letter to the editor by a fiscal conservative who claimed not to be a political activist but was drawn to the Tea Party movement:

We are...displeased with our government of late and are concerned about our nation’s future. Our Depression-era parents taught us to live within our means. And to keep our house in order. This is a lesson lost in Washington.

A question I have been thinking about for some time now is whether such people are correct. Is Washington spending too much and taking in too little?

The obvious answer is, "Of course." The estimated federal budget for the coming year involves receipts of $2.3 trillion and outlays of $3.6 trillion. The federal government would need to take in over 50% more in taxes than it currently is collecting to balance the budget. This is not an ideal state of affairs, but it's the one we have, because this country has neither the political will nor, likely, the economic capacity to hand over one-quarter of our GDP to the federal government.

Ignoring that elephant in the room for the moment, is a $3.6 trillion federal government too big? Let's look at where that money is going.