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Skeptikos
GeneticallyEngineeredBonobo

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How Big is Bush's Big Government?
#5532563 - 04/19/06 06:56 AM (17 years, 9 months ago) |
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Posted on Mises.org on Tuesday, April 18, 2006
HOW BIG IS BUSH'S BIG GOVERNMENT?
by Mark Brandly
When teaching economics I sometimes find it beneficial to use government budget data to apply the lessons of economics to our current political circumstances. The students tend to be surprised at the size of our government, the amount of tax revenues that we "pay," and the amount of government debt. The following numbers get the point across.
We, in the United States, live under the rule of the largest civil government, measured in budgetary terms, in history. Federal spending alone in fiscal year 2006 is expected to be over $2.7 trillion, which means the federal government spends $7.4 billion a day or $5.1 million in every minute of the year. This is 815 times the level of federal spending in 1930.
Things have been getting worse recently. In the first five years of the Bush regime, federal spending increased 45%. Readers of Mises.org may remember that they were warned about Bush's fiscal irresponsibility before he took office. For comparison's sake, during the eight Clinton years nominal federal spending increased 32%, and under Bush I federal spending increased 23% in four years. In the 2000 election, Bush II promised to shovel money into all sorts of programs ? and he's kept that promise.
Since 1930, in addition to the spending increases, the feds also drove prices up more than 1,100%, according to the Consumer Price Index. Also, we should suspect that these inflation numbers are low since government officials have an incentive to underestimate inflation.
If we adjust the spending numbers to account for this inflation, real federal spending is 65 times larger than it was in 1930. The US population has more than doubled since 1930 and if we take the population changes into account, real per capita spending is 27 times higher than in 1930.
In estimating real federal spending I'm not dismissing the effects of inflation, nor am I absolving the state of its complicity in driving prices up. These calculations are simply an attempt to give us some idea of the growth in government and the attendant loss of our liberties over the last several decades.
This $2.7 trillion in federal spending breaks down to $9,000 per capita or more than $36,000 for the average family of four. If we add in all state and local spending, then total government depredations (a term Murray Rothbard used to describe the greater of government spending and government receipts) are currently over $4.4 trillion or about $14,700 per person annually. Since 1959, government depredations, in real terms, have increased at an average annual rate of 4%. That kind of spending will buy a lot of votes.
A significant portion of this spending is being financed with government borrowing. In 1930, the per capita debt load was $140 per person. The current federal total debt level is $8.4 trillion, which works out to around $28,000 per person. In short, the per capita debt load is 200 times larger than it was in 1930. Adjusting for inflation, the real debt per capita is still over 16 times more than it was in 1930.
Federal government debt increased $553 billion in fiscal year 2005 alone. That's more than $1.5 billion of additional debt per day and over $1 million of borrowing per minute for every minute of the year. The interest on the debt in 2005 was $352 billion or more than $1,100 for every man, woman, and child in the country. These interest payments are roughly equal to 37% of federal income tax revenues.
Much of this debt is owed to the Federal Reserve. US taxpayers are on the hook for $758 billion of government securities that are held by the Fed. So on average, every person in the country owes the Fed about $2500.
Tax revenues and borrowing have financed all sorts of interventions. Since 1959, we have suffered from the Great Society, the war on poverty, price controls, increasingly burdensome environmental regulations, the establishment of the Department of Education and its increasing federal control over local schools, Federal Reserve created recessions, agricultural price supports, minimum wage laws, and energy policies that keep oil and gasoline prices high.
There's more. We've also had labor policies that increase the costs of hiring workers driving down their take-home pay, trade restrictions and trade agreements that give the feds control over our international trade, massive increases in the welfare state, the drug war, endless pork barrel spending, and the prosecution of businessmen for political gain. There have also been the wars to extend the US empire, from the Vietnam War to the Iraq War. A partial list of the other military interventions would include conflicts in Cambodia, Laos, Lebanon, Panama, the Gulf War, Somalia, Bosnia, and Afghanistan. I could go on, but you get the idea.
One way to see the harm of government intervention is to realize its effects on our standard of living. The depredations of the state reduce the incentives to be productive, destroy our capital base, and have a negative effect on economic growth. From 1959 to 2005, adjusting the numbers using the implicit price deflator, real Gross Domestic Product increased an average of 3.37% annually.
Consider the possibility that government interventions reduced real economic growth 1% annually during this time. If there had been an additional 1% per year economic growth since 1959 then real GDP would currently be 55% higher than it is. The 2005 GDP of $12,479 billion would have been $19,342 billion. The median family income is estimated to be $44,389. A proportionate increase in this statistic results in a median income of $68,800.
In this scenario, a worker with a salary of $44,389 who is losing 35% of his salary to taxes has a tax liability of $15,536. After paying the various types of taxes he gets to keep only $28,853 of his salary. With the extra 1% growth per year since 1959, if that worker represented the average, his gross salary would be $68,800 and he would get to keep all of it.
It is conceivable that the $4.4 trillion of annual depredations could have caused more than 1% annual damage to our economic growth since 1959. What are the implications of a 2% negative impact on GDP? If the absence of interventions had added an additional 2% annual growth, this would have resulted in 141% more output today. The 2005 GDP would have been over $30 trillion and the median family income would now be $107,000. The worker described above with the $44,389 gross salary and the $28,850 of after tax pay, would have an income of $107,000. The depredations have reduced his net income by 73%.
The point here is that we cannot precisely know the magnitude of the damages that intervention has on the economy but we do know that those damages compound over time, resulting in significant negative effects on our prosperity.
Those of us making the case for liberty have logic, history, and morality on our side. Government intervention is immoral and should be stopped for that reason alone. However, the economic costs of the intervention are also important. Part of the appeal of freedom is that it leads to tremendously higher standards of living and these numbers show that government interventions that cause seemingly small amounts of harm, over time, impoverish a society.
---------------------------- Mark Brandly teaches economics at Ferris State University and is an adjunct scholar of the Mises Institute and the Mackinac Center for Public Policy
-------------------- Sincerely, Skeptikos
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Luddite
I watch Fox News


Registered: 03/23/06
Posts: 2,946
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Re: How Big is Bush's Big Government? [Re: Skeptikos]
#5533889 - 04/19/06 02:55 PM (17 years, 9 months ago) |
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Where does this guy teach economics, North Korea?
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zappaisgod
horrid asshole

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Re: How Big is Bush's Big Government? [Re: Luddite]
#5534066 - 04/19/06 03:46 PM (17 years, 9 months ago) |
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For the impaired, the President doesn't pass the budget. He proposes one, it gets smacked around and added to and massaged separately in the House and Senate, who then get together on the final package, vote on it and send it to the president for his signature. The sad part is that it can only be vetoed in toto.
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Skeptikos
GeneticallyEngineeredBonobo

Registered: 01/15/06
Posts: 145
Loc: Rome, west side
Last seen: 15 years, 2 months
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Re: How Big is Bush's Big Government? [Re: Luddite]
#5534503 - 04/19/06 05:43 PM (17 years, 9 months ago) |
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Read the post. It clearly states where the author teaches.
-------------------- Sincerely, Skeptikos
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Skeptikos
GeneticallyEngineeredBonobo

Registered: 01/15/06
Posts: 145
Loc: Rome, west side
Last seen: 15 years, 2 months
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Re: How Big is Bush's Big Government? [Re: zappaisgod]
#5534585 - 04/19/06 05:57 PM (17 years, 9 months ago) |
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Yes, presidents submit budgets to congress and have veto power. Have any of Bush's budget proposals included ACTUAL spending cuts in the federal budget? How many times has Bush used the veto? Has he or has he not submitted new programs and new spending proposals to congress? Has he authorized and or requested spending of various sorts? Has he requested various 'emergency' spending authorizations?
The sorry fact is that Bush has overseen some of the largest spending and debt increases in history while making no effort towards fiscal responsibility. Yes, the Republican controlled congress is complicit and guilty. But Bush has DONE NOTHING towards implementing a conservative or rational fiscal policy.
Bush and the Republicans have done what many thought impossible, they have made Democrats look fiscally responsible. Have you seen this news?
-------------------- Sincerely, Skeptikos
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zappaisgod
horrid asshole

Registered: 02/11/04
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Re: How Big is Bush's Big Government? [Re: Skeptikos]
#5534742 - 04/19/06 06:34 PM (17 years, 9 months ago) |
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I don't believe Bush has vetoed anything at all.
I also believe that the Dems would have done the one thing guaranteed to fuck the economy and that is raise taxes. I have absolutely no reason to believe that they would not be spending even more than is currently being spent. Am I happy about the spending level? No. Do I think it's a disaster waiting to happen? No. Do I think anything can be done about it? No. Do I think there is a sure way to make it worse? Yes. Elect Socialists.
I have listened to over 30 years of chicken littles decrying government spending and federal debt. I don't like it much but the only thing that I really care about is tax rates. When they go up the economy goes down. When they go down the economy goes up. I am not a government. The only deficit I care about is mine.
I read the article. I thought currencies were freely traded on the open market. I still think they are. And so what. The dollar goes down, exports go up. The dollar goes up exports, go down. It's a pretty efffective homeostatic system.
Is it the fact that Bush has led the nation into a fabulously prosperous last few years after inheriting a recession that bothers you? Because it shouldn't.
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Skeptikos
GeneticallyEngineeredBonobo

Registered: 01/15/06
Posts: 145
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Re: How Big is Bush's Big Government? [Re: zappaisgod]
#5534813 - 04/19/06 06:49 PM (17 years, 9 months ago) |
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I cannot blame you as you are a victim of gullibility and utter childlike faith in government figures as massaged kneaded and hammered for public consumption. The U.S. economy is not so rosy as you want to believe. Why is the savings rate at the lowest it's been since 1933 during the depths of The Great Depression? Any rational person would expect to see saving increase during good economic times. Why did the fed stop publishing the M3 figures? Why are commodity prices rising? Why are food, fuel and housing omitted from the GDP figures?
If you had a sense of history, you would understand that economic trends of government mismanagement do not always unfold in a decade or two. How long did it take for the Soviet Union to collapse into bankruptcy? It was on the fast track to insolvency, the U.S. is in the slow lane (but traveling at an ever increasing velocity) and had a hell of a lot more capital to eat up. The U.S. started from a level of unprecedented abundance and a fairly free economic system which the government could live off of through taxation. Having nearly exhausted it's seed corn, the U.S. is now borrowing from everyone and his uncle while increasing it's spending binge.
-------------------- Sincerely, Skeptikos
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zappaisgod
horrid asshole

Registered: 02/11/04
Posts: 81,741
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Re: How Big is Bush's Big Government? [Re: Skeptikos]
#5534901 - 04/19/06 07:12 PM (17 years, 9 months ago) |
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Aside from your obnoxious tendency to decry those who believe what you do not as "gullible" and "childish" (a direct derivitive of the idiotic "brainwashed" screed) it saddens me that you are not in a position to take advantage of and/or observe all of the economic bounties which have unfolded in the last 5 years. Savings rates? Another Chicken Little screed I've heard about for the last 30 years. Saving doesn't increase during good times, spending does, which contributes to more good times. Do you know what capital in savings accounts does? Nothing. That's right, not one fucking thing. Why would anyone put money in a savings account that yields 1% interest? Only retards.
Get this. Historically low interest rates do not encourage saving. They encourage investing. Which is what is happening. Are you aware that more people own their own home than at any time in history? By percentage. You can pick your info if you want but I'm pretty damn pleased with the economy. A lot more than I was 5 years ago.
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