Tuesday, February 15, 2011


Well now, we've had snow storms, an Egyptian revolution and a very disappointing Super Bowl result so far this month and it's only the 15th. And now even more disappointment blossoms as our elected leaders play fast and loose with the national budget. And part of the reason is that the American people are pretty ignorant of how and where the government spends their tax money.

Bruce Bartlett nicely summarizes some of the many ways that we just don't get it. Case in point:
A Nov. 30, 2010, poll by WorldPublicOpinion.org found that when people were asked what percentage of the federal budget goes to foreign aid, the mean (average) response was 27 percent and the median was 25 percent. When asked how much of the budget should go to foreign aid, the mean response was 13 percent and the median was 10 percent. Actual spending is well under 1 percent.
This is just one small example, but when the public is that far off it says something. It says that either a large part of the public is just, well, dumb, (remember, 1/2 of all the people in your town are below average) or that we have failed miserably to educate ourselves and our children, or that our public servants do a very poor job of explaining just what they do and how they do it. I'm going with all three.

Of course it could be that our elected leaders don't know any more than we do. This is getting on my wires right now in the almost constant chant of, "Cut Spending, Cut Spending, Cut Spending" that we hear from the Right.

Now, no sane person would claim that our mountain of debt is a good thing. Or that running a $1.3 trillion deficit is in any way going to lower that mountain of debt. But, just as the GOP and the Tea Party and right wing radio talkers everywhere can, with a straight face, claim that raising taxes in a recession recovery will kill that recovery, I want to know how cutting government spending during the same recovery won't create even more unemployment. Would someone please explain this to me.

Government spending could just as easily be called government buying. That is, the government uses money collected in taxes and, of course, money borrowed from the Chinese and others, to buy goods and services. Now, before anyone has a fit over the simplistic nature of that claim, let me add that the government does this buying either directly or, sometimes very, indirectly. Let me explain.

Let's say the feds give a community block grant to a small town to help build a much needed sewer system. The town needs to hire and contract for all manner of goods and services in order to complete the job. And, of course as we've discussed before with regard to the Obama stimulus, the money doesn't stop there. The contractor buys some new equipment from a dealer a couple towns over, who then decides to enlarge his showroom with the extra profits by hiring a local contractor, who then employees three carpenters and subcontracts to a tile guy, who then buys a new used truck from a local dealer and...well it just keeps on going doesn't it. And don't forget that every one of those transactions is taxable! In fact, I challenge any of you to come up with a Federal spending line item that doesn't include wages or profit for persons either real or corporate.

Heck, take the most outrageous example of wasteful government spending that you can think of, like studying owl vomit in the Northwest, and somebody is still going to be getting paid, like researchers, their paid staff, the guy who fixes their truck, and on and on. Everything you can think of to do with government spending results in a paycheck for someone. It's just like the point I've made before about our spending on NASA. Honest, they don't pack the shuttle full of $100 bills and release them into orbit. Every dime is spent on earth to pay somebody!

So please, all you folks clamoring for spending cuts during a recovery; how many lost jobs can we afford? Do I think that it's a good thing that we are so far in debt? No! But if we can only stick blindly to our ideologies, even in the face of extraordinary circumstances, then we are well and truly screwed. 

1 comment:

Lisa P said...

Interesting, thanks! I had no idea that we spent less than 1% on foreign aid- that makes me feel better! It's nice to help others, but we have to draw the line somewhere when you consider all the money we owe. It's always good to give, but you shouldn't have to borrow to do it. I think they should raise the minimum age to receive social security- why should the government support someone's retirement at 62? That's so young (I can say that because I'm not that far away!), and unless there are other issues in play, they should pay for it themselves or keep working!