Government spending is a topic that raises a lot of controversy in the USA. Some feel that the government spends too much, while others feel that it spends too little. Historically, government spending spiked during the two world wars, when nearly every able-bodied man was in the military. When those wars ended, spending declined rapidly. Other than that, government spending relative to GDP has been on a fairly steady upwards march for all of living memory at both the federal and lower levels. One would thus think that those who want high government spending should be very happy with the government and economy as it is now.
Needless to say, they aren’t. Instead, government fans, from Rachel Maddow to Paul Krugman, give us a constant chorus of complaints about how we aren’t spending enough, are building enough infrastructure, aren’t offering generous enough social programs, etc… Of course we’re running a federal deficit several times larger than we were a generation ago while in states like California, budget disasters have already hit; others will hit soon. The main response from Krugman and his ilk is to focus on the revenue side. The federal deficit is so large because of a revenue shortfall. California is in trouble because of Prop 13. Even if the facts show that California has one of the highest tax burdens in the country, California’s problems must be caused by low taxes. Even if most of the recent growth in the deficit was actually caused by higher spending, it was still caused by lower revenues.
So we have an apparent paradox: governments spend more than ever (outside of WWII), yet those who want high government spending aren’t happy and they compare the present moment negatively to past government glories such as the Hoover Dam. Why?
Let’s look at how much it costs governments to build things. We’ll find that by any measure, it costs more than it should. more than other countries, more than the private sector, and more than it did in the past. A few examples:
According to my father, who’s a professor there, the University of Kentucky would like to build a new physics building, with a cost of over $100 million for a building roughly the size of a 30-unit apartment building. Obviously a physics building will include some fancy, high-tech equipment, but nowhere near enough to justify a 9-figure price tage.
The town I live in is trying to raise $39 million to renovate a local high school with about sixty classrooms. At budget meetings, some folks have said that the figure is ridiculously low and that we’ll really need closer to $80 million.
etc… etc…
So the real reason why we can’t build modern day Hoover Dams and other infrastructure and why government budgets are being slashed is not revenue shortfalls or the evil manipulations of the Koch brothers. It’s because everything that the government does is so expensive. Why? In one article I linked to above, Matthew Yglesias admits that though some of the explanation is just that government planners include so much waste in their projects, he doesn’t know the main reason. But the main reason surely must be that governments in the USA are required to pay so much more in so many ways whenever they build stuff. As just one example, unions have secured deals requiring that anyone who works on a government project be paid a “prevailing wage” that is generally much higher than the actual prevailing wage. That, and a thousand other regulations like it, make government projectsw vastly more expensive than they otherwise would be.
Only if one assumes that people who want the government to spend money don’t care how it spends the money. Despite the fantasies of the Right, liberals and moderates don’t want the government to spend money for its own sake.
Another oversimplification. The rich have most of the money in the country and have had their taxes reduced again and again for decades, while the tax and fee burden on everyone else has been raised. But you can’t get blood from a turnip; since the rich have most of the money in the country, there just isn’t enough money to be made by squeezing the non-rich harder.
Because so much of that spending is due to spending on things like the military and Bush’s wars and handouts to corporations.
Money actually going to people who do the work? How terrible!
California is running a budget surplus. Your talking points need updating.
I don’t think “building stuff” is really that big a part of the Federal budget, so even if we do over-pay, I don’t think it really accounts for increases in federal spending. We’re spending more because our population is older, medical care is over-priced and we have a really big military. Stuff like rail lines are a rounding error.
Does France have lower Unionization and fewer regulations then the US? That wasn’t my impression, but since they’re the only other country you compare the US to to show we pay more, I’m not sure how else to read your post.
The remodel of our master suite is costing twice what I thought it should cost. Probably more than it would cost in France. As far as I know, the government isn’t the reason.
Government projects do cost a lot. No doubt about it. I doubt that where’s the money’s going, however. I think most of the money, at least at the federal level, is going to the military, social security and medicare/medicaid. Fucking Leon Panetta squealed like a stuck pig at the thought of cutting even a portion of the Pentagon budget. That’s what the real fight about Hagel was about, people who don’t like the thought of trimming a bit of fat from our armed forces.
Also, looking at your chat, Gov’t spending has been pretty steady as a 40% fraction of GDP since 1980 or so. There’s a spike at the end, but that’s pretty obviously the effect of the Great Recession, and you can already see it falling back to trend at the edge of the graph. So despite your claim of a “pretty steady upmarch”, your cite shows its actually been level pretty much my entire lifetime.
As the baby boomers retire, its projected to rise 2-3 points, but that’s just a consequence of having an older population. I don’t really see any problem here.
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California is running a budget surplus. Your talking points need updating.
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Cite? I thought it was a projected budget surplus, not an actual surplus (and is pretty piddly compared to the mountain of debt that California current has…over $20 billion, IIRC). A quick Google search shows this (it’s an older article though):
From here. Its projected, but the year being discussed ends in June, so it seems likely unless something goes seriously pear-shaped in the next three months. In any case, they aren’t running billion dollar deficits any more.
(And 20 billion dollars in debt isn’t really “a mountain”, CA GDP is 2 trillion a year).
Government spending is a very easy target (which is why it is so often employed in polemics like this), but in many (most? nearly all?) cases where government’s nose is in the tent, shifting expenditures from individual user fees to broad government expenditures is extremely efficient.
Obviously, people who equate taxation with theft don’t care about this and are only going to quote numbers about the growth of government spending in a vacuum, but the bigger picture is that those awful, socialist hell holes where taxation cripples the fine, upstanding entrepreneur, actually produce an overall standard of living that is far better than ours.
In a recession, revenues do decrease because fewer people are working and thus paying taxes, and at the state level there are fewer sales and thus fewer sales taxes. And expenses, for things like unemployment, increase. So blaming revenue makes perfect sense. California cut its budget very significantly, but revenues plummeted even more. The projected surplus does not come from still more cuts, but from the very significant recovery going on in at least some parts of the state.
Prop. 13 has a couple of problems. First, it causes a very inequitable tax burden. The guy two houses away who has been in his house for ages pays a lot less than I do and I, who have been in my house for 16 years, pay a lot less than the guy next to me who just moved in. The property tax bill on my house went from $500 a year to $3,000 a year when I moved in. It is not all that much higher than that now, despite the fact that its value has doubled and my salary has almost doubled. Plus we have business property which never gets a major tax increase because the business never sells.
The second problem is that property taxes are more stable than either income tax or sales tax. That leads to a big revenue drop during recessions which causes the exact problem you are pooh-pooing.
Anyhow, different conditions require different levels of spending. Krugman is not saying that high spending is always good, he is saying it is needed when there is high unemployment. It can be cut during good times. Bush is the one who boosted spending during relative prosperity without raising taxes to pay for it. Complain to the Republicans.
It’s my impression that over the past generations government spending has soared in almost all categories. In the military, health care, and Social Security, and also in education,transportation, welfare, and nearly any other category that you’d care to name. Regardless of which type of government spending is a person’s personal favorite, he or she should be quite happy with the trend in that category. The only folks who have cause to be unhappy are those who of us who’d like to see spending go down a bit.
Eh, most of those graphs aren’t adjusted for population or even in constant dollars. They don’t really demonstrate much.
The graph in your OP shows total gov’t spending as a fraction of GDP has been pretty flat since 1980. So obviously not everything is growing.
Plus I’m always pretty scornful of arguments that “spending” is too high. If you think we should spend less on some particular thing, make the case. But just handwaving at “spending” doesn’t really open much of a discussion.
By clicking around on those sites, you can verify the following. In 2000, the state of California took in slightly more than $80 billion in tax revenue and spent slightly more than $80 billion. The budget was balanced. Nobody was complaining about the State of California being stingy with its spending at that time. Financing was generous for almost every government service.
By 2011, tax revenue was at $117 billion, a healthy increase for the 11-year period. If spending levels had remained the same, adjusted for population increase and inflation, there would have been no financial crisis. But spending levels didn’t remain the same. They skyrocketed upwards by almost 150% in that 11-year period. The data show that in 2007 and 2008, before the revenue drop caused by the recession, California’s government was already spending a lot more than it took in. The recession and the ensuing fall in revenues made it worse, but fundamentally California has a spending problem rather than a revenue problem.
It’s worth nothing that if the balanced budget Gov. Brown claims to have actually materializes, it will be dependent both on huge tax increases and on brutal spending cuts in many areas. Some of those budget cuts have been restored, but most have not. This proves the basic point I’m trying to make. It’s costing the government more and more to get any individual thing done, which means by basic math that the government must do fewer and fewer things as time goes on.
You might remember the thing called the Bubble. In 2000 we were awash in money, as people cashed in stock and options and paid all sorts of tax on it. I did. And even then people were calling for more school funding to make up for the decline relative to other states which resulted from Proposition 13. But indeed, if we were in that kind of economic situation nationally there wouldn’t be a lot of argument. And our projected surplus is due in major part to our recovery in some areas, like mine.
I put this into a compound interest calculator - this is a 3.75% increase a year, not exactly skyrocketing. And that of course does not adjust for inflation or the 10% population growth we’ve had since 2000.
You’ll see from your tax graph the big dip in revenues starting in 2008 - just what I said. And you’ll note that welfare spending increased from 10% of the budget in 2000 to 15% in 2010, due to the poorer economy. California is odd since spending for all local school districts goes into the state budget.
The balanced budget, by the way, has been done without new major spending cuts, but instead from the Prop 30 tax which avoided them and increased revenue from the recovery - so it is clearly a revenue problem, not a spending one. Brown has done all sorts of tricks to reduce spending, such as sending people in state prison to local jails. And a lot of the problem comes from the people. Three strikes increased prison costs, and that is not from the liberal part of the state.
As I said, you are wrong. The spending cuts have been in the past - during times of deficits. People are pretty happy at the lack of brutal spending cuts in this budget. Things are easier because the Republicans are no longer in a position to block anything - showing how well your austerity went down here. Much of the Prop 30 tax was maintaining temporary taxes, as well as tax increases for the wealthy. An excellent example of how tax increase, fiscal prudence (which does not mean cuts) and a recovering economy can fix the problem.
So, if government spending has been steadily increasing, and you graph shows a fairly linear progression, where are all the people who want to decrease government spending? Those who want to increase government spending haven’t been in power the entire time since WWII, so you would expect to see government spending decrease during those times when they weren’t. Only you don’t. It’s be a steady increase, including under those who claim they are against government spending. So how is this?
First, can you demonstrate exactly what fraction of the cost you’re talking about here? That link is not exactly clear, and since it’s your point, not mine, I’m not going to add up every kilometer, divide by total project cost, convert from Euros into dollars, and convert from kilometers into miles. [edit: I just found a point in your link where they mention a cost for more recent projects of $15 million per km–sorry I didn’t catch that before].
Second, your proposed explanation for why the US spends more on building than France does is–well, I can’t stop giggling:
Seriously? You’re suggesting that it’s our capitulation to unions that makes projects here so expensive, whereas in France, what, they’re a right-to-work country with virtually no unions to mess anything up? hee hee hee.
Y’all are missing the most important axiom in the buying power of the government: Norm Augustine’s Rule 16: “In the year 2054, the entire defense budget will purchase just one tactical aircraft. This aircraft will have to be shared by the Air Force and Navy 3½ days each per week except for leap year, when it will be made available to the Marines for the extra day.”
The sad part is that the rule was laid down more than a generation ago and it seems to be holding true.
I do not recall saying that France is a right-to-work country. I said “That, and a thousand other regulations like it, make government projects vastly more expensive than they otherwise would be.” France has powerful unions but it does not have all the roadblocks to construction that hamper everything the government does in the USA, ranging from superlong and complicated environmental impact statements to affirmative action.
I’ve given examples showing that construction of big projects here can cost more than in other countries. The difference is not subtle, with our government in some cases spending five or even ten times more. I’ve offered an explanation for it. I’m willing to listen to any alternative explanations.
The obvious next question would be to compare non-government construction projects between the two countries and see if its any different? Also, are the examples you choose typical or did they make the news because they were particularly egregious? Three selected data points does a trend make.
The problem with government spending is that unlike corporate spending there are 300 million stock holders all of whom are looking over their shoulder to see if there is anything that is not being done like they think it should. If a executive in Boeing decides to take the heads of his department on a “staff retreat” to Hawaii the worst thing that happens is that he might get fired and a internal memo is sent out explaining that this was inappropriate. However if government department head were to take his department heads out to dinner paid on a government credit card the scandal would be on Fox news the next night.
If the executive did it with discretionary funds intended for him to manage relationships with his department heads, he probably gets undying loyalty and improved productivity and a pat on the head for a cheap investment that will probably pay off handsomely in the long run.
You suggested, as I already quoted, that union demands were part of what pushed up costs in California. That’s a laughably ridiculous explanation, given the relative strengths of French unions to CA unions.
So let’s go to an alternate explanation, such as “superlong and complicated environmental impact statements.” If this is your explanation, you’ll need to:
Show how EISs impact the cost of construction in CA; and
Show how the French equivalent impacted the cost of construction in France.
If this is just a shooting-the-shit explanation, then sure, have at it, but that’s hardly Great Debates material. I could shoot the shit by proposing that California has more major road surface than France, and it’s harder to work around their road structure; or that France has more established passenger rail structure in place on which to build, and that lowered their costs; or that France built their rail system using prison labor. I mean, if we’re shooting the shit, we don’t need to cite any of our claims, right?
But if you want us to take your explanation seriously, you need to provide a scintilla of evidence for it.
