Ignorance Index V The Spending Problem

Robert Borosage

Conservatives argue that America has a spending problem, not a revenue problem.   We earlier dispelled the myth that Americans – particularly wealthy Americans – pay too much in taxes.  Now let’s look at the spending question.

Ignorance IndexPart 5 in a series of posts that refute some of the Orwellian, “ignorance is strength” falsehoods used by conservative leaders to control the economic debate.
See the complete series »

Yes, spending is up – to nearly 24% of gross domestic product.  But it is worth looking at where the spending comes from.  Conservatives are focused on cutting domestic discretionary spending – the spending for everything government does outside of the military, the guaranteed programs like Social Security and Meidcare and interest on the national debt.  But domestic programs haven’t  been the source of the increased spending.  As this chart shows, despite the stimulus, domestic non-security spending is not driving the growth of spending.

What's driving government spending: the military and health care costs

The security budget has increased dramatically – with the development of homeland security agencies, already notorious for waste, fraud and abuse – and two wars that went unfunded. 

Mandatory programs also have risen, which is to be expected given the Great Recession, when automatic stabilizers like unemployment insurance, food stamps, Medicaid kick in for those who have lost their jobs.  They are designed to go up to help limit the drop in the economy and the misery among the families struggling with lost jobs.

Over the long term, the scary projections of U.S. debt amounting into the trillions in “unfunded liabilities” are driven by only one thing – the unaffordable increase in health care costs.  But this isn’t a Medicare or Medicaid problem.  This is problem of a broken health care system that now costs nearly twice per capita what the rest of the industrial world pays with worse results.  The answer, as the President has argued, is not to gut Medicare and Medicaid.  It is to get our health care costs under control.  That means taking on the corporate complexes that drive them up – the drug and insurance companies, the private hospital chains.  Not surprisingly, conservatives would rather gut Medicare than take on Big Pharma.  

Reduce our military spending which now amounts to almost as much as that spent by the rest of the world combined – and get health care costs under control.  When it comes to our deficits, everything else is simply distraction, targeting vulnerable people, in order to avoid taking on powerful interests.

The Great Recession is the source of much of the increase, less from the stimulus than from the automatic social supports that expand when the economy declines – unemployment insurance, food stamps, Medicaid,  and other supports.  These work to sustain families that have lost their jobs, while sustaining demand in the economy and limiting the downturn.  Thus federal spending will automatically decline if the economy recovers and people get good-paying jobs.

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