Thursday, July 21, 2011

Trends In Federal Spending

There is no area of the federal budget that couldn't use a little trimming. This includes the sacred cows of the Left (entitlements like welfare benefits and Social Security) and the Right (Defense). The easiest thing would be an across-the-board cut to the budget. Pick a number, something sensible. Five percent, say. That seems to be off the table though, and instead there's a lot of infighting and charges of wanting old people to die and children to go hungry, and so on. Meanwhile, nothing gets cut. Where does all this money go? Well, looked at one way, the biggest chunk goes to Defense ($925.2B). Of course, that includes all defense spending. Entitlements get broken up into subgroups like "Welfare" ($431.5B), "Pensions" ($805.6M), and "Healthcare" ($866.1B). Put together, entitlement spending far outstrips defense spending. That said, there's still room to cut defense spending. Perhaps we could stop building ships that never sail, for example.

But when you look at the historical data around government spending, some interesting trends emerge. First, take a look at Defense spending through the years. Note that I picked 1950 as the cutoff. I picked it because it's a round number and because the immense amount of spending on WWII skewed the chart's y-axis, making it a bit more difficult to read. Suffice to say that at the peak of WWII, defense spending accounted for over 40% of GDP.

The trend over the last 60 years is clearly a downward one. Even with the "massive" buildup in the 1980's, we're talking about 7% at the peak of the Reagan era. Fiscal Year 2010 projects around 5.8%.

Now look at the trends in Healthcare:

And Pensions:

These trends are not sustainable. They just aren't.

(Crossposted at Say Anything)

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