What’s Our Future? Bigger Government And Higher Taxes
At least that’s what Robert Samuelson sees for us. I can’t really dispute his numbers either:
For the past half-century, federal spending has averaged about 20 percent of GDP, federal taxes about 18 percent of GDP and the budget deficit 2 percent of GDP. The CBO’s projection for 2020 — which assumes the economy has returned to “full employment” — puts spending at 26 percent of GDP, taxes at a bit less than 19 percent of GDP and a deficit above 7 percent of GDP. Future spending and deficit figures continue to grow.
What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century’s average. Remember, that average was 18 percent of GDP. To get from there to 26 percent of GDP (spending in 2020) would require an additional 8 percentage points. In today’s dollars, that would be about $1.1 trillion, a 44 percent annual tax increase. Even these figures may be optimistic, because CBO’s projections for defense and “nondefense discretionary” spending may be unrealistically low. This last category covers much of what government does: environmental regulation, aid to education, highway construction, law enforcement, homeland security.
Now, this should come as no surprise, really, to anyone with a passing knowledge of accounting. When you increase spending without increasing revenue, you end up with a deficit. And what we’ve seen the government doing for decades is exactly that. Now it’s in the midst of piling up massive deficits and planning huge increases in government.
And it’s not all the politicians fault. After all the average American keeps returning the same fiscally irresponsible people to the same place where they can continue doing what they’ve been doing for decades – spending us into bankruptcy.
Because, as Samuelson notes, Americans like the benefits even if they don’t like the taxes. So the formula has been a little different for each party but the result has been precisely the same:
Republicans want to cut taxes without cutting spending. Democrats want to increase spending without increasing taxes, except on the rich. The differences between the parties are shades of gray. Hardly anyone asks the hard questions of who doesn’t need benefits, which programs are expendable and what taxes might cover remaining deficits.
In fact, much harder questions are routinely ignored, such as “why is government getting into _________ at all?” To me that is the key question that is never asked. Name your program and tell me when anyone asks why government is involving themselves in such things?
It all comes back to the fundamental question which, over the centuries, has seen the answer change radically – “What is the basic function of legitimate government?”
Few are going to be able to argue successfully that the answer in 1781 was the same as it is today, are they? And you don’t really have to be an economist to understand what this direction we seem to be intent upon taking means for our future. It should also be clear by now that those who’ve have gotten us into this mess have little incentive to change their ways and certainly no stomach for the sort of work it would entail:
There is little appetite for any of this, and so we face the consequences of much bigger government. Certainly higher taxes for future Americans. Probably a less robust economy. The CBO notes that elevated deficits would penalize saving, investment and income, while unprecedented tax burdens could “slow the growth of the economy, making the [government’s] spending burden harder to bear.” To such warnings, Americans’ collective response is: Go away.
You can go back to sleep now.