Government Spending: How it Affects US (us being Americans or people living in America)

Adam L. Silverman, PhD*

In the comments to my recent post with the charts about government spending, some of the commenters have taken different positions on just what is being spent and what is benefiting Americans.  I recently read this scholarly article that deals with how most Americans don't realize just what benefits they are receiving from the government, or perhaps more accurately from government spending.  I'd like to give the hat tip on this to The Big Idea or Grasping Reality with Both Hands, but to be honest I can't remember which econ site I saw the link for this at.  The most revealing data is presented in table 3.

The article can be downloaded here:

Reconstituting the Submerged State

* Adam L. Silverman is the Culture and Foreign Language Advisor at the US Army War College.  The views expressed here are his own and do not necessarily reflect those of the US Army War College or the US Army.

Comments

[Roy G.]

First, sorry to be pedantic, but there's a typo in the headline – should be 'affects.'

Second, while I didn't delve too deeply into the .pdf, it seemed to be outdated, an artifact from when Obama really seemed to be an agent of change; in that light, quotes like this are eerily prescient:

"They offer no insight as to why Obama's supporters – so energized during his campaign – became so quiet with respect to his issue agenda."

Frankly, even if Obama is the 'Jedi Master' some of his followers claim he is, I'm more inclined to be an Egyptian in regards to his rhetoric vs. reality. I think Tom Tomorrow is closer to the truth:

Middle Man and the Debt Ceiling Debacle
http://bit.ly/oBkCwu

Sorry to seem so glib in the midst of a policy debate whose aims I actually support, but I am jaundiced at the idea of Obama being any kind of progressive, based on his actions in office.

[J]

To apply the brakes to the runaway financial train, re-institute the Glass-Stegall Act.

To apply the brakes to the runaway healthcare costs, re-institute the Hill-Burton Act.

By past Congresses doing away with both of the previous legislation, has led us to the financial debacle we are currently in.

[LeaNder]

Roy, you should read it. It's a very good paper. You will much better realize what specific forces Obama fought in the health care debate and why he only partially succeeded. Read it! Yes, even if it has 22 pages. It's highly interesting. You'll learn something about "the submerged state" in the private sector.

It is also an important addition to Adam's last article.

Concerning that article I was somehow startled that the military budget didn't result in a tranche as big as I thought.

[VietnamVet]

Dr. Silverman;

The Submerged State is a good description of the Federal Government. Being a scholarly paper it is not explicit why only 4% of Americans think the federal government benefits the Middle Class. Where the rubber hits the road, the Federal Government has turned its back on the American Middle Class; from the proliferating of Hot Lanes to ignoring the Housing Crisis that is kicking millions of Americans out of their homes. The paper also ignores the likelyhood that services the submerged government does provide from Social Security to Medicare will be cut back. In 15 years the US Postal Service is planning on delievery the mail three days a week.

Both Parties are bought by Special Interests but the GOP tops it off with propaganda supporting their belief that government is evil and incompetent. The GOP’s only goal is cutting the taxes of the Elite and forcing the rest of us into servitude to pay for college loans, health care and never ending wars; if one is lucky enough to have a job.

[graywolf]

I read as much as I could of this extremely wordy piece (why use 10 words when 1,000 will do?), and it seems to settle on how grateful we should be that the government actually provides something after taking significant portions of our income in taxes. That is, those of us who are net tax-payers - a shrinking minority..

Do academics get points for verbosity?

[J]

Adam,

When our fellow Americans read just what the Members of the Congress are getting, we're talking the same Congress that is berating those with Social Security/Medicare/Military Retirees/Veterans, they see red with anger. Congress has the audacity to lambast our seniors on Medicare and Social Security, but their Congressional healthcare and retirement packages, are something only our fellow Americans could wish for.

Where else but the Congress does an 'elected' individual that is green-behind-the-ears with no skills, start out at a yearly salary of just under $200,000? Not even those with Masters Degrees graduating out of Graduate Schools hope to make such a starting salary.

State Congresses aren't fare behind. While my state's Reps have a what most would term a modicum beginning salary, it jumps sharply when they start adding in the 'additional $$$' that one get for being on a Committee, the more Committees, the more $$$s they make.

Congress's general healthcare costs they pay the D.C. area hospitals, I understand just one hospital received over $25 Million per year alone, just to take care of the Members of the Congress.

Is our President and his position really worth the amount of money that the taxpayers are spending?

Are the Members of the Congress really worth the amount of money that the taxpayers are spending on them?

[walrus]

An excellent article Dr. SIlverman. This is the first confirmation I have seen (although I didn't look very hard) that there are plenty of Academics who understand what has been going on, and in great detail.

Surely if the thinking behind this article can be mobilised into political action to change things towards a more free market economic model then the fundamentals of the American economy are good.

[Gordon Wilson]

Dr. Silverman, thank you for posting the link. I would imagine that "Figure 3" could be expanded quite a bit with very little imagination, which would be equally overlooked by those who derive no benefits from governments, or fail to understand the thrust of the chart, Percentage of program beneficiaries who report that they “have not used a government social program” If it had been titled, Percentage of people that have had sex who report they have not had sex" your explicit reference to it would not have been, apparently, universally overlooked.

[optimax]

A commentator here said he is surprised that the military budget is such a small part of the budget pie. It depends on how the chart is figured. Desceptive is the chart that includes the trust funds(SSI, Medicare,etc) in the budget pie. If you exclude the trust funds, the military is 54% of the budget. This includes past (pensions, healthcare, but not sure if it includes the security appartus) and present military spending.

See charts below.

http://www.warresisters.org/pages/piechart.htm

[optimax]

By past military I mean what we are still paying for.

[Fred]

J,

"Are the Members of the Congress really worth the amount of money that the taxpayers are spending on them?"

Just what do you propose? Only those who with money should be in office? I'd take a 1/3 pay cut to be in the state legislature. If I were a lawyer I'd do just fine as every SOB out to screw the general public would be glad to hire my services while the legislature's out of session.

[ked]

The phrase Submerged State is a great addition to our politcal lexicon, kinda like New Deal, or maybe Black Market. It encompasses so much that begs discussion. Our present vocabulary is old & loaded to the point of uselessness. I wonder if it will take.

[J]

Fred,

Just imagine:

A Congressional job ad - "Be a congressperson, free room and board, work probono."

We provide them their room and board and transportation to and from the capitol to their congressional barracks.

Think of all that money we'd save. Plus we'd weed out the 'egos' that fill the candidate trails we see today. Only those who truly cared about the nation need apply.

The problem today is that the membership of the Congress show in both their attitudes and actions that think they are American Royalty. I'd gladly burst that bubble, wouldn't you?

[john f]

Apologies for posting O/T but I do think it quite important. From The Jerusalem Post:

"Pro-Israel leaders in the United States, Britain and Australia are warily watching the unfolding of the phone-hacking scandal that is threatening to engulf the media empire of Rupert Murdoch, founder of News Corp.

Murdoch’s sudden massive reversal of fortune -- with 10 top former staffers and executives under arrest in Britain for hacking into the phones of public figures and a murdered schoolgirl, and paying off the police and journalists -- has supporters of Israel worried that a diminished Murdoch presence may mute the strongly pro-Israel voice of many of the publications he owns.

“His publications and media have proven to be fairer on the issue of Israel than the rest of the media,” said Malcolm Hoenlein, the executive vice-chairman of the Conference of Presidents of Major American Jewish Organizations. “I hope that won’t be impacted.”"...

http://www.jpost.com/International/Article.aspx?id=230270

[LeaNder]

optimax, I didn't want to suggest, this changes in any way my dislike of the War on Terrorism, the way it happened.

And I was indeed a bit puzzled too by the "projected debts" and its sources. They in fact create the visual impact. As far as I know the Bush Era tax-cuts are not meant to remain. So this may in fact be a bit partisan. But they may also have simply looked at the data with the question: what if these cuts remain.

On the other hand I am tired of tax-cut cries. In Bush's case I found it really, really peculiar. On the other hand the tax-cuts were in place before 911. I checked that. ...

Besides there are two important factors: depts resulting from economic downturn and recovery measures, it feels. It feels the military budget is related to this. What exactly would happen, if you reduce it by half, to the economy? One of the reasons politicians support a big military budget surely depends on production in their respective home states? As the money earned is spend in the state too.

A couple years ago, I read a series of studies for the EU about new Media as the main growth market. This made me realize that the fact that I pay almost nothing compared to a decade ago for telephone and the internet may have to do with both politics (submerged state?) and more competition. There was no article about state support, from which I felt reading it I profit. There was only one slightly critical article in the book. In a nutshell it reached the conclusion that this new market would create new wealth on one hand and a decline in wealth for others, that had to be taken care of.

I am not an economist and realize, you can use data to make your point. But sometimes working with data also leads to something you didn't expect. ...

And now I have to finish my tasks before leaving Cologne for a while.

[Norbert M Salamon]

Nassim Taleb's reflection on economics and the USA, 378 min video or the transcript:

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2755

Enjoy the deep insight!

[Fred]

J,

I agree with bursting the bubble but not your approach. I care but I don't care to have sell my house and car, at a loss, to live for room and board. I do believe that plenty of guys and gals will get in and be able to get their wives/partners nice 'consulting' jobs for a few hundred grand a year. I believe that was one of the things that got Tom Delay indicted. (She did about 4 days of work if the news reports were accurate).

[walrus]

""Pro-Israel leaders in the United States, Britain and Australia are warily watching the unfolding of the phone-hacking scandal that is threatening to engulf the media empire of Rupert Murdoch, founder of News Corp."

In my opinion, Two "suicides", have been to Israels advantage:

David Kelly - Who blew the Whistle on Iraq WMD evidence:

http://en.wikipedia.org/wiki/David_Kelly_%28weapons_expert%29

And now this; the Murdoch empire whistle blower:

http://www.news.com.au/business/news-of-the-world-whistleblower-sean-hoare-found-dead/story-e6frfm1i-1226097240186

OK, comments about tinfoil hats are in order, but....

You can imagine the rumors going around every News Limited News room at the moment...People who cross Rupert come to bad ends.

[Thomas]

Walrus,

I believe that is why Assange won't release his list of billonaire tax cheats, they play the game for keeps.

[J]

Thomas,

Assange is 'controlled opposition'.

[WP]

The whole debt ceiling thing is just theater. None of it is real.
The reality is that about 400 families control most of everything and little of it is really influenced by what the mass of the public think or say.

To some extent "money" on an national level is just a chimera and has little reality.

A little humor never hurts in viewing history. Take for example this Bird and Fortune video from 2008 http://www.youtube.com/watch?v=mzJmTCYmo9g Then compare what Bird and Fortune forsaw with what has happened.

http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency-loans/ and what will probably happen to those responsible http://www.rawstory.com/rs/2011/07/21/states-negotiating-immunity-for-banks-over-foreclosures/
Which is immunity paid for with funds given to them by US and the people go unemployed.

Such is life in a "Free" society. Free, that is, if you are one of the criminals who brought this all on and got to keep the bailout money and who remain free and are enjoying their spoils.

I remain a wage slave and they now have my retirement.

[WP]

I meant to annotate the "400 richest families" im my last post. See, http://digbysblog.blogspot.com/2011/03/seriously-what-is-wrong-with-these.html and
http://crooksandliars.com/jon-perr/richest-400-taxpayers-see-incomes-double These are the ones that own the minions in Congress.

[Fred]

WP

Don't forget ALEC, which was just a topic on soon to be de-funded NPR. It's not that organization as facilitator, it's the money that backs it.

[optimax]

Here are charts and summaries that show sources of Federal revenue from 1950 to 2008. Its summary:

"The individual income tax has consistently provided nearly half of total federal revenue since 1950, while other revenue sources have waxed and waned. Excise taxes brought in 19 percent of total revenue in 1950 but only about 3 percent in recent years. The share of revenue coming from the corporate income tax dropped from about one-third in the early 1950s to less than one-sixth in 2008. In contrast, payroll taxes provided more than one-third of revenue in 2008, compared with just one-tenth in the early 1950s."

http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm

What sticks out is the increase of payroll tax (medicare, soc. sec.) from 1.6% of GDP in 1950 to more than 6% since 1990. Because I paid into Railroad Retieremnt, I paid more than the average but consider it worth it.

Also corporate taxes fell from 5 to 6% of GDP in the early 50s to 2.1% in 2008. Exxon made record profits last year and recieved 2 billion in federal refunds after paying NO fed. taxes. Corporations basically write the tax codes. The more they save in taxes, the more government starves and has to privatize public resources and sevices, the more money corporations have to buy same services. Win-win. But for us it's lose-lose.

[Adam L Silverman]

Graywolf,

Its part of the rules they give academics when they get their PhDs.