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April 06, 2006

federal budget trends

This graph from today's New York Times, although it doesn't break any news, provides essential information for citizens--the kind of substantive context that people need but rarely get.

Some observations:

  • As the Times notes, 80% of the budget is military spending, entitlements, and interest payments. Few if any conservatives are really calling for cuts in those areas. The debate is about the remaining 20%. There can be big and palpable consequences from cutting small discretionary domestic programs, but the effects on the deficit are very modest.
  • Although there is some truth to the idea that we live in a time of political polarization, with one party that's against government and another that's strongly liberal, it's easy to overstate the difference. Essentially, both parties want to hold federal spending at between 18 and 21 percent of GDP. Even when conservatives have control of both elected branches of government, they let all three major categories of spending increase; and they don't seriously propose any substantial cuts. Nor do Democrats have proposals that would increase domestic spending or cut defense on a scale that would cause fundamental change.
  • The great shifts of recent decades were the doubling of federal mandatory spending as the Great Society programs were fully implemented between 1965 and 1975, and the big decrease in military spending between 1968 and 1978, as we withdrew from Vietnam and ended the draft. As a percentage of GDP, all the other changes (the Carter-Reagan military build-up, the rise in domestic discretionary spending in the 1970s and cuts under Reagan, and the spending increases of the last three years) are relatively small.
  • Posted by peterlevine at April 6, 2006 11:25 AM


    Good post. I basically agree with but do have some quibbles. I agree that the 20% gets way too much attention, but disagree that conservatives do not want to tackle mandatory spending. That was the point of Social Security privatization. Perhaps you disagree with consumer-driven health care, but for those that do subscribe to it, I wonder if the medicare prescription drug entitlement was a trojan horse for HSA's. And finally, there is a lot of noise in conservative circles for applying welfare-reform solutions to other entitlements like food stamps (converting to block grants rather than matching grants, etc...).

    Posted by: Jibaholic [TypeKey Profile Page] at April 13, 2006 04:34 PM

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