What we talk about when we talk about Big Government
The last few weeks, I’ve been wrestling with the peculiar disconnect in the Great American Dialogue about what we do next as a society.
Like so many modern, post-industrial democracies, we’ve discovered that we have been enjoying the benefits of a lot more government than we’re actually paying for.
Millions of seniors, to cite one example, will receive far more in Social Security payments — along with other government aid for prescription drugs and other services — than they paid for with their taxes.
We know this is unsustainable because currently roughly a third of Federal spending is “paid for” through borrowing.
The problem, though, is that the debate over what to do about this mess has gotten tangled up in an ideology that a lot of people espouse, but very few people actually embrace.
Put simply, we live in a Big Government world.
Compared with the 1930s — before Franklin Roosevelt launched the New Deal — our lives are touched (and yes, improved) at almost every juncture by government.
Government educates our children. It cares for our elderly. It builds the roads we drive on. It monitors the food we eat and the drugs we take.
We expect government to fix the economy. We expect it to adjudicate our disputes. We want it to defend us and we want it to protect the supply of commodities (such as oil) that we rely upon.
I am writing this blog post using a government invention (the internet) on a computer powered by a government regulated utility.
And the simple truth is that most Americans take all this for granted. We want and expect that all these things will get done.
But we also want the luxury of pretending that we’re still a frontier society. We like to think that we’re independent of the herd, lifted not by the takes-a-village-ethos of our Federal government, but by our own bootstraps.
It’s a myth, I’m sorry to say. There are very few Americans alive who have any memory of what that nation looks like.
Our debates are further bamboozled because our mental portraits of that Lost America are usually nonsense, whether they are concocted by the left (who fantasize about a pre-industrial, less money-grubbing, more organic society) or the right (who croon for a more moral, more self-reliant, more free era).
The reality,of course, is more harsh.
The reality is that things are a lot better now in America than they used to be. The vast majority of government does really good things for us.
Most of the “entitlements” and “mandates” that people grumble about have helped to lift people out of poverty or ended their isolation or made their lives a little more fair — even, in many cases, a lot more free.
Those seniors that I mentioned at the beginning of this post? A huge portion of them used to live in truly sickening poverty, a moral and economic crisis that big government programs largely solved.
So the problem at the end of the day isn’t that Big Government is bad. (Again, even many people who claim to believe that are usually relying on government for a big chunk of their quality of life.)
The problem is that we can no longer afford it. Or quite so much of it. Even after we boost taxes (and we will), deep cuts will have to be made in programs and services.
I suspect there will be real pain. There will be times when we will call government agencies, expecting them to help us as they have in the past, and we will be turned away.
But if we begin to talk more honestly about government, about what it does in our lives, we can also begin to make smarter, more efficient, and less ideological decisions.
As always, your comments welcome.
Tags: politics
But at some level it is ideological and we have to get around that before we can get down to what works. Also we need a review of history to really sort out what we are talking about and the impact of government.
For example at the turn of the century the structure of American families was much different than it is today. Many if not most seniors lived with their extended families and continued to work as long as they could they also died younger. The very concept of retirement as a specified period of time is a recent one in the United States. I think it is a good thing don’t get me wrong but those are issues that are worth looking at.
Government is just the communal response of individuals and serves those people and the people pay for these services or borrow the money, but regardless the debt is still on the people the government can pay that debt by devaluing the money it borrowed or it can tax the real productive output of the people.
We are better off today and out of poverty today largely because of the private sector not government. Government certainly creates a platform for growth and stability and is a needed safety net and we are better off because of good consistent government, but the meat the core of what is happening in the country economically, socially and individually does not flow from government.
That is a philosophical point not a technical one and I think many people disagree with that point. But it would drive much of the discussion.
Brian observes “Millions of seniors, to cite one example, will receive far more in Social Security payments — along with other government aid for prescription drugs and other services — than they paid for with their taxes.”
Well, yes, but… The dollars we paid in (I’m on SS) were worth more than the dollars I’m getting back now. And what I paid in was pretty substantial, as much or more than I paid to income tax every year. Had those monies in excess of what was being immediately paid out been invested prudently instead of churned back into the federal budget at a pitiful rate of interest, there would be plenty of money for SS now. So I think an argument can be made that the impending shortfall in SS is as much or more due to mismanagement as saying it was an undoable promise from the outset.
Aside from that, at its core the problem is that we have created a system which succeeds only through endless growth and inflation. The SS system can give back more than it collected from me because the money it’s is giving back is worth less. We (individually and collectively through the government) can afford large expenditures because the money we borrow today is worth more than the dollars we will use to repay, or at least that’s the plan. When the plan stops working, as it did when the housing bubble burst or the tech bubble before that, the system doesn’t work. At some point there will be no more room for growth and yes, that will involve a lot of pain.
Great discussion: If you want a look at the real pain, read the details of the deficit reduction commission. Part of the problem is that the debate about what services we want has been disconnected from the “what are we willing to pay for it”. There is also a deep-seated suspicion that the services are going to free-loaders who are gaming the system and laughing (at the rest of us) all the way to the bank. And the government is incompetent etc. There is a germ of truth to all these myths. The worst part though (IMO) is that health care costs have almost entirely eaten up the “what we are willing to pay” and squeezed out roads and bridges, and educating our children.
Social Security is very solvable. Defense spending is intractable because they have by far the best lobby, but the solutions are there.
I don’t know what the solutions are to Medicare/Medicaid and the out of control cost explosion in health care. The only honest solution is that we are going to have to limit health care the dreaded rationing, but rationing already happens based on economics anyway.
I heard a recent discussion on the trends in recent decades to meet our personal demands. Both spouses entered the work force. Then they worked longer hours. Then they borrowed. And they also bought things more and more manufactured by societies which did not value the same sort of work conditions required at home. Has government not done the same in its own way?
Is it perhaps that we (in either of our countries) cannot afford the essentials that government has always provided as the times demanded because we want too much generally? Government has always been able to spend well if it chooses. The state of New York, I recall, built the Erie Canal quickly and with a surplus back in the 1820s. Is it that we have become such consumer product omnivores that we are balancing a third car against reasonable schooling? Are we balancing social security – a plan that can afford itself as the Canadian CPP proves – against non-essentials?
All of your points are reasonable, Brian but I would like to add a few and emphasize some.
The aging of the population has never been adequately addressed. It is a problem at both the physical and psychological level. We might ask, “What is life and what is it for?”
Do we live only to live another day or do we live to do something with the life we have? When it comes to doing something, for most if not for all of us, doing something begins with getting an education, followed by getting a job, going to work and taking care of ourself and our loved ones. If all of this activity is to end with retirement, then what is retirement for? But if retirement is a real goal, then what is the goal of retirement? Take up a hobby? Maybe volunteer to do a JOB and deprive someone from doing a job they would like to get paid for doing? But what if the physical and mental abilities to do the hobby or the volunteer work are no longer there? Then what? Assume the role of the newborn and become totally dependent upon others? Is that life?
Recently there was much talk/fear over Death Panels. I don’t think any of us would want that. But I do remember my grandmother saying to me when she was in a nursing home and in her 90’s and shortly before she did die, “I don’t know why God keeps me alive.”
This was a woman who worked all of her life, even taking care of the house and my grandfather before he died. Work was her life. The few years she didn’t work, except for taking care of herself before entering the nursing home, were almost pointless to her. Life was work and work was life.
We need to address this reality.
Big Government? If we want a big country with 100’s of millions of people, we can not avoid having a big government.
Yes, the weight is heavy and as we walk further and further out on the limb of growth and progress, the risk to the limb breaking increases with every step. We are caught! We find ourselves being pushed further and further out on the limb. It’s what happened to Rome. The barbarians are at the gate.
I think part of the problem is that they are structured and funded in an irrational way, especially here in NYS. The state mandates things but then sends the bill to the counties and school districts, who have to fund it via the extremely regressive property tax. Newt Gingrich was right about one (only one) thing: unfunded mandates. If the state wants something, it should either fund the mandate at 100% or it should run the program itself. Maybe then it would be more circumspect about what it wanted done.
James Bullard says: “there would be plenty of money for SS now. ”
There is plenty of money for SS now. You can look it up.
Pete Klein says: “Recently there was much talk/fear over Death Panels.”
There never were any Death Panels. You can look it up.
This is our discourse. Long, ponderous discussions about things that don’t exist or aren’t true.
Pete said there was talk/fear of Death Panels, not that there every were any.
Does anyone here not believe that health care is already rationed?
My employer pays a large chunk of our medical insurance, but many people still don’t think they can afford it. In the real world, doesn’t the cost of health care cause it to be , if effect, rationed?
I wish we could boil it down to a simple rule, like:
Government will be responsible for all the stuff the Private Sector doesn’t want to deal with. That would undoubtedly, and possibly most importantly, have to include the policing of said private sector.
The pursuit of profits is a hugely corrupting ingredient, and sad to say, our public sector must be where the oversight exists.
Brian:
Just don’t assume that all Americans think as you do. Probably a certain percentage do.
Government educates our children. (some of us homeschool our children)
It cares for our elderly. (some of us have rooms specifically built to care for our aging parents)
It builds the roads we drive on. (as well it should)
It monitors the food we eat and the drugs we take. (some of us take unregulated nutritional suppliments)
We expect government to fix the economy. (some of us expect government to get out of our way, so we can fix our own personal economy)
We expect it to adjudicate our disputes. (I’m in favor of a judicial branch, however, some of us resolve our own family matters)
We want it to defend us (absolutely!)
and we want it to protect the supply of commodities (such as oil) that we rely upon. (some of us want us to use our own resources first)
Also you are going to get into issues of justice and fairness when we do start the needed cutbacks. The pain must be evenly shared and not done politically or in a way that there is a perception of large scale unfairness. Will one industry or group be favored over others for example?
Most people will accept marginally bad services if they understand that everyone is getting marginally bad services, but when you have some groups getting great services and others getting nothing we will have problems big problems.
Ever the contrarian I will point out that while our national debt and current deficits are high they are still manageable.
People often say government should manage its affairs like a family has to manage its budget. Well, national debt as a percent of GDP hasn’t yet reached 100%. Most people who buy a house are managing debt at 200% or 300% or more of their gross income and are managing that debt very responsibly.
A few very small corrections in national policy including spending and taxation will change the trajectory of debt to GDP. That and waiting out the recession.
All it takes is two political parties that are willing to occasionally say “yes” to one another’s ideas.
Nietzsche once wrote that “Convictions are even more dangerous to truth than lies.” For the word “convictions” perhaps we should substitute “ideologies”.
Knuck, the problem with that theory is that there is no bank officer someplace ensuring that the borrower (the USA) has the ability to pay back the loan and there is no collateral (the home) to back the loan. Add in that the loans you use as an example are on a scheduled payment system that ensures payoff in 20-30 years. A more realistic example would be an entrepreneur with a 110% loan on his own home plus 5 or 6 other homes he hopes to “flip” so he takes out additional loans using the speculative homes as collateral and cash advances on his multiple credit cards. He’s doomed. The biggest difference is he doesn’t have a Treasury to print more and more money.
What are the little changes you think could straighten this all out?
This is helpful to Brian Mann’s discussion:
http://motherjones.com/kevin-drum/2010/11/deficit-commission-serious
Click the link and scroll down to the graph. Social Security is not in any kind of crisis. Health care spending is. Here’s the money quote:
“To put this more succinctly: any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn’t maintain approximately that ratio shouldn’t be considered serious.”
That’s on a federal level, of course. New York State has other issues, though health spending is still a huge part of its problems.
The cuts needed will mean people are going to get less money and that will be very contentious. It will seem unfair to many people. In the end the solution is mundane not tricky it is just very hard and maybe impossible. For example when you say to everyone getting social security and every government employee who is getting a pension check, sorry regardless of the money you put into the system you are being cut 10% in your pensions; they will be really upset. They will point to Wall Street fat cats; they will point to others who they perceive make more and so forth. They will rabidly vote against any politician who brings that up. Anyway I am not sure this country has the ability to really cut spending. I mean we can’t even build a wind turbine in a time that we need clean energy and jobs; no one wants to sacrifice because there is a perception of unfairness in the system.
Hate to burst your bubble oa but that graph is a projection from 2008. Outlays exceeded revenues in I believe June this year making the 2008 projection pretty useless. This means that SS will have to start cashing in some of the IOU’s. The result is the SS shortfall has to be made up from general revenues. I would suggest you get budget news from a different source as the SS ledger going negative was widely reported and there is absolutely no excuse for that kind of ignorance from a reporter.
As I understand it, and I don’t have access to any crystal balls, payout exceeded revenue this summer. There is nothing on the horizon foretelling of that changing anytime soon. So, again as I understand it, the “crisis” is that the SS program is operating out of it’s reserves…..only it has no reserves, those were borrowed ever since the mid 60’s and spent. So since my Google search resulted in multiple pages of what I wasn’t looking for (a clear explanation of how much SS thinks it’ll pay out vs how much it’ll take in) maybe someone else has an easily understood outline of how we can pay out more than we can possibly expect to take in over a long period of time and still remain solvent.
BTW- The cap on people paying in when they make over a set amount ( some hundreds of thousands) seems an odd idea to me.
Solutions to our budget problems are easy.
Social security, eliminate the cap so that all earnings are taxed and raise the retirement age by one month a year for the next 24 years. Great that’s done!
What do you want me to solve next?
Eliminate mortgage deduction on second homes? No brainer!
Eliminate the Bush tax cuts for the top 2%? Done!
Hold aggregate federal spending to the current rate for next two years? You bet!
Get Republicans and Democrats to agree on ANYTHING? Oh, we’re screwed!
I see a larger problem, here are some of my thoughts-
We have big gov’t, an enormous, ponderous, relatively inefficient and extremely costly gov’t. Some of what gov’t does is undoubtedly good- our military defends us, our postal service never fails to deliver my bills in a timely fashion, our Treasury is printing money night and day. On the other hand, at the Federal level, just what good does the Dept of Energy do? In fact, does it do anything? Same for the Dept of Education. Why is it the Dept of Agriculture was unable to determine exactly how many people it employed some years back? Things like that bother me. At lower levels I have to wonder why there are often redundant programs and depts. Why are there sometime duplicate Federal and State agencies and programs? Why do some depts support an item on one side of the house and attempt to limit it on the other?
What it comes down to is inefficiency. Gov’t, especially at the Federal level, operates in a manner that private enterprise never would or could. Now some would say that is because Gov’t often does things a private enterprise never would attempt. That’s a good reason, but it fails the test in the long run if it both fails to fulfill it’s mandate effectively and is clearly a money loser- Johnsons Great Society for example. Some programs, Social Security for instance, were simply robbed by our beloved politicians. Others are simply black holes for money it seems, pick your favorite- Defense, the arts, education, Medicare, infrastructure, space exploration, the War on drugs, whatever. Everyone has a favorite target to cut.
So what, in my opinion, do we do? Well, we can’t maintain the status quo. We can’t continue to exploit the taxpayers and yet offer declining returns for their “contributions”. We certainly can’t implement any gigundous new entitlement programs and we can’t continue to be the worlds policeman. If given my preference we’d take care of our elderly, our veterans and provide aide to those truly unable to care for themselves. Continue to offer aide to the poor, but ensure welfare isn’t a career choice. Bring our military home over a 3 year period with plenty of warning to those gov’ts that depend on us, maintain a DEFENSIVE posture within the scope of protecting our national interests, forget places like Africa, the Balkans, even Pakistan. Close the southern border immediately- seal it! Round up and deport all illegal aliens, anchor babies notwithstanding- you don’t have papers to be here, you leave. Abolish the Dept of Energy, Education, Health and Human Services, Housing and Urban Development, Interior. These don’t need to be Cabinet level depts. Energy does nothing, Education could be handled by Labor, HHS by Commerce, Interior by Agriculture, Housing + Urban could simply be abolished, Veterans Affairs should be under Defense. Actually Labor and Commerce could be combined. Streamline, nip and tuck, cut where you can. NO MORE EARMARKS! Follow Sen. Demints lead and outlaw earmarks. Every dime spent should be voted on, recorded and published with no ability to redact statements or votes. Drill baby, drill! And build baby, build! We need our own energy sources- new, clean and efficient. That means nuclear, clean coal, gas, and we need to try every crackpot idea out there and all the simple proven ones too like micro and mini hydro, solar, geo thermal, wind, wave/tidal generators, etc. Let private enterprise fund it and get out of their way.
The important stuff- The Fed needs auditing yesterday! The current QE2 scheme is simply devaluing our currency by another name. It’s nuts. The problem is spending and debt. Until spending increases cease and our debt is relieved we have a problem with no one attempting to fix it.
That’s just scratching the surface.
Let ALL the Bush tax cuts expire.
Not in the village. Links, please.
Let the estate tax go back to the 1990-2000 levels.
oa,
http://www.cbo.gov/doc.cfm?index=11943
It was published in the NYT as “Social Security Payout to Exceed Revenue This Year” on March 24, 2010. Doing a Bing search for “social security outlays exceed revenues 2010” on the first page I get the story from Fox Business, Reuters, the NYT, Fidelity, MSN Money, and the CBO.