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What it really means to rein in spending

To listen to certain talk-radio hosts, cutting spending is simple--cut a few silly grants here and there, stop some subsidies, and suddenly we have a balanced budget.  But this post from the Cato Institute's blog suggests the fundamental problem.  Poll data suggests that the American people are willing to make cuts in certain areas; in fact, a majority would be happy to see foreign aid slashed.  But foreign aid makes up only a tiny percentage of the budget; eliminating it entirely--and most would probably balk at cutting all funds to Israel, Afghanistan, and Iraq, which together represent more than a third of foreign-aid spending--would make virtually no difference to the bottom line.

So where does all the money go?  It's not hard to figure out.  The Department of Defense and Social Security alone add up to well over a third of the total budget.  Medicare and Medicaid make up nearly 20 percent more.  Of course, those things will never be substantially cut; on the contrary, they will undoubtedly grow tremendously in the next twenty years. (I realize that the health care bill calls for cuts to Medicare, but a) I don't believe that Congress will really make those cuts, and b) all of the resulting "savings" would simply go into another government pot.)  Social Security, Medicare, and Medicaid are, unfortunately, popular, and Republican control of Congress would probably lead to increases in defense spending.

In other words, to quote John Derbyshire, "we are doomed."

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Discussions - 7 Comments

We are doomed only if politicians are unable or unwilling to attempt to educate the public and unable to dispel the chaff and deception of other politicians. In any case, failed bond sales and sovereign defaults may prove mighty educative. As Herbert Stein put it, "something that 'cannot go on forever' won't"

It's nothing more than clever misdirection to make working joes think their income taxes go to welfare moms. Nearly all of it goes to corporate welfare lest we forget the findings of the Grace Comisssion under Reagan's leadership. I believe they found that 100% of the income tax goes to service the national debt and not one red cent was used to provide services to the people.

Nearly all of it goes to corporate welfare lest we forget the findings of the Grace Comisssion under Reagan's leadership.

I've got a bridge I want to sell you.

The problem is that big program titles like "Medicare" and "Defense" hide an enormous about of graft, waste, and criminal overspending. Where is it? Mostly in nasty administrative overhead, unqualified people (e.g., dead people) being covered, and inflated costs from providers. How much richer are doctors today that they were in the mid-1950s, before Medicare?

It's a rotten system, and it's doomed to fail.

Direct quote: “With two thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government."


Its not as if the only source of revenue is the income tax, we play all sorts of taxes. The income tax came into existence in the same year as the Federal Reserve and is simply a way to service the debt on the money created out of nothing and loaned to our government.

Using defense spending as an example. Congress is not above pork spending as defense spending. Exclude grey area programs like the B2 bomber and the Paladin mobile artillery system. Congress still manages to pass pork via mandating unwanted military museums, tasking the army core of engineers to projects and not providing funds for it, forcing the purchase of items the armed forces do not want, etc.

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