Fascinating. I guess if your world view in that just increasing taxes makes solutions simple, then indeed, no spending problem is difficult.

Specific runaway health costs? This is like the golfer who says "I'd have shot 72 and won the tournament if I could putt; I three putted number 3, 6, 14 and 18........or I'd have won. Laughable.

Fair enough on prescription drug benefit. I did try to google your views on it, but didn't find anything.

I agree that we have a crisis looming... but to solve it we need to understand what is causing it. And the problem is not causes by some undifferentiated "entitlements," it is caused very specifically by runaway health care costs. All the other stuff has some pretty simple solutions actually.

--BF

I'm not disagreeing with the Trustees Report. Nice attempt to imply otherwise. I am disagreeing with your assumption of no deficits ever again in about 30 years.

Also, I think you are engaging in misdirection. My point wasn't that Social Security is in actuarial imbalance therefore bad things. It is that Medicare and Social Security are in actuarial imbalance and that coupled with large deficits for the next 2 or more years could be problematic and we should take steps now to reduce that actuarial imbalance.

Regarding posts on Bush's prescription drug program, we do have a search function on this site Bernard. And do you really think I supported that atrocity? Unfortunately I've let my site expire so posts prior to here at OTB are not to be found.

and to the original point, this ain't no Republican policy. Its the logical conclusion to Democratic wet dreams.

Of course it is. After all, the GOP has controlled the White house 28 of the last 36 years. So naturally, everything the the Democrats fault.

First, I did not know you had your own site, and would be interested in knowing its address, so I can take a read.

But look, the issue is NOT whether social or defense spending is better. Defense spending is a neccessary evil. And a total dead weight loss. Who in their right mind would want to spend a nickel if not for the realities of the world??

The real issue is this. Defense spending is the only major government expenditure I know of that behaves just as we would hope: it scales, and becomes a smaller fraction of our resources (GDP) over time. 40% at WWII. Teens in the 60's. High single digits in the 70's and 80's and low single digits now. Perfect. There are only so many oceans to defend. So many deserts to kill terrorists.

But what has happened is that we have created a social spending machine that has grown, and continues to grow without a throttle. And who is surprised? Politicians promise ever more goodies for votes.

Economies like the US are huge. Things move slowly. But over 45 years we have gradually morphed, allocating ever more resources from the military to social spending. And although TOTAL spending may have remained relatively constant wrt GDP, this is an illusion. With the rotation that has occurred, social spending is a freight train coming down the track at double digit growth rates.............and the crutch of letting defense spending scale down has only so much yet to go.

We have a runaway social spending problem of the first order.

Steve Verdon, less prone to hyperbole than I, calls it "fiscal imbalance."

I call it an effing nightmare about to consume us. Oh, and to the original point, this ain't no Republican policy. Its the logical conclusion to Democratic wet dreams.

Oh, actually, now that I reread you post I see what you are saying. Yes "social spending" has increased very significantly.

In the end, our disagreement may be on the more basic issue of whether there is a fundamental difference between social spending and defense spending. Ultimately, my view is that in a democracy, government spending will be divided up as the electorate prefers. My "concern" is not really with how it is split up, but rather with the risks associated with the government getting so big that its revenue extraction harms the economy. From my perspective, in terms of the domestic economy, I don't see any reason to prefer defense spending to say health care or welfare or whatever. We can debate the merits of those issue individually, and on those issues we probably would agree more than you might suspect. But my point is that this is not an issue of "affordability." Old fashioned welfare was a terrible devastating policy, but it was not unaffordable.

Social security is another example. I think it is a terrible system, but I don't think even as structured it is unaffordable in the sense of causing a major drag on the economy.

--BF

I will make a follow-up post on this issue on my own site so I can properly format the tables.

The short version is that yes, the percentage of the federal budget devoted to defense has declined and that devoted to social programs has increased dramatically. That said, the United States percentage of global military expenditures has also increased dramatically, and by any realistic measure our military dominance has never been greater... so we're not starving the military either.

But no, spending has not run away and the overall level of federal government spending is roughly in line with what it has been for 50 years. You claimed that it was basically a continuous increase. It has not been. And as a percentage of GDP the federal budget is within a couple of points of where is has been since the mid-1950. It has not doubled. It has not even gone up by 50%. I think that the fact that the federal budget as a percentage of GDP has increased by about 15% (from 18% to 20%) since 1957 is hardly an indication of runaway spending, especially since most of that runup occurred in the 1960s.

I was not talking about the future. Indeed, I believe we facing a genuine crisis with entitlements going forward, about 95% of which is related to health care.

The entire post WW II revenue (taxing) statistic as a percentage of GDP is 17.9%. However, we have some hangover from the WW II effect, and we have recent increases, which pump the number up. The truth is, if we set the stage: from 1955 through 1965 we ran in the 16% - 17% range. Today we are just above 20%. (And the spending number isn't 20% in 1955, BTW. In the decade 1955 - 1965 spending ran right at 17% of GDP, the proverbial balanced budget.) Said another way, from a baseline of the decade 1955-1965, in the last 48 years, since the Great Society implementation, as a percentage of the size of our economy, we are taxing 3.5/16.5, or 21% more. We have hardly starved government of revenue.

More germane to the argument - in 1965 we spent about 9% of GDP on defense. We now spend about 4%. We have rotated our expenditures, freeing up 5% of GDP from defense to "something else," social spending of course. And, as I pointed out previously, from a standing start in 1965, we are spending today on Great Society programs 40% of the current budget, and about 9% of GDP. That's a 14% of GDP change in composition of spending from 1965 to today. That's 14% out of 20%; that's absolutely huge. And it is accelerating.

We absolutely have a runaway social spending problem. And if we look at estimates for 2015, 2020, 2030 etc we see estimates that the freight train called the Great Society programs alone, will take us to spending of 15%-20% of GDP.

No runaway spending problem? You must be joking. I though you had better facility with numbers?!

Now Steve: Look, if you disagree with the assumptions of the Trustees, then say which. Do you think the economy will grow at a slower rate over the next 30 years (1.7% per year) or at about the same rate (2.0% per year). If the latter, there is no problem with Social Security, if the former then there is a problem the size I said before... unless you disagree with some other assumption of the Trustees. Yes, it is unlikely that the rest of the budget will be in balance, though in fairness, under Clinton we ran surpluses. But the crisis is not Social Security's fault. It is the fault of reckless tax cutters like GWB and his fanboys on this and other boards.

About health care... indeed... it will be hard to solve and Obama's promises may lock him into some very costly and silly initiatives. I will argue against them if it comes to that, as I argued against Bush's prescription drug benefit, which was much more dangerous to our fiscal health than anything Obama has proposed yet. If possible, could you send me the links to your passionate attacks on Bush when that passed?

Anyway, you avoided most of my substantial points and reiterated your talking points, but only after labeling me insane, or at least beyond reason. Gee, I feel special now. Do you feel like Young Mr. Yglesias or Professor DeLong?

You and are have been arguing about whether our current recession will be the most severe since the Great Depression (my argument) or not (yours). I don't see why/how that should affect our assessments of the next 50-75 years, which is the timeframe for discussions about Social Security.

Look at the last 64 years and tell me what you see in terms of national debt and deficits? The idea of not having deficits is the exception not the norm. So I still think, even in the long term you are being overly optimistic.

And yes I have read the Trustee reports and the picture for Social Security isn't very good. It will add alot of debt to our national debt and will start doing so fairly soon. By itself it isn't horrible, but we don't have just Social Security to deal with, but also Medicare. Together they present a very, very serious problem. But maybe we can solve the Medicare problem completely and not have to deal with Social Security. Again I think that is wildly optmistic. And it doesn't just depend on economic growth rates. For God's sake not too long ago we had many on the Left wanting to increase the fiscal imbalance in Medicare by a rather large amount. And Obama wants to expand health care coverage without addressing why health care costs are rising so rapidly. Increasing coverage and access is a sure fire way to make health care costs go up even faster thus exacerbating the problem in Medicare.

I still think you are wildly optimistic.

All I heard here then was that he was a mad socialist intent on reversing all of the policies of Reagan, Bush, and Bush by raising taxes on the wealthy.

There's some truth there,(he is a mad socialist).

Now it turns out he's really a Republican in disguise! Wow!

If you compare him to the way some Republicans have acted over the the last few years, you may be right.

To me, fighting over the problems, and trying to assign blame, which can be attributed to all politicians, is really not the answer.
Therefore, trying to assign relief to a politician who just wants to do more of the same, is at the very least, unrealistic.
This is not about a particular party, it is what about what is best for this country. What republicans and democrats have done in the past; and doing more of the same, just ain't going to get us to where we need to be.

We don't want political insanity on steriods.
If it was wrong for republicans, wrong for democrats, it was wrong in the past, wrong in the present, and will do us harm in the future.

Feeling that a few people, one party, one philosophy has got us to this point, is folly beyond folly. Hating one or two individuals, the opposition, to justify current standards, is just wrong.

Yes, in real dollars federal revenue has increase... because the economy has grown. But as a percentage of GDP, federal outlays are essentially unchanged since the mid-1950s and down from the late-1960s. The federal government has been spending roughly 20% of GDP for 50 years!

Our deficits are almost wholly a function of changes in tax policy and trends in economic growth. They are not a function of "runaway" spending.

I don't blame anyone for running deficits in recessions because recessions depress tax revenues and kick in some (usually relatively minor) counter-cyclical spending (though not this time, lol). But running deficits in good times is wholly a function of irresponsible tax policies, and unfortunately irresponsible tax policy has been almost the exclusive province of Republicans of late.

Call it partisan if you want. As I say, facts are facts.

And Charles... I think you're beyond reason. If there is a Republican president and Democratic congress, it is Congresses fault that we spend too much. If a Dem president and GOP Congress, then everything is the President's fault. If Clinton was hollowing out our military, why didn't the GOP Congress do anything about it? Because... the system is so big that only the executive branch has the capability to put together a budget, while Congress put together a wish-list of pork to add to it. That is the nature of the beast. The thing is... all the pork, taken together, is chump change. Congress really does only affect 2-5% of the budget, and I swear to you, you will not find a serious analyst on either side of the aisle who argues otherwise. We live in a presidential system, and the president's budget is, de facto, the national budget.