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70% of U.S. Government Spending Is Writing Checks To Individuals
An anonymous reader writes with this excerpt from Investor's Business Daily:"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high. In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP. What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama." It's very hard to lay blame on only one part of the U.S. government, though; as the two largest parties are often fond of pointing out when it suits them, all spending bills originate in the House.
I hate to be the guy saying "why is this on Slashdot", especially since I've been posting these very budget numbers here for years, when it has been relevant to the thread, but WTF? This is a blatant political click-troll story. It's not news (been this way for many years), and it's not "for nerds".
Sure, I guess we could rehash the same old "NASA's budget is trivial in the scheme of thing" posts, but really.
Socialism: a lie told by totalitarians and believed by fools.
In 2009 Slashdot turned into an internet libertarian website targeted to IT personnel. Didn't you get that memo?
Also, one of the listed examples was "farm subsidies". That is not something that can be assumed to be a "check to a person". A lot of large farms are corporate. So farm subsidies in some cases are just corporate welfare.
Perhaps this "checks to people" idea assumes that corporations are people too.
Also not sure what this is doing on Slashdot...
A Pirate and a Puritan look the same on a balance sheet.
Riiight,
because after 40 years in the military, getting a pension check means you're a "Taker".
F.U. and Romney too.
So the richest 1% receive approximately 0.4% of the money. Not really surprising or interesting.
mandatory (adj): Obligatory; required or commanded by authority.
As the article points out, most of this is going to mandatory programs, which would be the same even if it were Romney or McCain or Sarah Fucking Palin in office.
What this means, for those dumb enough to believe what they read in IBD, is that what Obama has achieved is to reduce the amount of spending on the discretionary side. Agriculture, down 8%. HHS, down 7.6%. Even Homeland Security, down 2.8%. The Pentagon is down over $100 billion.
But hey, by all means, let's make sure that this looks like Obama's doing a bad job, because that was clearly the author's goal before he wrote it. The rest is just a matter of selecting the data until it proves what you wanted it to prove.
When we hear a serious discussion of how to cut benefits (something other than "the poor should die" and "let's give it all to Wall Street, because they're so freaking responsible"), we can have an actual conversation. But articles like this show why anything from Obama, no matter how reasonable, is doomed even before it gets printed.
Much of the remaining 30% was things like defense and infrastructure -- this may be bloated, but in theory it benefitted fuure generations, so it was considered ethical to borrow from them to pay for it. But wealth transfer payments?
That is flat-out current generations refusing to carry their own weight.
By the way, taxing the rich won't cut it -- taxing 100% of the rich's income would gain you an additional $500 billion a year (assuming they continue to work for free, good luck with that and keeping their salaries pointlessly high). This is still hundreds of billions a year short.
No, every elected politician knows you have to tax the middle class to pay for the middle classess' wealth transfers (social security, whether retirement or disability).
And these politicians are cowards because they are a huge and motivated voting block.
No, we, the middle class, have to decide on an amendment to prevent ourselves from borrowing from our children. We won't, because we, and our politicians who we elect, are weak.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
What I have a problem with is that I know several illegal residents here with their entire family living off of state and federal programs. One of them hasn't worked in years and hasn't needed to.
Now they don't live like the middle class, but sure live better than some of the homeless people that I have come across. They qualify for these programs because they have never had a job before.
What would you rather do? Work hard in your home country and live in poverty or come to the US illegally and live slightly above the poverty line and never have to worry about working at all?
I have a friend who has run out of unemployment insurance and has no possibility of a job in the near term because he is over qualified for almost everything. He is in the process of losing all that he has ever worked for.
Tell me you don't see a problem.
Have you even looked at the budget breakdown? Pensions are the #1 expense. Instead of 40 years in the military we're probably closer to the point where people's retirements are longer than their actual years of service. You only need 20 years of service in order to retire younger than 62. The average retirement age of a federal employee is 60 but what if someone retires in their 50's or even 40's and then ends up living into their 90s? The results can be fairly extreme. http://www.usgovernmentspendin...
Ummm No. In the Bitcoin debates I have always been liberal on money creation – that some low level inflation is better than low level deflation. But never give control of the printing press to politicians. They will turn on the tap and inflation will spiral out of control. See Germany in the interwar era, or Zimbabwe a few years ago. Deflation may enrich the wealthy (as you point out), but high inflation destroys and savings of the poor and long term investments for the growth of tomorrow.
taking $2.6 trillion from some and handing it back out to others.
Ummm, what else is the government supposed to do with the money? If it gave the money back to the same people who paid the taxes in the first place, it wouldn't make much sense, would it?
This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high.
Including medicare, medicaid, and Obamacare? So the payments for drugs and health care are counted as going directly to individuals. OK, and other than the military, what's left? Highways, schools, NASA, and the post office -- and we've been cutting all of those.
So in short, article is saying that taxes are money transfers (which they had better be, or they'd be really stupid), and that health care and social security are going up, and everything else but the military is getting cut. That's news?
an eye-opening fact
Maybe if you're retarded.
Stop-Prism.org: Opt Out of Surveillance
Anyone who thinks the fed "creates [money] out of thin air" and as a consequence is able to "raise revenue without increasing taxes or borrowing it" has undoubtedly received their economic education from a single source, namely youtube.com
When the federal reserve increases the supply of money, inflation is the net result. The net result of the fed increasing the money supply and inflation, is a tax on everyone who currently owns US dollars, as each of their dollars now purchases fewer real goods.
It doesn't come from thin air at no cost, no matter how many youtube videos you watch that claim it does, or what liberal college professor you overpaid to tell you it does. If you learned this in college, demand a refund on your tuition.
And it is not 1870 anymore either.
"Direct payments to individuals" would seem to include your pay during those 40 years too. It's obvious to me that the wording is chosen to be deceptive.
Yet if you point this fact out, you lose a presidential election...
Actually, there may be a confounding factor (this is a hypothesis, anybody who has real numbers is welcome to step forward to argue for or against):
Assuming you aren't inimically opposed to the concept of the welfare state (whether because you think that it's actually a good idea, or whether you think that it's relatively cheap insurance to keep a fundamentally capitalist economy with slightly higher tax rates to buy off the proles, irrelevant), the state basically has two options for 'redistribution':
1. Actually comparatively high taxes on individuals and corporations, used to fund a variety of not-directly-cash public services(eg. national health system, cheap or free education, etc.).
2. Avoid the flack associated (in the US) with robust public-sector offerings, and sneak in your social welfare spending primarily in 'emergency' programs (WIC, etc. which pay in scrip; but have nontrivial USD value once you discount them for being able to purchase only certain classes of goods) and in 'hand up for the virtuous poor' type things ("earned income tax credit", assorted subsidies for small business loans, edging up to programs that are basically a sop for the middle class, like mortage related deductions).
Now, lest anybody misinterpret me on this point: I Think It Is A Bad, Bad, thing that nontrivial swaths of the US population are basically so damn poor that the only cash worth squeezing out of them is sales taxes and check-cashing joint fees. However, barring a solution to that problem, it would be my contention that (like our absurd 'We should really have universal health care; because our current system is an utter clusterfuck delivering bad results for crazy high prices, and tying workers to their jobs; but universal health care is commie socialism, so let's have a crazy arrangement where the government 'launders' universal health care(at a tidy markup) through the incumbent private insurance companies!') our 'let's see if we can get some of the benefits of a welfare state without courting the unpopularity of calling it that, and without the clout to do anything about the ever-widening wealth gap' approach has left us with a singularly dysfunctional creature, neither fish nor fowl.
When a substantial portion of the money supply is out of circulation, printing money taxes that out of circulation money and gets it back into circulation, which can grow the economy. So while the effect you describe exists, it is not the only effect that must be accounted for. When the bulk of money in the economy is not circulating, the economy shrinks, and that's at least as damaging as the value of money shrinking.
Let's roll back the clock and have them ONLY to only be allowed to fullfill the narrowly defined duties and responsibilities given by the US Constitution, things like defense, border protection, etc.
Bring the power back to the states as it is supposed to do, and we'll cut most of this spending nonsense out.
At the very least, let's at least narrowly define what "interstate commerce" means, and roll back the laws that are based on the overreach of that idea.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
The bottom line is that the term "government spending" is highly misleading, since the government is exercising no discretion on how it is spent... the government simply sends it to individuals (mostly old folks) who decide what their individual priorities are and where to spend it.
Inflation certainly grows the economy, as all assets denominated in dollars, see their valuations rise, because the value of a US dollar has fallen.
Whoopity do ... the GDP number went up. This isnt real growth. Your example of 'promoting economic activity for the sake of economic activity' is also not real growth, when one defines real growth as the production of wealth. If this were true, as a nation, we could become exceedingly wealthy simply by expanding the money supply, issuing monthly checks to ourselves, and buying as much consumer crap as we can each month. Certainly you are not claiming that behavior generates real wealth ?
I am not arguing against the concept of monetary expansion and contraction, or its usefulness when utilized responsibly, as you seemed to provide an example of.
I am however pointing out the ridiculousness of thinking it "comes from thin air" at "no cost." I suppose when grandma can't buy a single carton of eggs with her entire months social security check, we can just blame it on evil greedy corporations right ?
"Printing money" is a tax, same as any other, in color if not name, and someone pays the price. The same is true of the opposite action of "destroying money." It to is a tax, and someone pays the price. And no matter the form of tax, there will always be a politician claiming its for everyones benefit, even tho, someone will be getting fucked, while someone else gets to do the fucking sans lubricant.
Every action has an equal and opposite reaction, and there are no free lunches.
Bring the power back to the states as it is supposed to do, and we'll cut most of this spending nonsense out.
Because states are not run by the same democrat and republican politicians running Washington?
Which is why this statitistic is utterly meaningless without a thorough breakdown of where the checks go and why.
I mean technically every tax payer who gets a refund gets a check from the government, but (barring EIC) it shouldn't really count because that money was never the governments in the first place.
All the people who work for the government? I presume most of them get checks or they would stop showing up to work.
Social Security?
Military pay and pensions?
But I guess we are supposed to assume that 70% of the money we pay in taxes is spent on welfare on top of the 50% that goes to foreign aid and 30% on interest and 400% on nasa and 50000000% on foreign wars....
The problem with your reasoning is that it presumes that money is given in exchange for work of equal value, but of course the very basis of business is that you pay less than what the work is worth, and the difference is your profit.
You have a very strange notion of how business works. The idea is that you pay more than what the work is worth to the worker, and charge less than what the product is worth to the customer. The difference between these two is your profit. It works because the same good can be worth different amounts to different people.
The middleman isn't getting paid for nothing, either. He provides value to the worker in the form of a predictable paycheck, and value to the customer by organizing workers to produce the desired goods. Without him the (now self-employed) workers would have to go out and find individual short-term jobs on their own, and customers would be limited to such goods as can be produced by individuals or small, close-knit groups.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
The problem with your reasoning is that it presumes that money is given in exchange for work of equal value, but of course the very basis of business is that you pay less than what the work is worth, and the difference is your profit. So this notion of a 1:1 connection between money and value is simply mistaken, and not only that, it's impossible in a capitalist society.
No you don't understand capitalism.
In a free market people don't exchange something of lessor value for something of greater value or vice versa, one of the parties would never agree. What happens is we meet and discover we value things differently.
If I hire you do a job, I do so because I value the "work" less than my money. That might be for any number of reasons: maybe I don't have time to do it myself despite the need; maybe I have a lot of money I don't need for anything else; maybe I don't know how to do the work and so If I chose to invest time instead of dollars the costs would be much greater; etc.
You on the other hand have offered to do the work because you have time, and want something else more and believe that you could satisfy that if you had more money. You value your time and labor less than my dollars.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Except that this fact isn't correct, which makes me wonder if anyone bothered to fact check the original article. The article states that 38.6% of 2.6 trillion is transfer payments in the form of medicare and medicaid, that's about 1 trillion for the mathematically challenged. That encompasses basically all medicare and medicaid outlays. The problem is medicare and medicaid outlays are not payments to individuals. For example 26% of medicare outlays are to hospitals, 23% to insurance companies for medicare advantage, 13% to physicians and so on. So the article is factually wrong, a fact that I think will be overlooked by everyone.
"Technology.....the knack of so arranging the world that we don't have to experience it." Max Firsch
How many? Do you have stats on this? Furthermore, how much would it cost to fix this? Would we actually end up saving money?
There are plenty of stats on the subject, and the amount of pervasive abuse is also apparent.
But you can't cite any stats.
Therefore, many of us would conclude:
1. There are no statistics.
2. You're full of shit.
It's a lot easier to hold state reps accountable than the 48 senators and 434 representatives that don't represent me.
It's not that state politicians are more moral; it's that their power is more limited. Less power = less corruption - and they have 49 competitors, which are relatively trivial to move between (compared to moving to a different country, anyway).
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
Proof that Forbes lies? Because looking at Apple's published, audited financial information, I see an income before taxes of $17.7 billion - and they pay $4.6 billion in taxes, about a 23% tax rate. Now, if you are privy to some secret information you could make history and become a "Woodward and Bernstein" level famous journalist by revealing counter information and having Tim Cook and the rest of the executive team sent to prison for violating SOX laws...
It seems to me that Forbes is telling the truth. And the published, SOX-compliant reporting from Apple backs that up.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Sure, when the ratio of unproductive old people to productive young people increases, the burden on the young people increases. This is true whether your accounting of chits uses dollars, entitlement programs, social customs (obliging children to support their parents directly), or anything else. There is no avoiding it. The only real questions are how to distribute the burden among the able-bodied, and how quickly the assets of the old are transferred to the young.
First, central bankers have shown a remarkable restraint. There haven't been ANY hyperinflation episodes in developed countries for more than 50 years. Even in developing countries or xUSSR countries most hyperinflation episodes are linked with political upheavals.
In fact, right now ECB doesn't print _enough_ money - inflation is way under the targeted level, threatening to go into outright deflation.
Correction: Someone pays them to work under the table. The same person who won't pay you to work above the table.
May the Maths Be with you!
In fact, right now ECB doesn't print _enough_ money - inflation is way under the targeted level, threatening to go into outright deflation.
Have you been shopping for food in the last few years? All the important stuff like food, gas, heat and shelter sure seems to be going up faster then claimed. Or perhaps it is offset by the luxury goods that many or most can't afford or need to buy very often. I don't care if yachts and big screen TVs are getting cheaper. I do care that my income is flat and groceries keep going up.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Aah. Anybody remember Schoolhouse Rock?