The whole point of free speech is not to make ideas exempt from criticism but to expose them to it.

Sunday, February 21, 2010

A great overview of the Federal Budget. (Hint: it's not as catastrophic as some would lead us to believe.)

Nate Silver takes a long view here and puts a lot of things into perspective. We'll all perhaps be well served to keep some of this info in mind before we launch off into the mid-term election campaigns and their corresponding talking points.

Nate's observations in a nutshell:

"So, what does all of this tell us about the US budget?

1.) The total federal debt/GDP ratio and interest rate payments (both on a percent to total expenditures and percent of GDP) are manageable at current levels. All of this has been aided by a two decade long decrease in interest rates. It's doubtful that will continue given the current pace of expenditures. Most importantly, given the current rate of spending and debt growth, changes will have to be made once we are out of the recession for sure. And that's where the real political problem lies.

2.) While mandatory spending has remained constant as a percent of GDP, it's increase to about 60% of the current federal budget is perhaps the biggest problem the US faces going forward. And as the percentage increase in medicare payments indicates, medical payments are a primary reason for the problems the country faces at the federal fiscal level.

3.) The argument that the US is taxed to death is wrong. On a percent of GDP basis the US is taxed at moderate rates.

4.) I'm surprised how unimportant estate and gift taxes are to the overall scheme of things. Even before the generous estate tax credit of the last few years (essentially exempting estates worth less than $3.5 million), estate and gift taxes are remarkably unimportant from a total revenues perspective. It's obvious they serve another purpose such as the theoretical prevention of dynastic wealth transfer."

p.s. This will be my last post as a moderator on the DecorumForum. I've not had time of late to give the project the attention and focus I feel it deserves, and so leave the project in the able hands of my good friends Mike and Bob. I'll check in from time to time as a commenter, but no longer wish to be part of "the Management." It's been fun, and thanks to all for the good conversations.


Anonymous said...

Nate's analysis, while usually spot-on in the political arena is wide of the target here for countless reasons.

Among the reasons his brief analysis ignored the impending trouble of the states & local governments that vastly over-promised and under-funded pensions and retiree healthcare.

Nate also overlooked the historical pattern of human (western) generations to really muck things up once a lifetime. Google the authors first book, Generations, to see the western pattern goes back at least 500 years.

Thad Wasson said...

Not even close Nate. Don't forget about our off-the-books accounting for SS and Medicare along with our wars and military and civilian pension obligations.

Trillions already spent to pay for a government that will not stop growing.

The only solution is to say no to programs, even those that benefit SD.

Taunia said...

Whoa...wait a minute...BF's done?!?!

I missed that entry entirely yesterday.

My apologies if my, perhaps out of line, tongue lashing was a factor in that.

I'll keep quiet if BF would continue here. With no offense to Bob or Sanborn, I think BF did a great job here, and was essential in rounding out the other two.

Maybe BF is too busy to contribute, but I think with some prompting he would continue?

Again, my apologies.

Michael Sanborn said...

Well Bill...
I understand the time thing...That's how you got on here in the first place.

In order for my plan to work...I need someone from the far left to follow in your shoes without throwing tantrums. Those are pretty big shoes to fill.

I won't be changing any accesses without letting you know. You're always welcome here.

Bill Fleming said...

Thanks, Mike. I'm not really that "far left" but I suppose in SD one could think so. Anyway, like I said, I'll keep an eye on you guys. Just don't have time to contribute the way I used to.