We Don't Have a Spending Problem

Over at Mother Jones, Kevin Drum marshals two charts showing—quite clearly—that the federal government has a revenue and aging problem, not a spending one. The first shows federal spending as a percentage of gross domestic product, from 1981 to the present:

There was a spike in spending in 2009, but that was entirely a function of the recession, when the government—as it should—began spending more on unemployment insurance, food stamps, infrastructure, and other stimulus programs. That spike was larger that similar recessionary spikes in 1990 and 2001, but that’s because the 2008 recession was the most severe since the Great Depression. Even with the Affordable Care Act and other new programs passed under this administration, spending is on track to reach the modest levels of the Clinton era by the end of Obama’s presidency.

As for revenue, a combination of tax cuts and recessions have plunged federal income receipts to their lowest levels in 30 years:

So how does this square with the wide evidence that the government will be spending more and more of its income on social programs for the next several decades? Easy: America is getting older and our taxes are too low to pay for it.

The simple truth, as Drum writes, is that “over the next 20 or 30 years, spending on the elderly is going to go up by three or four percent of GDP.” If you’re concerned with deficits and long-term growth—and opposed to simply ending benefits for the elderly—then, eventually, you’ll have to accept higher taxes and greater revenue. Either that, or you’ll have to implement death panels and turn the United States into some sort of Logan’s Run-esque dystopia. (Not really.)

This has lessons for liberals as well. A more robust welfare state—with universal health care, programs for education, and ample retirement security—will require more money, even if in broad scheme of things, this arrangement is cheaper than the alternative. For now, higher taxes on all Americans—and not just the rich—are off the table. But eventually, liberals will have to make the case for why everyone should pay more into the system. If American history is any guide, it won’t be an easy case to make.

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