Friday, February 3, 2012

Follow the Money


I stand corrected for misreading the trend in federal spending (now you know why I majored in English in college). The CBO indeed estimates that federal spending as a proportion of GDP will remain at nearly 23% for the foreseeable future, a level significantly higher than the historical average of around 18% as your 1st chart in “Hey Big Spender” points out.

But look more carefully at where the spending is coming from. Discretionary outlays (defense plus everything but the entitlements) are actually expected to fall through the next decade from a high of 9.4% of GDP (the result of the hated stimulus) to a low of <6% by 2020.  What increases is the 1) the cost of servicing the debt which doubles to 2.6% of GDP by 2013, and the cost of the entitlements, especially Medicare, which triples from 1970 to 2020 estimates.

So the Obamalytes might not be doing a great deal to alter this trend (and they can faulted for that in the long run), but they didn’t create it. These data also reinforce the cold, hard reality that any effort to reign in federal spending that ignores the entitlements may provide interesting political theater, it has as much chance of succeeding as Giants will have running the football on Sunday.


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