From: sug6@usite-next.uchicago.edu (Patrick Sugent)
Subject: Re: Republicans bad for Economy?
Organization: University of Chicago
Date: Tue, 18 Aug 1992 23:44:23 GMT

In article <92231.143622ZEITLIN@SLACVM.SLAC.STANFORD.EDU> ZEITLIN@SLACVM.SLAC.STANFORD.EDU (Cary Zeitlin) writes:
>In Message-ID: <16847CB17.MEDELMA@cms.cc.wayne.edu>
>         EDELMA@cms.cc.wayne.edu (Michael Edelman)  writes:
>
>>>I think a better measure would be the fraction of the federal budget
>>>that military spending constitutes. Remember, it is not just DoD spending
>>>that needs to be considered; a substantial fraction of the DoE budget
>>>goes for defense, not to mention funding for the various branches of
>>>the national security bureaucracy. Does anybody have these figures handy?
>
>>If military spending as a % of GNP has been steadily decreasing, and
>>entitlements steadily increasing, doesn't that suggest that the same
>>trends should be true when the numbers are expressed as %GNP as when
>>expressed as % budget? It would be very surprising for the ratios to
>>reverse! ;-)
>
>That wasn't my point at all; I am genuinely interested in getting some
>realistic estimate of military spending (not just DoD budget) as a fraction
>of total government expenditures.

  Here is a previous article I posted on entitlements.  I have a lot of
other data, but it is easier for me to repost things. :-)

  Under Reagan, entitlements grew from $313 billion/year to $533 billion/year.
Entitlements are the true culprit in our runaway budget.  Too bad anyone
who mentions this gets unelected or Clinton making short work of them
in Florida.   (Sorry, Clinton teed me off with this one.)


________________________________


Subject: A Note On Entitlements

  After reading various posts in this newsgroup, I thought I would
jot down some brief numbers on entitlements in the congressional budget.
(Read: I've heard numbers used that don't sound quite right often enough
to prompt me to dig up some material. :-) )

  The following numbers are from _Time_ and _The Economist_.
(Also verified with a congressional budget.)


                    1992 US Spending in billions

  Entitlement Spending (Social Security, Medicare, etc.)...$728 billion
  Defense                                             .....$313 billion
  Domestic                                            .....$216 billion
  Net Interest                                        .....$199 billion

  Also, entitlement spending is the fasting growing part of the budget.
Between 1970 and 1990, real spending on entitlements has grown an
average of over 6% a year.  Discretionary spending has grown an average of
around 2% a year.  The economy grew by an annual average of 2.7% a year.
(All in real terms.)

  Currently, social security is growing by about 6% a year (in real terms),
and Medicaid and Medicare are growing at double-digit rates.

  There also exist $257 billion worth of tax breaks towards health care,
housing, employment, and retirement that could be considered quasi-entitlements.
(This money has to be made up somewhere.)

  "Means-tested" programs account for just $140 billion a year, or
one-fifth of all entitlement spending.


_____________________________________________________________



>
>>>I would have guessed that entitlements were steadily increasing, rather
>>>than undergoing periodic explosions. 

  Well, I think you are correct (but I haven't reviewed it year by year.)
The problem is, that the amount has become ludicrous and it continues to
grow at an increasing rate.  This obviously cannot continue.  It will,
eventually, collapse under its own weight.  It is just a matter of it
takes the rest of us with it.

>
>
>Government spending may have increased under Carter (as it has, continuously
>through three decades now), but I do not recall the tremendous increase
>you cite. How about some numbers to back up your claim? In any case, you
>have chosen to ignore the uncomfortable (for you) fact that the deficit
>was *not* increasing under Carter. And the deficit is what we were talking
>about since it's a central part of Keynesian theory.

  The deficit did increase under Carter.  I have a graph in front of me,
but I would appreciate it if you could post your data (since it obviously
doesn't mesh with mine.)  By year deficit levels (including '81) would
be appreciated.


>>No, I can't buy this in the least. You don't need a mythical business
>>cycle when you have striking differences in policy that repeatedly correlate
>>with economic performance.
>
> Maybe some trendy economists
>have jumped on the supply-side bandwagon, but can you really say that
>the consensus of economists is that the business cycle does not exist?

  Well, I would call the last recession mostly the result of a business
cycle.  There are certain excesses that occur during expansions that need
to be corrected.  The 80s expansion was no different than any other in
this regard (except it was longer than most.)

  However, the recession we suffered was relatively short and shallow.
(Measured by GDP growth.)  _The Economist_ now points out that so long
as we don't screw it up, we are headed for our first productivity led
recovery in decades.  This will be slower, but fundamentally more sound
than previous recoveries.

  I also like to remind people at this point that the recession is worldwide
and not just the U.S.  In fact, the U.S. is technically out with five quarters
of positive growth and other nations are still in recession.

>>Nonsense. It was the "compromise" on spending and taxes that killed
>>an 8-year boom.
>
>This is the typical know-nothing answer -- the tax increase killed
>economic growth. I expected better of you, Mike. If you recall, the
>economic slowdown had started and government revenues were low. To meet
>the Gramm-Rudman limit without cutting spending, taxes were raised.

  Well, true to some extent.  It is certainly true that the tax
increases were an attempt to stabilize the economy by showing the markets
that the government was in control of the budget.  However, it clearly
didn't work and it is a rather classic blunder to raise taxes as you
head into a recession.

>>>The media are certainly not economic genuises. They repeat the conventional
>>>wisdom ad nauseum.

  Now here is the best comment of this thread. :-)  The media makes me
crazy.  I've never figured out if they are stupid or just biased.

>
Pat


-- 
Patrick Sugent				"Cry 'Havoc!' and let slip   
sug6@usite-next.uchicago.edu		 the Hogs of Peace."
(708) 447-1771				 --P.J. O'Rourke
Newsgroups: alt.politics.elections