10 ms·

> How do you square that with the fact that spending as a percentage of GDP is only slightly elevated compared to the historical average...? Why should it scal

• Terr_ 2y ago
  > Why should it scale linearly with GDP? I GDP per se, maybe not, however we should still expect it to scale with the costs of services and goods that are correlated. Ex: If the dollar price of rent doubles, then dollar expenditures to keep the elderly from dying in ditches will likewise double, even with no change in population.
  • cwalv 2y ago
    GDP increases are generally measured in real (i.e. inflation adjusted) terms, so a doubling of rent costs don't imply a larger GDP. If we're talking nominal GDP, then I'd agree we should expect gov expense to increase as well.
    • jjk166 2y ago
      Inflation refers to the money supply and is one number applied to everything in the economy. It does not account for things getting legitimately more expensive. Rent can go up faster than inflation, indeed we'd expect it to as presumably buildings are built or improved to higher standards and the surrounding neighborhoods have improvements which make the local real estate more valuable. Likewise for many other goods and services.
• LargeWu 2y ago
  Scaling with GDP, rather than population, implies that government spending is scaling with the country's ability to provide services commensurate with prosperity.
  • enriquec 2y ago
    Who said the problem is solely deficits? I don't think spending should just "scale" with anything and there is empirical evidence that that is a horrible way to run an economy. You are literally just suggesting we spend more no matter what. Obviously, there is a massive difference in types of spending right? And we have an incredible amount of bad spending. In fact, in places like public education and health, we continue to spend more to get worse outcomes. You're making large, sweeping generalizations and most of the positions espoused are more political than scientific.
    • LargeWu 2y ago
      "Bad spending", according to who? Conservatively, 20% of the nation's wealth goes to the top 1%. The people who need it the least. I can buy the argument that we could be more effective with spending, but not with the idea that we need less wealth transfer from rich to poor.
      • dcow 2y ago
        The entire premise is to cut wasteful, corrupt, and ineffective spending. I’m sure nobody will agree with every single line item cut, but generally throwing money away on ineffective and fraudulent spend isn’t contributing to wealth transfer. Putting “bad spending” in quotes like none of the spend being cut is actually bad is disingenuous. If you tax the wealthy and get $100, but 95 of them end up in landing in other wealthy people’s pockets along the way, the people who need it aren’t winning. if you can remove $90 of waste, give the people who need it $20 instead of $5 and spend $5 to grease the wheels, you’ve cut spending 3 fold while transferring more wealth.
        • bandrami 2y ago
• JumpCrisscross 2y ago
  > Why should it scale linearly with GDP? It doesn't have to. But GDP is a good proxy for the tax base. If the problem is deficits and spending isn't increasing linearly with GDP, that suggests the problem is with taxation. Not spending.
  • cwalv 2y ago
    Another factor is cost of debt. In a decreasing interest rate environment it's possible to run with increasing deficits without any major issues, but once you bounce off zero, even if thos deficits are not currently a problem, projections show that they will be.
  • throwawaymaths 2y ago
    spending doesn't take into account debt payments though, and those snowball.
    • JumpCrisscross 2y ago
      > spending doesn't take into account debt payments Spending is related to debt only inasmuch as it exceeds taxation.
      • brightball 2y ago
        I’ve seen several reports recently that the interest on our debt will exceed the defense budget within the next couple of years. Is that not accurate?
        • JumpCrisscross 2y ago
          > several reports recently that the interest on our debt will exceed the defense budget within the next couple of years. Is that not accurate? This happened, I believe, in FY 2024 [1][2]. We're currently running a 6.5% primary deficit/GDP [3]. With real GDP growing around 2.5% a year [4], that means we need to cut about 4% of GDP, or $1.2tn [5], to stabilise our debt/GDP ratio. That's two Medicaids [6]. (Which would probably trigger a recession.) [1] https://comptroller.defense.gov/Portals/45/Documents/defbudget/FY2024/FY24_Green_Book.pdf https://comptroller.defense.gov/Portals/45/Documents/defbudg... $842bn [2] https://budget.house.gov/imo/media/doc/the_baseline_and_interest_costs.pdf https://budget.house.gov/imo/media/doc/the_baseline_and_inte... $870bn [3] https://bipartisanpolicy.org/report/deficit-tracker/ https://bipartisanpolicy.org/report/deficit-tracker/ [4] https://fredblog.stlouisfed.org/2024/06/how-much-did-the-us-economy-grow-last-year/ https://fredblog.stlouisfed.org/2024/06/how-much-did-the-us-... [5] https://fred.stlouisfed.org/series/GDP https://fred.stlouisfed.org/series/GDP [6] https://www.pgpf.org/article/budget-explainer-medicaid/ https://www.pgpf.org/article/budget-explainer-medicaid/
• digitaltrees 2y ago
  It scales linearly because the same ratio of services to people continues. There aren’t suddenly less kids to educate, less elderly that need health care or less cases in federal court as the population grows. —- As someone that has been in healthcare for 12 years it’s broken because of the corporate structure and administrative state of companies. The payors and providers share the same incentive to raise rates because they each collect a percentage of premiums. This is a solved problem in every OCED country in the world except here. RFK isn’t going to fix this, he hasn’t even labeled the problem correctly. He has some ok ideas around nutrition but the rest of his ideas range from futile to dangerous. —- Corporate tax contributions aren’t at fair levels the national debt is increasing even while spending isn’t. They get access to markets created by society and government and yet as debts increase their ratio of tax payments is going down. The fair level would cover social service costs. I haven’t even gotten to the companies that receive subsidies or pay workers so little that they are in social support.
  • cwalv 2y ago
    > It scales linearly because the same ratio of services to people continues That would be scaling with population, not GDP. > The payors and providers share the same incentive to raise rates because they each collect a percentage of premiums This must be an oversimplification. Why would insurers ever reject a claim, or spend time negotiating lower rates, if they're only incentivized to see health costs increase?
    • mlyle 2y ago
      No, because the level of services and cost to provide them scales also. Inflation. What paying workers costs. What is considered an “acceptable” level of poverty vs abject poverty as we get richer. New, expensive medical procedures. And as the world gets richer, defense gets more expensive. We can’t pay 1930 salaries to workers, field a 1930s army, nor would we consider it humane for our elderly to end up with an impoverished 1930s standard of living with 1930s medical care. Inflation is misleading for these purposes, too, because it includes hedonic adjustments. So a new better procedure or bigger apartment costing 40 pc more might only be 10 pc higher from an inflation point of view, even though you can’t really buy the old one. Re: insurers— it is an oversimplification. Suffice it to say they are at scale where they have market power and thus don’t price where p=mc, and the regulatory pressures and price opacity push them even further away from efficiency. They are not completely insulated from costs or market pressures, but it’s fairly close.
• unclebucknasty 2y ago
  >Why should it scale linearly with GDP? I can see an argument that it should scale linearly with population (maybe) That does seem more intuitive, but I think throwing GDP in the mix is intended to measure something different—kind of our theoretical ability to bear the cost. >but if GDP per capita increases, you could also expect better tech/productivity to allow gov spending per capita to decrease. To some degree, yes. But, this potential decrease is limited by the proportion of our spending represented by direct transfers, such as Medicaire and Social Security.
  • AnthonyMouse 2y ago
    Medicare is very much not a direct transfer. It's highly dependent on the cost of providing healthcare, which, if reduced (e.g. through regulatory reform) would allow the same value in benefits to be provided at a lower cost. Social security is a direct transfer, but it's also... not a very well-targeted program. The nominal purpose is to prevent indigent retirees from being on the street, but then it not only makes payments to the retired Bill Gates, those payments are larger than the payments people who had made less money will receive. A major efficiency improvement would cause everyone to receive the same payments. That would face obvious opposition from the affluent retirees who are currently receiving payments and spending them on luxury vacations etc., but it could certainly save a lot of money without at all compromising the goal of the program.
    • unclebucknasty 2y ago
      Medicaire is not fully a direct transfer, but not for the reason you mention. But, on the substance, you're correct that it was a horrible example, because the outlay is influenced by a highly inefficient system. Feel free to ignore. My larger point to OP was that, the higher the proportion of our spending that is represented in transfers, the less likely it is that the same general technology and productivity gains that lifted per capita GDP would likewise decrease government spending per OP's assertion. But, I missed the mark a second time in my comment by failing to mention that very little of those private sector productivity gains would flow to any government spending by osmosis. Beyond true direct transfers, other services would require regulatory change (to your point) or a review of specific government processes. So, in any case, there's little reason to believe that per capita GDP increases would cause a corresponding reduction in government spending. They're coupled very loosely, if they are at all.
• terribleperson 2y ago
  There's a lot of other data on the site the graph in 4 came from. I put together my own chart comparing corporate tax receipts to annual corporate profits, and it doesn't look any better. Looks worse, in fact. I have successfully convinced myself that corporations are not, in fact, paying their fair share. See the CPROFIT, CPATAX and FCTAX charts.
  • AnthonyMouse 2y ago
    To understand what's going on here, compare corporate income tax with VAT. These are very similar taxes: A business takes its revenue and subtracts its expenses, the tax rate is applied to what's left. The distinction is that VAT is paid to the jurisdiction where the corporation's customers are, whereas corporate income tax is paid to the jurisdiction where the corporation files paperwork. It should be obvious what happens when you do the latter: International corporations start filing their paperwork in the countries with lower tax rates. To fix this you need to tax corporations using a different kind of tax which is tied to some actual activity happening within the jurisdiction, which is what the US has been doing piecemeal rather than all at once, with corporate income tax playing a smaller role as time passes.
    • Majromax 2y ago
      > To understand what's going on here, compare corporate income tax with VAT. Under classical economics, there's also another effect at work. Corporate income taxes are capital taxes, whereas the VAT is a consumption tax. Under "spherical cow in a vacuum" economics, capital taxes wind up reducing wages in equilibrium. The idea here is that investors care about their after-tax return, and if corporate taxes (on profits) go up they'll simply forego less-profitable investments to keep the marginal return on capital at the right level. With less capital investment, workers are less productive, and under the same spherical-cow assumptions workers are paid in proportion to their marginal productivity. Conversely, VAT is assessed on consumption but not investment because corporations receive a VAT rebate on their inputs. The same "taxes are a disincentive" effect orients the economy towards investment (on the margin) and away from consumption. Capital intensity, productivity, and wages increase in equilibrium. Reality's messier, of course, and economic academia engages in lively debate about the real incidence of all of these taxes.
• shadowgovt 2y ago
  > you could also expect better tech/productivity A lot of government service does not scale that way. When a veteran needs help getting groceries, or getting to the VA, or has to go into long-term care, for example, there isn't technology to scale up a human being helping them with the groceries, or the transportation, or the nursing. The government mostly serves human beings and the options for scaling that problem domain (which aren't dehumanizing) are limited.
  • AnthonyMouse 2y ago
    There kind of is though. There are now grocery delivery services that amortize the cost of the trip by delivering groceries to multiple people, and self-driving cars. Moreover, a major role of the government is record keeping, which computers have made dramatically more efficient. Many of those roles have in fact been replaced in the government, with the savings being reallocated to new spending rather than returned to the public. And many of them haven't been but could be; take any instance of something that could reasonably be done via a government website only the website doesn't support it or is broken so instead the government is still paying a large staff to do it manually.
    • shadowgovt 2y ago
      Self-driving cars aren't nearly ready to solve this problem. Besides the fact that they don't work yet (source: I'm working on it ;), a self-driving car can't bring the food to the door because the veteran is in a wheelchair. It can't knock on the door, have short chat, ask about the wife (who is deceased five years), and when necessary... Call elder care services when the veteran says he just talked to her yesterday. None of this is part of the formal job description; it's the stuff that keeps real human beings from "falling through the holes" of the social safety net. There's a lot of the web of government support of people that doesn't scale because the human-to-human contact is part of the point.
      • AnthonyMouse 2y ago
        > Besides the fact that they don't work yet (source: I'm working on it ;) They don't work everywhere all the time. They clearly exist; they're out there on the roads. > a self-driving car can't bring the food to the door because the veteran is in a wheelchair. It could, however, deliver the veteran to their appointment, in the many cases where the path between their home and the VA is one of the ones a self-driving car can already navigate. Grocery delivery, by contrast, could still be done by a person, but modern logistics technology allows that person to deliver groceries for multiple people with one trip to the store. > It can't knock on the door, have short chat, ask about the wife (who is deceased five years), and when necessary... Call elder care services when the veteran says he just talked to her yesterday. That is an entirely different service. To see why, consider the veteran who has that problem but has never needed (or anyway requested) to have groceries delivered.
• harimau777 2y ago
  I'd argue that we shouldn't expect government expenses to be effected that much by advances in productivity. Government services largely exist to handle situations that are inherently inefficient (disability, national defense, civil rights, education, elder care, etc.). What's the argument that corporations should be laying a lower share of the GDP? Due to their greater proportionate wealth, corporations and the wealthy can better afford to pay. They also tend to disproportionately benefit from the government.
  • christophilus 2y ago
    The tax code can be looked at as written by the rich to pad their pockets. But it can also be looked at as the main lever by which the government manipulates us to get what it wants: affordable housing, high employment, cheap energy. There are a lot of real estate, business, and exploration / mining tax breaks presumably because the government wants to incentivize that activity. The book “Tax Free Wealth” covers this and points out that the tax code looks pretty similar across all western countries when it comes to the way the activity the code is trying to stimulate. I personally don’t like the tax code being used for such manipulations regardless of the motive behind it.
    • 20after4 2y ago
      Most politicians are doing all sorts of real estate deals on the side. That’s why there are all kinds of tax breaks and incentives for real estate. It’s not to encourage such activity, but rather to directly benefit themselves and their associates.
  • toofy 2y ago
    They absolutely benefit significantly more, from roads for shipping/traveling to educated workforce, to a more stable economy, more stable international trades, to a more stable electrical grid, plumbing, more stable buildings to house their business, and on and on etc… etc… it’s absolutely wild to me how people fail to see how much more companies benefit from taxes.
  • antihipocrat 2y ago
• SmirkingRevenge 2y ago
  > Absolutely, it should be looked at! I don't think it's a trivial problem to solve, but as RFK was confirmed as the secretary of HHS we should expect a lot of scrutiny on big pharma and insurers. Eh, we're going to see a lot of scrutiny on proven vaccines and other proven medications that RFK harbors a lot of delusional beliefs about, because he's a conspiracy addled pudding-brained nutjob.
  • y-curious 2y ago
    And we've devolved into ad hominem arguments 2 replies in. I don't think this is the forum
    • stouset 2y ago
      The problem is, RFK is a conspiracy-minded nutjob. If you want to have an honest discussion there’s no real avoiding that fact.
• pwagland 2y ago
  >> How do you square that with the fact that spending as a percentage of GDP is only slightly elevated compared to the historical average...? > Why should it scale linearly with GDP? I can see an argument that it should scale linearly with population (maybe), but if GDP per capita increases, you could also expect better tech/productivity to allow gov spending per capita to decrease. Over time it _can't_ scale linearly with population, unless you decide to not adjust for inflation. It _could_ scale with population and inflation, assuming that you agree that you don't want more services from your government. Don't forget, a percentage of that GDP increase is just inflation. Most people, as they get richer, want to have services increase, as they can afford to pay more. For example, they go to nicer restaurants, nicer hotels, maybe they get a massage, where previously they would not have, etc. This is largely also true of a population. We expect that our children will be better educated. We expect better roads/bridges/other infrastructure. Heck, we might even expect better public infrastructure such as trains, buses, etc.
  • cwalv 2y ago
    > Don't forget, a percentage of that GDP increase is just inflation. By design, GDP measurements are adjusted for inflation, unless you're looking at 'nominal GDP' (which nobody does because it's pointless). > Most people, as they get richer, want to have services increase, as they can afford to pay more This makes sense. But I'm not sure how many people believe that they're getting what they pay for, esp when it's not actually paid for, but financed
• stouset 2y ago
  > But if the question is 'do you think an effort should be made to look for things to cut', I'd say 'yes, of course.' This is such an unbelievably lazy response. Every single person in existence thinks there’s some amount of government waste that we wish were cut and either returned to the citizens or put to better use elsewhere. The interesting and important question which GP poijted out—and which you completely dodged—is where and what should be cut. DOGE is looking at the set of government spending that accounts for less than 9% in aggregate of the entire federal budget. At best if they found that 10% of this money was abuse, it would account to less than 1% of the overall federal budget. This isn’t about reducing government spending. If it was, they’d be going after larger targets. It’s about fulfilling their long-stated wet dream of finally drowning the government in a bathtub.
  • tdeck 2y ago
    > It’s about fulfilling their long-stated wet dream of finally drowning the government in a bathtub. Except for the parts for the government that can shoot you or kick down your door. Those parts are sticking around for sure.
    • aikinai 2y ago
      Yeah, those parts are the primary reason to have a government.
      • 8bitsrule 2y ago
        As I recall, the reasons are to: "form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity" Whether all that was sincere or not is not the question: that was the promise I learned. 'Common defense' is well taken care of ... unlike 'general welfare' and/or liberty, particularly for 'our posterity'
        • aikinai 2y ago
          Good point! I’m not a constitutional scholar but I think basically all of those except “general welfare” are related to defense and peacekeeping. I’d forgotten about “general welfare” and now I wonder how that got in there considering it didn’t really make it anywhere else in the founding vision. Maybe they didn’t intend it like our modern reading at all?
• onislandtime 2y ago
  I think we all agree that making the Gov more efficient is a good thing but this is about terrorizing federal employees for ideological reasons. There is no crisis to justify this. We do have a crisis in healthcare which is being ignored.
  • Panoramix 2y ago
    I am certainly not a supporter of this government, but I do find it unsettling to have massive amounts of ideologically fueled bureaucrats running the government. It goes both ways. The pendulum is now swinging in the other direction. I am losing hope that it will return to the middle one day.
    • djur 2y ago
      What makes you think that "massive amounts of ideologically fueled bureaucrats" run the government?
      • miohtama 2y ago
        Probably not fueled but in some agencies most staff is Democrats > Democrats made up about half of the workforce during the 1997-2019 data period (compared with about 41% of the U.S. population). Meanwhile, registered Republicans dropped from 32% to 26% during the period, with an increase in Independents making up the difference. The most heavily Democratic departments are the EPA, Department of Education, and the State Department, where about 70% of employees are registered to the party, while the most conservative departments are Agriculture and Transportation. https://newsroom.haas.berkeley.edu/research/study-finds-the-cost-of-partisanship-among-federal-workers/ https://newsroom.haas.berkeley.edu/research/study-finds-the-... Also American First propaganda site lists some individual cases where career staff hinders agenda due to ideological reasons.
        • xav0989 2y ago
          Wasn’t there a study that identified that college educated individuals are more likely to be Democrats? Most US government jobs require a college degree (or higher), so it wouldn’t be surprising to see that population match the findings in the general population? Additionally, the republican image typically espouses the idea of private industry and private capital more so than the democrats, where public service takes a bigger role. If people already identified with a given ideology, it’s likely that their career choice would reflect that. Finally, one’s political leanings aren’t being used to determine if they should be hired.
• throw0101d 2y ago
  > But if the question is 'do you think an effort should be made to look for things to cut', I'd say 'yes, of course.' You mean like Reagan did, bringing in the private sector: * https://en.wikipedia.org/wiki/Grace_Commission https://en.wikipedia.org/wiki/Grace_Commission * https://www.reaganlibrary.gov/archives/topic-guide/presidents-private-sector-survey-cost-control-grace-commission https://www.reaganlibrary.gov/archives/topic-guide/president... * https://www.gao.gov/products/123531 https://www.gao.gov/products/123531 * https://www.pgpf.org/programs-and-projects/convening-experts/expert-views/fiscal-commission/fiscal-commissions-promises-and-disappointments/ https://www.pgpf.org/programs-and-projects/convening-experts... * https://news.ycombinator.com/item?id=42463355 https://news.ycombinator.com/item?id=42463355 Or Bush (43): * https://en.wikipedia.org/wiki/Council_of_the_Inspectors_General_on_Integrity_and_Efficiency https://en.wikipedia.org/wiki/Council_of_the_Inspectors_Gene... Or FDR: * https://en.wikipedia.org/wiki/Brownlow_Committee https://en.wikipedia.org/wiki/Brownlow_Committee Or Truman: * https://en.wikipedia.org/wiki/Hoover_Commission https://en.wikipedia.org/wiki/Hoover_Commission Or Clinton/Gore: * https://en.wikipedia.org/wiki/National_Partnership_for_Reinventing_Government https://en.wikipedia.org/wiki/National_Partnership_for_Reinv... There's an entire agency whose job is auditing: * https://en.wikipedia.org/wiki/Government_Accountability_Office https://en.wikipedia.org/wiki/Government_Accountability_Offi...
• rco8786 2y ago
  > Why should it scale linearly with GDP? I can see an argument that it should scale linearly with population (maybe), but if GDP per capita increases, you could also expect better tech/productivity to allow gov spending per capita to decrease. This isn't the question. The question is about the premise of federal spending being "out of control". By what measure is it out of control?
  • sojournerc 2y ago
    Increasing deficit
    • rco8786 2y ago
      https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio/ https://www.americanprogress.org/article/tax-cuts-are-primar... https://www.budget.senate.gov/chairman/newsroom/press/extending-trump-tax-cuts-would-add-46-trillion-to-the-deficit-cbo-finds https://www.budget.senate.gov/chairman/newsroom/press/extend... https://taxpolicycenter.org/briefing-book/how-did-tcja-affect-federal-budget-outlook https://taxpolicycenter.org/briefing-book/how-did-tcja-affec... So the strategy is to cut taxes and revenue and balloon the deficit, then declare that spending is out of control and constitutes emergency measures to fix.
• rainsford 2y ago
  "Better tech" is a double edged sword though because it can result in more efficient output but also more demand for output. The military was a lot cheaper in absolute terms before the technology existed to build nuclear powered aircraft carriers. But if you want to maintain a capable military you need to build nuclear powered aircraft carriers not just equip your troops with more efficiently made muskets. While certain specific functions of government can and probably do get more efficient as technology progresses, the demand for new functions or more of existing functions goes up. You didn't need an FAA before air travel and you needed less FAA when there was less air travel, for example.
  • Griffinsauce 2y ago
    Also keep in mind that life and laws have gotten more complex. The tax code likely hasn't shrunk over time.