4 ms·

>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

>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.
  - AnthonyMouse 2y ago
    Part of this is that specifically social security has become a monstrous program which is in need of significant reform but consistently fails to receive it because it's the third rail, and then because it has been allowed to become so large, it's crowding out the rest of the government. There are a lot of other de facto transfer payments in the government, but those programs do have the potential for significant efficiency gains, because they're not just transfer payments. They're each making relatively small payments and then have associated eligibility and means-testing bureaucracies. They would also be better replaced with tax credits for the same people for exactly that reason, but in a comparison against the historical programs, the current programs should be benefiting from significantly improved administrative efficiency as a result of computers etc. And the budget items that aren't direct transfers generally aren't individually large budget items (the military being an obvious outlier), but cumulatively they're still most of the budget.
    - unclebucknasty 2y ago
      Well, to be clear, I'm not claiming that there's no room for more government efficiency. My point here was just that these efficiencies don't happen automatically, simply because the private sector figured out how to increase productivity (i.e. a simplification of what increases in per-capita GDP presumably proxy). Your point that the current programs should be (emphasis mine) benefiting from improved efficiency "as a result of computers, etc" suggests that we are in agreement that it's not automatic (since it's not happening). Likewise, we agree that direct transfers are the larger individual items. But, that's not to say that I agree with you 100%. For instance, recent data suggests that only 0.5% of the money paid to Social Security recipients goes to administrative costs [0]. So, I don't want to overlook the programs that are administered efficiently. And, if by "monstrous" you mean we pay out a lot of money, then this is only a potential issue relative to what we take in. That is, the implication is always that cutting benefits is the answer. So, the other third rail seems to be having the wealthy pay more by raising caps on FICA or otherwise. I mean, at what point do we consider that billionaires and centibillionares are increasingly common, and we're well on our way to minting a trillionaire? Yet, we're considering cuts to programs that contribute to mere subsistence for others? (I'll leave aside the irony that it's the would-be trillionaire who may well drive the cuts, because it's almost too rich). >They would also be better replaced with tax credits I'm not sure that adding to our already insanely complex tax code/bureaucracy gains us much, or that it would approximate needs as accurately as the current means testing approaches (even if it were more efficient). [0]https://www.cbpp.org/research/social-security/top-ten-facts-about-social-security#:~:text=Universal%20participation%20and%20the%20absence,advantages%20while%20yielding%20little%20savings. https://www.cbpp.org/research/social-security/top-ten-facts-...

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.
- AnthonyMouse 2y ago
  Part of this is that specifically social security has become a monstrous program which is in need of significant reform but consistently fails to receive it because it's the third rail, and then because it has been allowed to become so large, it's crowding out the rest of the government. There are a lot of other de facto transfer payments in the government, but those programs do have the potential for significant efficiency gains, because they're not just transfer payments. They're each making relatively small payments and then have associated eligibility and means-testing bureaucracies. They would also be better replaced with tax credits for the same people for exactly that reason, but in a comparison against the historical programs, the current programs should be benefiting from significantly improved administrative efficiency as a result of computers etc. And the budget items that aren't direct transfers generally aren't individually large budget items (the military being an obvious outlier), but cumulatively they're still most of the budget.
  - unclebucknasty 2y ago
    Well, to be clear, I'm not claiming that there's no room for more government efficiency. My point here was just that these efficiencies don't happen automatically, simply because the private sector figured out how to increase productivity (i.e. a simplification of what increases in per-capita GDP presumably proxy). Your point that the current programs should be (emphasis mine) benefiting from improved efficiency "as a result of computers, etc" suggests that we are in agreement that it's not automatic (since it's not happening). Likewise, we agree that direct transfers are the larger individual items. But, that's not to say that I agree with you 100%. For instance, recent data suggests that only 0.5% of the money paid to Social Security recipients goes to administrative costs [0]. So, I don't want to overlook the programs that are administered efficiently. And, if by "monstrous" you mean we pay out a lot of money, then this is only a potential issue relative to what we take in. That is, the implication is always that cutting benefits is the answer. So, the other third rail seems to be having the wealthy pay more by raising caps on FICA or otherwise. I mean, at what point do we consider that billionaires and centibillionares are increasingly common, and we're well on our way to minting a trillionaire? Yet, we're considering cuts to programs that contribute to mere subsistence for others? (I'll leave aside the irony that it's the would-be trillionaire who may well drive the cuts, because it's almost too rich). >They would also be better replaced with tax credits I'm not sure that adding to our already insanely complex tax code/bureaucracy gains us much, or that it would approximate needs as accurately as the current means testing approaches (even if it were more efficient). [0]https://www.cbpp.org/research/social-security/top-ten-facts-about-social-security#:~:text=Universal%20participation%20and%20the%20absence,advantages%20while%20yielding%20little%20savings. https://www.cbpp.org/research/social-security/top-ten-facts-...