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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

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
    > 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). You can argue that the increase in government productivity wouldn't be exactly the same percentage change as the increase in private sector productivity, but it's highly implausible that it would be zero. > that it's not automatic (since it's not happening) That's not necessarily what's happening though. Some of the efficiency improvements have been realized by the government. But instead of taking the efficiency improvement as lower spending, other spending increased to consume the surplus. > For instance, recent data suggests that only 0.5% of the money paid to Social Security recipients goes to administrative costs That doesn't necessarily imply a high level of efficiency given the massive outlay though. "Oh, it's only 0.5%... of $1.5T." That's still billions of dollars in overhead. If you could cut the overhead in half you could save billions of dollars. It's also not even accounting for all of it because a lot of the overhead from Social Security comes from the administration of the tax, which falls under the IRS. Which then uses the same trick where they hide a huge administrative budget by comparing it to the entirety of all income taxes paid by everybody to turn a large number into a small percentage. And then the separately budgeted federal law enforcement resources that go into investigating social security fraud etc. It's easy to make something look more efficient by shifting its costs into someone else's budget. > 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. Well no, any given program should have to stand on its own. Just because you could hypothetically collect more tax revenue doesn't mean you should raise taxes, nor does it mean that you should spend the money on program A instead of program B. For example, which is a better use of tax dollars, sending a social security check to millionaires, or increasing the child tax credit? > So, the other third rail seems to be having the wealthy pay more by raising caps on FICA or otherwise. The far better solution is to eliminate FICA whatsoever and put Social Security and Medicare into the general budget. Having a separate tax for them is an anachronism and it would eliminate the wailing about the "social security trust fund" which was never anything but Congress immediately spending the money when social security was collecting a surplus and funding the shortfall out of general revenues (or, let's face it, deficit spending) now that it isn't. > 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? Why does anyone think this has much to do with taxes? Taxes in general are a percentage of profits. If someone's company becomes worth three trillion dollars and as a result they now have $800B, is the problem actually that the government took 30% of it instead of 38% or something like that? No, the problem is that the market is so consolidated there is a three trillion dollar corporation roaming around, which there still would be even if you changed who owns it unless you do something about that, which is a competition problem rather than a tax problem. > Yet, we're considering cuts to programs that contribute to mere subsistence for others? The point is that the program's budget is so expansive because it's cutting larger checks to affluent people who are not relying on it for subsistence. > 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). You don't have to create a separate tax credit for each individual program. The programs all do the same general thing: Transfer payments to lower income people. Create a single refundable credit in the combined amount that everybody gets (and parents can claim on behalf of minor children) and it replaces all the different programs at once.

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
  > 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). You can argue that the increase in government productivity wouldn't be exactly the same percentage change as the increase in private sector productivity, but it's highly implausible that it would be zero. > that it's not automatic (since it's not happening) That's not necessarily what's happening though. Some of the efficiency improvements have been realized by the government. But instead of taking the efficiency improvement as lower spending, other spending increased to consume the surplus. > For instance, recent data suggests that only 0.5% of the money paid to Social Security recipients goes to administrative costs That doesn't necessarily imply a high level of efficiency given the massive outlay though. "Oh, it's only 0.5%... of $1.5T." That's still billions of dollars in overhead. If you could cut the overhead in half you could save billions of dollars. It's also not even accounting for all of it because a lot of the overhead from Social Security comes from the administration of the tax, which falls under the IRS. Which then uses the same trick where they hide a huge administrative budget by comparing it to the entirety of all income taxes paid by everybody to turn a large number into a small percentage. And then the separately budgeted federal law enforcement resources that go into investigating social security fraud etc. It's easy to make something look more efficient by shifting its costs into someone else's budget. > 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. Well no, any given program should have to stand on its own. Just because you could hypothetically collect more tax revenue doesn't mean you should raise taxes, nor does it mean that you should spend the money on program A instead of program B. For example, which is a better use of tax dollars, sending a social security check to millionaires, or increasing the child tax credit? > So, the other third rail seems to be having the wealthy pay more by raising caps on FICA or otherwise. The far better solution is to eliminate FICA whatsoever and put Social Security and Medicare into the general budget. Having a separate tax for them is an anachronism and it would eliminate the wailing about the "social security trust fund" which was never anything but Congress immediately spending the money when social security was collecting a surplus and funding the shortfall out of general revenues (or, let's face it, deficit spending) now that it isn't. > 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? Why does anyone think this has much to do with taxes? Taxes in general are a percentage of profits. If someone's company becomes worth three trillion dollars and as a result they now have $800B, is the problem actually that the government took 30% of it instead of 38% or something like that? No, the problem is that the market is so consolidated there is a three trillion dollar corporation roaming around, which there still would be even if you changed who owns it unless you do something about that, which is a competition problem rather than a tax problem. > Yet, we're considering cuts to programs that contribute to mere subsistence for others? The point is that the program's budget is so expansive because it's cutting larger checks to affluent people who are not relying on it for subsistence. > 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). You don't have to create a separate tax credit for each individual program. The programs all do the same general thing: Transfer payments to lower income people. Create a single refundable credit in the combined amount that everybody gets (and parents can claim on behalf of minor children) and it replaces all the different programs at once.