Douthat Is Hiding the Military Budget

"For decades, the tug-of-war between left and right has kept government’s share of the economy nearly constant, around 19 percent of G.D.P. But in what you might call the revenge of Lyndon Johnson, the ballooning cost of Medicare is poised to tilt the debate decisively toward liberalism."

Douthat has to assign a very loose meaning to "around." In fact, the Reagan military build-up caused spending to hit 23 percent in the mid 80s. It then fell back to 18 percent under President Clinton due to the peace dividend and cutbacks in various categories of domestic spending, including public investment.

The run up in the last four years is of course response to the downturn created by the collapse of the housing bubble.

The chart points out that swings in military spending have been a big factor raising spending. If spending fell from its current level (@4.6 percent of GDP) to the 3.0 percent level at the end of the Clinton years, this would free up considerable money for other purposes or lower spending.

It is also worth noting that the major factor driving up Medicare costs is the broken health care system. If people in the United States paid the same amount per person for health care as people living in other wealthy countries we would have surpluses, not deficits in the long-term. It's not clear that giving huge excess payments to health care providers is an especially liberal position.

Thanks for the Research
written by Ron Alley, July 11, 2011 11:30 AM

Dean,

When I read Douthat this morning, I thought 19% sounds low. I did not have the numbers at hand and I did not have the time to investigate.

Thanks for the research.

Around is a lot
written by djt, July 11, 2011 3:19 PM

I've had this argument before about the definition of "around" when a conservative friend pointed out how revenues, despite tax rates, always hovered around 19% of GDP, or whatever it was. But the quickest search shows revenue swang from 19 to 15% of GDP under Bush - doesn't sound like much but that is a swing in revenues of 600 billion. Looking at the chart in this article, you are talking about a swing in expenditures of over a trillion of today's dollars. "Around" is a soft pedal.

How about Recessions vs. Growth periods?
written by Wisdom Seeker, July 11, 2011 11:05 PM

While the Douthat "about 19%" is borderline fraudulent math, we might also consider some additional factors:

(1) It looks like during recessions the spending is higher; during growth, a bit lower. Makes sense given the propensity for fiscal stimulus. If the current economy is going to grow, 2 years after the alleged end of the recession, it should be able to do so with the fiscal stimulus being tailed off.

(2) It looks like Reagan-through-Clinton also benefited from the peak productive years of the Baby Boomers.

(3) The last time we had a semi-balanced budget was around '99-'00, with taxes and spending at about 18% of GDP and a "peace dividend" in our favor. Today we have to include larger Medicare costs (Part D), and a larger Social Security outlay. So those who think we should run the government with a balanced budget on anything less than 20% of GDP really need to say what they propose to "improve" to make everything fit. Meanwhile, those who want to run the government on anything over 15% (the current taxation level) need to say where they're going to get the additional money. We need to bring revenues in line with spending within a few years to a decade, and it's "put up or shut up" time, especially for those politicians who want to be re-elected next year.

Lies about the Reagan record
written by arkansasmediawatch, July 12, 2011 7:54 PM

Thanks for the chart. I am trying to fight the lies and myths about Saint Reagan perpetuated by the mainstream media:

http://arkansasmediawatch.wordpress.com/2011/07/11/bradley-gitz/

The concept was Tax Revenues being consistently under 20%
written by AndrewDover, July 19, 2011 7:44 AM

The basis for this article was this article.

http://www.hoover.org/publications/hoover-digest/article/5728

The important thing to note is that tax revenues were under 15% of GDP in 2009 and 2010, so somehow Hauser's Law was broken in 2009 and 2010.

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205

Douthat Is Hiding the Military Budget

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