Brad DeLong's Semi-Daily Journal (2004)

Money to the State governments?

Regulatory agencies? The FAA, for example.

Big Ron accomplished some very important slash and burn techniques inside the government that have set the tone for continued destruction. Try to consider the perfect storm that hit the land management agencies in the 80's and 90's. The timber production was decreased, decreasing revenues into the operation without corresponding reduction in personnel, while he simultaneously forced the best (revenue producing) recreational sites to contract. The Land Management agencies cannot lobby Congress and with the contracting of these recreational areas the Land Management Agencies end up with a problem of justification for existence, especially in the current "contract services" environment. The operation cannot justify the expenditures; therefore it is more likely to go to contract. The loss of these professional land managers will contribute to the continued loss of these environments and continued increase in costs and fees charged at these operations.

The fees for the land agencies is hypocrisy at its finest. Most of the people who use these places are lower income and use the operations for family gatherings. God forbid if you would charge for any museum in DC.

The Bush solution of managing the Land by the locals would be a good solution, if the Land operations had not already been under contract. The onsite government personnel could have made the land pay for it self if they were not micro managed. Lets look at the logging issue for an example of micro management.

CONGRESS DETERMINED HOW MANY BOARD FEET PER YEAR COULD BE CUT.

WTF, Over.

It would be like asking Congress to operate the Air Traffic Control Center. Dumb.

Hire people to do the job and have an oversight mechanism that adjust to the times.

The tactic of contracting out key or lucrative government services has increased costs and reduced the moderating effect that government oversight used to provide.

Look at the Contracting of the Defense Industry. The people working in that line of work are well paid and are on the stock options plan. They are bought off not to complain about the budgets and are less likely to bitch when force is used.

America seems destined to reap what it sows.

By comparing govt spending at two points rather than looking at it over time some of your comparisons can be misleading. Interest payments on the debt are one example. They peaked at 3.3% of GDP in the early 1990s.
The drop from 3.3% back to 2% implies that the 1990s sbudget surplus had just as big a role in cutting that item as lower rates. Remember rates peaked in 1981 and fell much more form 1981 to 1991 than the did from 1991 to 2001.

The series I find most interesting is that govt spending excluding defense and interest payments was almost constant beween 14% to 15% of GDP
over the entire period.

I have not looked at the data but one of the others has to be air traffic controlers. It would be an intersting calculation to compute the productivity of air traffic controlers over the last 20 years . Air miles or landings-takes offs per air traffic controler must have grown at fantastic rates.

I bet another would be highway contruction. 1981 must have been near the peak of the construction of the interstate system and in 2001 about the only spending on that item was the Boston big dig -- the last big program in the interstate highway system.

I bet if you went through and found exactly what the other is it would largely be things we think of as "public capital" like the interstate highways.

My guess is that this would include National Parks and Forests (which are being used as cash cows if possible, but otherwise being allowed to degrade), spending on various sorts of non-medical research, perhaps the Smithsonian, the National Endowment of the Arts, etc.

And education. Education has been becoming harder to get, with students taking longer and emerging with much more debt than before, or just quitting. As the economy evolves, education supposedly become more and more important.

A constant theme over the last 24 years has been the use of fiscal-responsibility rhetoric to justify cuts in small programs (or their elimination) while ignoring fiscal responsibility on tax policy and big-ticket items.

Read about Brad's "inner Republican" at:

http://pep.typepad.com/public_enquiry_project/2004/06/prof_delongs_al.html

Sorry, but your "go and read my blog" posts are six steaming pounds of pig shit in a 5 pound bag.

If you have an issue put here. Put your blog in the URL portion of the post.

I'm not referring to the quality of your blog posts, but to the quality of your comment posts here.

Brad, what is your source? Analyses split and lump Fed spending in different ways. If by "other" do you mean everything outside the big 4? (SS, DoD, HealthCare and Debt service)

Those other budgets have been limited to inflation more or less. GDP has expanded, those budgets have not.

Gene Simmons has a pretty good graph of where the money goes and 4 year trends.

http://www.federalbudget.com/

If you look at the chart, very few agencies increase, while most have about the same budget in 2001 as in 2004. This continues a 20 year trend.

Krugman traces the decline in Federal investment back even further than 1981:

http://www.pkarchive.org/economy/SpendProgram.html

Reagan continued a trend that was already in place in 1981. I believe that Clinton was constrained by Reagan-Bush deficits from making up for cutbacks to important infrastructure. The late 70s early 80s were a time of rapid inflation. Part of the response was to maintain the fascade on our infrastructure rather than raise the revenue necessary to maintain it. We have allowed our infrstructure to become hollow. Any idea how many gallons of water our major cities waste because of cracks in the plumbling? Any idea how much the Federal government spends per passenger mile on highways compared to rail/mass transit? Over time these problems become significant.

The failure of both parties is to clearly state where tax dollars are being spent and making the case for why they are or are not a good investment. The GOP rhetoric dismisses any good from government spending other than defense. The Democrats too often fail to justify spending and explain how communities can benefit.

It is hard to get excited about this small change because these programs are to small to do much good. Clinton was something of a master at this, creating small programs because he could not get a significant one passed. Bush has continued the "tradition." It would get interesting if, for example, we chose to spend enough to enforce most laws and regs on the books. This not only would probably pay for itself in fines, but in closing opportunity costs as an added benefit. Less pollution = less asthma = more money for other stuff. Same with guns, trucks, rail and commercial transportation that isn't air traffic. This not to mention increased FEC, FCC and OSHA enforcement. THAT WOULD BE INTERESTING! But when programs are so small and underfunded, they are in fact, boring.

Read David Cay Johnston's "Perfectly Legal" and youwill get a good idea of how the regulators have been stripped from the government for the benefit of the wealthiest.

Read David Cay Johnston's "Perfectly Legal" and you will get a good idea of how the regulators have been stripped from the government for the benefit of the wealthiest.

Bakho
>Any idea how many gallons of water our major
>cities waste because of cracks in the plumbling?
That would be a subject for state and local spending, not federal allocations. Some guy on a well in Kansas needn't be paying for Detroit's plumbing system. (DC is another story - that system is a disaster, and IS a federal responsibility.)

>Any idea how much the Federal government spends
>per passenger mile on highways compared to
>rail/mass transit?
That is a policy issue, and mostly a state-level one, not a "hollow" infrastructure problem. Believe it or not, a lot of Americans live in places where "mass" transit makes no sense, because there are not "masses" going to or coming from any one spot on the map. Most transit spending should be state/local level, anyway - most of us have daily commutes that don't cross state lines, after all, and those that do in New Jersey and such should pay for their own commutes. The interstate grid, and some rural postal roads, are the only logical federal transportation concerns. (The constitution establishes federal spending on "postal" roads. There is not currently a corresponding authority for light rail lines, buses, monorails, or other intracity mass transit projects that don't move mail.)

>Over time these problems become significant.
I agree that we have spent wrongly on infrastructure. The amount spent on highways vs. mass transit isn't the problem here. Instead, the problem is that we build our highways too thin - literally, not enough concrete is poured. A thinner pavement cracks and wears out quicker, meaning we have to patch or repave sooner. We should have either more investment, or fewer, more robust miles of roads.

I do take issue with Brad's assumptions. Federal receipts dropped by 1.3% of GDP during the Reagan years. That is a big "smidge". The big fall after Reagan was Defence spending - it fell from 5 before him to 3 after (with a spike to 6 during the Reagan years). That is the "Peace Dividend" so discussed during the 90s. It isn't obvious that that would have been available w/o Reagan.

Much of the defense spending drop was due to policies of GHW Bush. There was a lot of waste in DoD. Remember base closings? Part of the savings is contracting base services (janitorial, grounds maintenance, etc) instead of abusing highly trained professional soldiers. Part of the savings is getting rid of all the extra ships the Navy did not want nor need. Part is technology that allows the US military to win in places like Kosovo without ground forces. Keep in mind that it takes 80 support positions to keep one fighting man in action. Part of it was not getting entangled in unnecessary conflicts like Iraq that require lots of ground troops and deplete resources. Part was moving to a reserve force to back up the standing army. Of course, the reserves have been abused by Mr. Bush.

As for transportation spending, most major cities have busses. Every bus rider means one more open parking space, one less car congestion on the road. How much less do motorists pay for gasoline because millions of city dwellers ride electric light rail? How many people benefit from 100 miles of subway in NYC? How many people benefit from 100 miles of interstate in Montana? The bigger bang for the buck is investing in the subway.

As for the guy pumping well water in rural KS, we subsidize the electricity infrastructure he uses to pump the water. This idea that rural folk are self sufficient and get no help from government is total BS. Rural folk get far more back in government help than they pay in taxes. The urban dwellers subsidize the rural. Rural folk may think they get less because they are more expensive to support and supporting them is less efficient.

One mile of electric grid can connect 1 million people in NYC. Several miles in KS might connect just 1 person. It is tiring to hear rural folk all the time whining about federal spending and not one word of thank you for the resources the rest of us are spending to supplement their precious lifestyle. They are self-centered and ungrateful for what government does for them.

Just what are we "missing" in that other spending? What would it have accomplished? I know some posts have looked at that, but who can summarize, and comment.

I like these kinds of posts, because it tends to simplify the huge costs of government, into "areas" and a simple percentage, that I can wrap my head around.

Then, maybe, you can begin to have understandable conversations that include a much larger audience than policy wonks, about what percentage of government revenues go to what areas.

I still don't know this.

In general terms, where do government revenues go?

In this post:

1. Health spending - 3.8%
2. Defense spending - 2.9%
3. Income security - 2.7%
4. Net interest - 2.0%
5. Other - 2.6%

This totals 14%. I'm assuming that Social Security eats up a big part of ongoing revenues - but would someone here be able, in general terms like this, to give rough percentage of government revenues, that add up to 100%?

Thanks in advance.

I'm sure the ignorance I display in the previous post must frustrate Brad to no end. I guess it's that fundamental economic ignorance, that allows people like Luskin, etc, to fundamentally and dishonestly get away with distorted economic propositions, and con the media with them. At any rate, it would be much appreciated.

Federal budget categories.
There is some double counting here and the
definitions are not always the same as the other
quotes. Parts do not sum to 100.
(% of fy 03)
defense 19.1
social security 21.9
income security 15.3
medicare 11.5
health 10.3
veterans benefits 2.7
admin of justice 1.7
education, trainings,etc 3.8
natural resources 1.3
ag 1.1
transportation 2.0
community development 0.8
general govt 1.3
science, space & tech 1.0
international affairs 0.9

I skipped interest payments at 7%.

The key point is that defense, heath and medicine, income security -- including social security, and interest payments account for 85%
of the total. Everything else is roughly 15%

One wag called the federal govt an insurance company with its own army.

JC -- really the point is that a layman should
not be expected to know this -- I just knew where to find the data to answer your question.

But Brads point about reporters is that they should know it.

Would a newspaper hire a sports writer as ignorant of batting averages and other sports details as the reporters that write on economics?

If a sports team manager or coach make statements as clealy biased and/or untrue as the
admin makes almost any sports writer would call them on it. Why cann't political and economics writers do the same?

Spencer,

Thanks a lot, I appreciate it. Looking over these numbers, it's just plain weird when I think back on all those talking heads "pontificating" about all the "waste" in the government, how government spending should be cut by a third, etc. You really have very little to work with.

Best,
JC

Other spending:
Mr. Reagan cut the real budget of the Department of Education by 19 percent.
He managed to cut the budget of the Commerce Department by 29 percent in real term during his first term and by 3 percent during his second one.
Department of Agriculture by 24 percent during his second term in office
DOT budget was reduced by 11 percent during his first term and 7.5 percent during his second term.
He cut the budget of the Department of Housing and Urban Development — by 40 percent during his second term.

Certainly, any organization has to restructure and eliminate ineffective parts. Otherwise government becomes cluttered like an attic that accumulates junk over a lifetime. However, Reagan did not understand the value of some of the programs he cut. Amtrak and light rail may not be important in S California, but the East Coast requires them. Most people can get housing from the private sector, but there is a shortage of affordable housing in some areas.

Ahhh Bakho beat me to it (just). I was going to write ... well what I am about to write anyway.
Brad, it's been so long that you have forgotten what the Federal Government used to do. Remember HUD ? Remember how many homeless people you saw in DC in the 70s ? (Brad saw few because he was usually in NW DC but the change is amazing).

I bet CETA falls under other even if it mainly worked for income security.

Someone up thread mentioned revenue sharing. Where is that and how did it change ? Sure would be nice to have some no ?

I guess your main question is, "does the English translation of "infrastructure" begin with the letters p o and r ?". I don't have a firm opinion either.

I have an interface to detailed federal spending numbers at:
http://www.truthandpolitics.org/budget-numbers-intro.php

One lacking of this dataset is that the numbers are not deflated into real dollars.

bakho wrote, "Department of Agriculture by 24 percent during his second term in office"

Be careful with that kind of number. Breakdowns by department/agency can be misleading. E.g., Dept of Agriculture contains both "welfare programs" (food programs for the poor) and farm support programs (well, yes, that's another kind of welfare). It's often clearer to sort things by budget function.

My site has numbers both ways. (Didn't have time to deflate the numbers.)

Also, I have tables and graphs here:
http://www.truthandpolitics.org/comp-fed-outlays.php

for 1962--2003. (That one has both nominal $s and % of GDP.)

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