> How do you square that with the fact that spending as a percentage of GDP is only slightly elevated compared to the historical average going back to at least the 1970s, with the main deviation in the past few years coming from the after-effects of the pandemic?
To begin with, that is a chart of federal spending as a percent of GDP. Since 1960, real GDP per capita has increased by 360%, so if real government spending per capita would have only increased by 360%, federal spending as a percent of GDP would have been flat. Instead it increased by 35%, which is to say by 486% in real dollars per capita.
> Federal spending largely falls into a few categories: taking care of the elderly (36%), defense and veterans (20%), taking care of the poor or disabled (22%), and interest on existing debt (13%). [2] This adds up to 91% of the budget. The US population is aging, which means that 36% slice is going to naturally grow. What do you think should be cut, and how?
The premise of "government efficiency" is to improve efficiency. That doesn't inherently mean discontinuing programs as much as investigating them to see how they're wasting money.
For example, a large chunk of that money is Medicare and Medicaid, and we would like people to continue to have healthcare, but maybe we would like to not pay so much for it. Medicare is paying significantly more to provide healthcare to the elderly in the US than the healthcare systems in most other countries. What's going on there? Are certificate of need laws or other rules inhibiting competition between healthcare providers? Are regulations imposing onerous compliance costs on providers? Lower the cost of healthcare and you can lower the Medicare budget without reducing benefits.
Likewise, there are a lot of assistance programs for the poor. A convoluted, overlapping bureaucratic mess of them that burden the recipients with paperwork and create perverse incentives as a result of stacked benefit phase out rates. The purpose of the whole lot of them is simply to make transfer payments to lower income people, so the entire bureaucracy could be deleted and the programs replaced with a refundable tax credit in the same total amount to the same set of people.
> The US pays far more for health care (28% of the budget if you include Medicare) and with worse outcomes on average. Why shouldn't the health insurance industry be the first item on the chopping block?
The insurance companies aren't where most of the money is going, it's the healthcare providers. Which in turn is down to the healthcare regulations that inhibit competition between them or require them to spend an undue amount of money on administrative and compliance costs -- a government efficiency problem.
> Corporate tax receipts have been steadily falling as a percentage of GDP. [3] Why shouldn't corporations (that benefit from a healthy and educated workforce, a safe and secure environment, a working transportation system, etc.) be paying their fair share to keep the national debt in check?
Corporations pay a variety of taxes, one of which is corporate income tax. Corporate income tax is essentially a tax on profits, but that leads to a problem. Where is the "profit" from an international supply chain? There is no principled way to pin it down because it's just the number at the bottom of a spreadsheet where all of the inputs are in different countries. But if you let the corporation decide, or leave enough play in the system that they can squish it around, international corporations will arrange to have their profits in jurisdictions with lower tax rates, and furthermore cause corporate income tax to act as a penalty on purely domestic corporations, which then promotes market consolidation because international supply chains gain a major tax advantage.
But to do otherwise you have to pin the profits down to something which is happening in a particular place. If that's workers, it's equivalent to payroll tax. If it's real estate, property tax. If it's customers, sales tax or VAT. If it's shareholders, the income tax on dividends and capital gains. So of all the taxes you can collect from a corporation, corporate income tax is one of the least sensible because the megacorps you most want to pay are the ones most able to avoid it, and giving them another advantage over smaller domestic companies is nothing we need, whereas those other taxes they can't avoid while still doing business in your jurisdiction.
Thanks for the response. I think we agree on a fair amount - in particular, I absolutely think Medicare and Medicaid can and should be made more efficient. I'm doubtful, however, that an administration that tries to antagonize its civil servants at every turn and an organization like DOGE is going to do the kinds of things you're suggesting. At the end of the day, I don't efficiency is really even the goal for them.
Regarding insurance companies, I was writing a bit hastily - my train of thought is that providers are able to charge obscene amounts largely because insurance companies pass on these costs to consumers, who have little choice (and only see the result as steadily rising premiums). Meanwhile, these government programs end up paying the same kind of increasing costs to health care providers.
On your first point, I think sibling comment threads already have some good discussion about why it may make sense for spending to keep pace with GDP.
To begin with, that is a chart of federal spending as a percent of GDP. Since 1960, real GDP per capita has increased by 360%, so if real government spending per capita would have only increased by 360%, federal spending as a percent of GDP would have been flat. Instead it increased by 35%, which is to say by 486% in real dollars per capita.
> Federal spending largely falls into a few categories: taking care of the elderly (36%), defense and veterans (20%), taking care of the poor or disabled (22%), and interest on existing debt (13%). [2] This adds up to 91% of the budget. The US population is aging, which means that 36% slice is going to naturally grow. What do you think should be cut, and how?
The premise of "government efficiency" is to improve efficiency. That doesn't inherently mean discontinuing programs as much as investigating them to see how they're wasting money.
For example, a large chunk of that money is Medicare and Medicaid, and we would like people to continue to have healthcare, but maybe we would like to not pay so much for it. Medicare is paying significantly more to provide healthcare to the elderly in the US than the healthcare systems in most other countries. What's going on there? Are certificate of need laws or other rules inhibiting competition between healthcare providers? Are regulations imposing onerous compliance costs on providers? Lower the cost of healthcare and you can lower the Medicare budget without reducing benefits.
Likewise, there are a lot of assistance programs for the poor. A convoluted, overlapping bureaucratic mess of them that burden the recipients with paperwork and create perverse incentives as a result of stacked benefit phase out rates. The purpose of the whole lot of them is simply to make transfer payments to lower income people, so the entire bureaucracy could be deleted and the programs replaced with a refundable tax credit in the same total amount to the same set of people.
> The US pays far more for health care (28% of the budget if you include Medicare) and with worse outcomes on average. Why shouldn't the health insurance industry be the first item on the chopping block?
The insurance companies aren't where most of the money is going, it's the healthcare providers. Which in turn is down to the healthcare regulations that inhibit competition between them or require them to spend an undue amount of money on administrative and compliance costs -- a government efficiency problem.
> Corporate tax receipts have been steadily falling as a percentage of GDP. [3] Why shouldn't corporations (that benefit from a healthy and educated workforce, a safe and secure environment, a working transportation system, etc.) be paying their fair share to keep the national debt in check?
Corporations pay a variety of taxes, one of which is corporate income tax. Corporate income tax is essentially a tax on profits, but that leads to a problem. Where is the "profit" from an international supply chain? There is no principled way to pin it down because it's just the number at the bottom of a spreadsheet where all of the inputs are in different countries. But if you let the corporation decide, or leave enough play in the system that they can squish it around, international corporations will arrange to have their profits in jurisdictions with lower tax rates, and furthermore cause corporate income tax to act as a penalty on purely domestic corporations, which then promotes market consolidation because international supply chains gain a major tax advantage.
But to do otherwise you have to pin the profits down to something which is happening in a particular place. If that's workers, it's equivalent to payroll tax. If it's real estate, property tax. If it's customers, sales tax or VAT. If it's shareholders, the income tax on dividends and capital gains. So of all the taxes you can collect from a corporation, corporate income tax is one of the least sensible because the megacorps you most want to pay are the ones most able to avoid it, and giving them another advantage over smaller domestic companies is nothing we need, whereas those other taxes they can't avoid while still doing business in your jurisdiction.