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Friday, December 21, 2012 3:57 AM

Congressional Spending Problem in Easy to Understand Format; It's Only Make Believe

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Since 2000, how much has your average hourly wage gone up?

If you are in the upper crust, the answer may be staggering. If not, perhaps the following chart more closely resembles your experience.

Average Hourly Earnings 2000-2012

Just the Facts Ma'am

  • The average hourly earnings was $13.75 on January 1, 2000.
  • The average hourly earnings is currently $19.84.
  • Since 2000, average hourly earnings are up 44.29%

Bear in mind, those are averages. Don't be surprised if you are much worse off because of distributional skew (huge wage increases at the high end pull the average up).

Moreover, the above chart does not reflect sales taxes, property taxes, state income taxes, gasoline taxes, fees, etc., all of which are way higher now than in 2000. In other words, the chart reflects average hourly wages, not spendable income.

Actual spendable income is up far less than 44%.

It's a peculiar thing how the CPI does not properly account for tax hikes.

While pondering those thoughts, please consider federal spending.

Federal Spending

The following table will show without a doubt the purported "revenue problem" in Congress, is without a doubt really an "out of control spending problem".

Department 20002012 estimatePercentage Increase
Legislative Branch2,8715,25382.97
Judicial Branch4,0577,58186.86
Department of Agriculture75,071150,680100.72
Department of Commerce7,78811,32645.43
Department of Defense--Military Programs281,028688,254144.91
Department of Education33,47698,467194.14
Department of Energy14,97138,998160.49
Department of Health and Human Services382,311871,836128.04
Department of Homeland Security13,15960,443359.33
Department of Housing and Urban Development30,78156,78884.49
Department of the Interior7,99811,24140.55
Department of Justice16,84634,556105.13
Department of Labor31,873127,157298.95
Department of State6,68729,937347.69
Department of Transportation41,55584,135102.47
Department of the Treasury390,524579,61848.42
Department of Veterans Affairs47,044129,186174.61
Corps of Engineers--Civil Works4,2299,184117.17
Other Defense Civil Programs32,80151,99158.50
Environmental Protection Agency7,2239,35229.48
Executive Office of the President28341446.29
General Services Administration741,0831363.51
International Assistance Programs12,08725,554111.42
National Aeronautics and Space Administration13,42817,63731.34
National Science Foundation3,4488,281140.17
Office of Personnel Management48,65587,46279.76
Small Business Administration-4213,157
Social Security Administration (On-Budget)45,121188,552317.88
Social Security Administration (Off-Budget)396,169638,50961.17
Other Independent Agencies (On-Budget)8,80353,199504.33
Other Independent Agencies (Off-Budget)2,029-5,120
Undistributed Offsetting Receipts-173,019-279,28961.42
Total outlays1,788,9503,795,547112.17

Problem in a Nutshell

  • Average salaries are up 44%.
  • US spending is up 112%.

The idea behind this post comes from a friend, Bob Gudas.

The numbers are from OMB Historical Tables. The spreadsheet is from Table 3.1 Outlays by Superfunction and Function: 1940-2017.

I downloaded the excel spreadsheet, hid all columns except 2000 and 2012, then calculated the percentage difference discarding a few columns where the numbers were negative or the calculations infinite.

Military Spending

Wages are up 44%, military spending is up 145%, total outlays are up 112%.

Let's dig deeper.

What are veteran's affairs programs and homeland security? By any rational measure of sanity, those programs constitute defense spending.

How much of NASA is really defense spending? How much of department of education spending is free tuition for those putting in military service? What about the department of state? How much of the cost of building the embassy in Iraq and other places is buried there?

Let's go further yet and investigate the 2012 OMB budget. Specifically, consider the separate budget item of $96.7 billion for "Overseas Contingency Operations".

Where was that line item in 2000?

What about the "National Intelligence Program" at 52.6 billion? Is that not defense?

Let's ignore all of that and simply total up Defense, Homeland Security, and Veteran's Affairs.

  • 2000 Total (281,028 + 13,159 + 47,044) = 341,231
  • 2012 Total (688,254 + 60,443 + 129,186) = 877,883
  • Percentage Increase 157%

I suggest defense spending is out of control, as is nearly everything else.

Medicare and Medicaid

Medicare and Medicaid are not broken out in the spreadsheet, so here are the numbers from the Fiscal Year 2013 Budget (which contains the most current estimate of 2012 spending), and the Fiscal Year 2002 Budget (which contains actual spending for 2000).

Medicare 2000: 200,588
Medicare 2012: 480,202

Medicaid 2000: 117,744
Medicaid 2012: 283,597

Medicare spending is up 139%
Medicaid spending is up 140%

Where's the Problem?

All things considered, what's the bigger problem? Failure to collect more taxes, or out of control spending?

It's Only Make Believe

Regardless of your answer to the preceding question, one thing is for certain: The purported effort to balance the budget is nothing more than an exercise in make believe.

With a tip of the hat to Conway Twitty I offer this musical tribute.

Can we get President Obama, Ben Bernanke, and John Boehner to do a remake? If so, we need background vocals. I propose Nancy Pelosi, Dick Cheney, Hank Paulson, Barney Frank, Tim Geithner, along with international rock stars Angela Merkel, Shinzo Abe, and Mario Monti.

We just need one slight change in the lyrics.

People see us everywhere.
They think "we" really care.
But myself, I can't deceive,
I know it's only make believe.

Mike "Mish" Shedlock

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