The answer to why Americans are OK with more spending

Yesterday, just before the State of the Union speech, I had an insightful conversation with a family member. This person is taking his first class in political science, something like a Polisci 101 class. He called me to ask some questions for an assignment he was working on.

“What does ‘non-security, discretionary spending’ mean,” he asked. “I guess the President is going to cut it, or freeze it, or something.” He paused. “It’s supposed to be in the speech tonight.” That would be the State of the Union, I mentally added.

“That phrase,” I said, “refers to items and projects in the federal budget that don’t relate to national security–like the military–and that can be adjusted from year to year, or that we have a choice about whether to spend money on them.”

“So what is non-discretionary,” he asked back.

“Things that must be in the budget, things that are fixed,” I said. “Things that Congress can’t really adjust because they are dependent on other factors, like how much Medicare or Social Security will cost that year.”

“Healthcare?” he asked.

“Yeah,” I said. The other side was quiet for a moment. Then he said thanks, and hung up. Two minutes later, my phone rang again, and he had another question.

“So,” he started. “How will cutting ‘non-security discretionary’ spending affect me?” I thought about his question. “Will it, like, lower my taxes?”

“Not much,” I said. “Most of the federal budget is spent on the non-discretionary things, so the discretionary non security items don’t account for much. And we spend more than we make.”

” More than we make? We pay for the budget with taxes, right?”

“Yeah, but the federal government has to borrow to pay for it, because it doesn’t collect enough taxes for everything.  So taxes pay for some of it, but not all of it,” I said, unsure where this was going.

“How much?” I wasn’t sure how much, but I was pretty sure it wasn’t all. In fact, I was positive.

“We don’t pay for most of it. We raise a lot of money in taxes, but we don’t pay off how much we borrow, ever. With only one exception (I think), we’ve run a debt since the early 1980s.”

“So we’re spending more than the taxes pay for?” He was incredulous, shocked.

“Yeah. A lot more.” I was surprised. Doesn’t everyone know this?

“No way,” he said. “That’s crazy.”

Yeah. It is crazy. But what struck me, and perhaps what is more crazy, is that it’s probably something that few people realize. The federal government spends more than it taxes. Further, it has done that for several decades, and it is projected to continue doing that for the foreseeable future.

And I doubt there are few Americans that realize it. The government is, largely, providing something for nothing and no one is paying for it. The next time you complain that the government owes you something, remember: it’s not paid for–it’s bought with a credit card. The federal credit card. And no one is paying that credit card off.

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6 responses to “The answer to why Americans are OK with more spending

  1. It’s nice that this family member is asking questions because of the polysci class. I know I’m guilty of not asking more because it frustraits me too much.

  2. My son just graduated from college last May and is clueless about national finance. He just complains that he has to pay taxes and has no idea that people he doesn’t even know and did not vote for are running up debt that he and his kids will have to pay for.

  3. Pingback: Where were you when… | What they didn't teach in law school

  4. Pingback: Cutting Non-Discretionary Spending Just Isn’t Enough | What they didn't teach in law school

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