Does Government Have a Revenue or Spending Problem?
People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too much spending, or too little tax revenue? Economics professor Antony Davies examines the data and concludes that the root cause of the debt is too much government spending.
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Will Rogers has a great quote that I love. He noted, “Lord, the money we do spend on Government and it’s not one bit better than the government we got for one-third the money twenty years ago”(Paula McSpadden Love, The Will Rogers Book, (1972) p. 20.)
We got to cut wasteful spending out of the government and here is another fine suggestion from the Heritage Foundation.
March 12, 2013 at 5:40 pm
Newscom
The massive spending bill, or continuing resolution, released by the Senate this week continues spending on programs which are inappropriate or wasteful and fails to adopt good policies in many areas. Here’s a rundown of some of the worst offenders in the Senate bill:
Supplemental Nutrition Assistance Program (SNAP): $77.2 billion. The recommendation continues record-high food stamp benefits. Food stamp spending has approximately doubled since President Obama came to office. It is one of the largest and fastest growing federal welfare programs. The federal government operates 80 federal welfare programs at a cost of nearly $1 trillion a year. Over 10 of these provide food assistance.
Food stamp spending should be rolled back to pre-recession levels. Able-bodied adults without dependents who receive food stamp benefits should be required to work or prepare for work as a condition of receiving benefits.
—Rachel Sheffield, Research Associate
Job Corps: $30 million added to the funding level already provided under sequestration. This program should be terminated, because a scientifically rigorous impact evaluation of Job Corps participants were less likely to obtain high school degrees, were no more likely to attend or complete college, and earned only $0.22 more in hourly wages than non-participants. Further, the Department of Labor Office of Inspector General estimates each Job Corps participant who is successfully placed into any job costs taxpayers $76,574.
Violence Against Women Act (VAWA) grants: $416.5 million. VAWA grants should be terminated, because these services should be funded locally. Using federal agencies to fund the routine operations of domestic violence programs that state and local governments could provide is a misuse of federal resources and a distraction from concerns that are truly the province of the federal government.
Office of Justice Programs (OJP) grants: $1.1 billion. OJP grants should be terminated, because these grants assign functions to the federal government that fall within the expertise, jurisdiction, and constitutional responsibilities of state and local governments. Further, the Edward Byrne Memorial Justice Assistance Grants ($392 million) within OJP have been used to place criminals on the street without posting bail.
Office of Juvenile Justice and Delinquency Prevention (OJJDP): $279.5 million. OJJDP grants should be terminated, because these grants fund juvenile justice and prevention programs that fall under the unique responsibilities of state and local governments. Further, there is little evidence that these grants are effective at preventing delinquency.
Community Oriented Policing Services (COPS): $225.5 million. COPS grants should be terminated, because these grants assign functions to the federal government that fall within the expertise, jurisdiction, and constitutional responsibilities of state and local governments. Further COPS grants were used to supplant local funds and had little to no effect on reducing crime.
FEMA Fire Grants: $675 million. Fire grants should be terminated. Fire grants, which subsidize the routine operations of local fire departments, are ineffective at reducing fire-related deaths and injuries of firefighters and civilians. Fire grants incorrectly encourage local fire departments to become increasingly dependent on federal funding.
—David B. Muhlhausen, Ph.D., Research Fellow in Empirical Policy Analysis
Two Pictures that Perfectly Capture the Rise and Fall of the Welfare State
July 15, 2011 by Dan Mitchell
In my speeches, especially when talking about the fiscal crisis in Europe (or the future fiscal crisis in America), I often warn that the welfare state reaches a point-of-no-return when the number of people riding in the wagon begins to outnumber the number of people pulling the wagon.
To be more specific, if more than 50 percent of the population is dependent on government (employed in the bureaucracy, living off welfare, receiving pensions, etc), it becomes rather difficult to form a coalition to fix the mess. This may explain why Greek politicians have resisted significant reforms, even though the nation faces a fiscal death spiral.
But you don’t need me to explain this relationship. One of our Cato interns, Silvia Morandotti, used her artistic skills to create two images (click pictures for better resolution) that show what a welfare state looks like when it first begins and what it eventually becomes.
These images are remarkably accurate. The welfare state starts with small programs targeted at a handful of genuinely needy people. But as politicians figure out the electoral benefits of expanding programs and people figure out the that they can let others work on their behalf, the ratio of producers to consumers begins to worsen.
Eventually, even though the moochers and looters should realize that it is not in their interest to over-burden the people pulling the wagon, the entire system breaks down.
Then things get really interesting. Small nations such as Greece can rely on permanent bailouts from bigger countries and the IMF, but sooner or later, as larger nations begin to go bankrupt, that approach won’t be feasible.
I often conclude my speeches by joking with the audience that it’s time to stock up on canned goods, bottled water, and ammo. Many people, I’m finding, don’t think that line very funny.
The Daily Hatch 