Friday, April 22, 2011

An Historical Perspective on the Federal Budget

Much is being said about the federal budget. Such large numbers seem so abstract. I find a historical perspective helps me understand the actual numbers.

Very few president have actually decreased the federal budgets. Presidents during great crises always increase spending. Lincoln during the Civil War, Wilson during World War I and FDR during WW II, George W Bush for his two wars all increased spending drastically. All but Bush increased taxes to pay for those wars. Presidents after big crises usually cut the budget but never bring them down to the previous levels before the crisis. If you take into account the average amount spent during Presidents terms, you get some interesting numbers.
  • John Adams was the first $10 million president.
  • Lincoln was the first $1 billion president. He inherited a $66 million budget and by 1865, at his death, it was $1.2 billion. This is a huge amount of money in 19th century dollars. This is an increase of 1800%, the largest in our history (including our current president ... so far). Lincoln had a civil war to pay for.
  • Wilson increased the budget six times ... World War I.
  • FDR is the first $50 billion president ... World War II and the Great Depression.
  • Eisenhower was the first $100 billion president.
  • Nixon was the first $100 billion ... Vietnam.
  • Reagan was the first $1 trillion president.
  • George W Bush was the first $2 trillion president ... his two wars.
  • Obama is the first $3 trillion president ... his two inherited wars and a recession.
You see a trend? Spending rarely goes down. If things continue at their current clip with the Obama administration, he will be the first $4 trillion president. As a nation, we usually like the spenders. Taft is our biggest cutter ... you don't see him on Mount Rushmore. Of all the presidents on Rushmore, the only cutter is Jefferson and he is probably more popular for his role in the Revolution than for his time in office.

After reading this, you might expect that I am a bit outraged by the Obama administration but I am not. I remember my Keynes, you don't cut government spending during a recession. You get through the recession and then you cut. Our continual participation in these wars is much more of a concern of mine. I am also quite a bit more upset with the tax cuts for billionaires which do nothing for our economy ... but that is a thought for another day.

After the recession is over, I agree, we should cut the hell out of spending. This seems to be something that everyone can agree upon. The question is how much and what to cut. My thoughts about spending are fairly simple. You spend now for savings in the long run. You spend on education on a federal level now because a decentralized department of education is a recipe for disaster and a poorly educated populace is far more expensive than an educated one. An educated populace creates innovation, jobs and votes responsibly. An uneducated populace is not innovative, is unemployed and commits more crime. Schools are cheaper and more productive than prisons.

The amount of money the US government is spending is scary even for a whacked-out liberal like myself. This is such a hot topic that some politicians are actually crossing the third rail and actually considering cutting defense spending and entitlements. It is about time don't you think? Everyone seems to want the government to cut spending but whenever anyone brings up something to cut, they freak out. Not my NPR, not NASA, not the EPA .... okay, I love all three of these. But these are tiny budget items. Even NASA is .1% of the federal budget. Nothing should be touched until our military spending is cut in half. Until then ... why the hell is anyone talking about cutting NPR funding?

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