The first three chapters of David Wessel’s “Red Ink: Inside the High Stakes Politics of the Federal Budget” covers the background for recent spending increases and tax cuts, as well as expected changes in the coming years. Wessel notes, “In fiscal year 2011—from October 1, 2010, to September 30, 2011—the federal government spent $3.6 trillion, $400 million an hour, more than $30,000 per American household (loc. 115).” Wessel also points out, that 2/3 of our budget (both taxing and spending) are on autopilot, and that the majority of discretionary–non autopilot–spending is on the military. Of government outlays, nearly $1 in $5 is spent on the military, and $1 in $4 is spent on health care. At the same time, we are one of the lowest taxed populations in the world in terms of income tax. Americans pay all sorts of taxes: sales, excise, payroll, inheritance, capital gains, corporate, and income taxes, many levied at the state, local, and federal level. However, the largest share of all taxes comes is the federal income tax.
Much of our current spending is the legacy of the New Deal–begun under FDR in the 1930s–and the Great Society–started by LBJ in the 1960s. Medicaid, Medicare, Social Security, and other programs were brought about through these landmark changes in policy, and some politicians have sought their undoing ever since. Wessel quotes Rep. Paul Ryan–current VP nominee–as saying, “I do believe government has a role in making sure we have a safety net to help people who cannot help themselves or are temporarily down on their luck, but I don’t want to see government turn that safety net into a hammock.” So, even a purported deficit hawk like Rep. Paul Ryan is not proposing to completely eliminate the government’s safety net, but he and others are proposing substantial changes. Robert Reischauer, a former director of the Congressional Budget Office is cited by Wessel as saying, “From the mid-1930s to the 1970s, the government made a set of commitments that led to expectations on the part of the American people about what their government owes them, [a]nd they’re totally unprepared to go back to a different world (loc. 347).” This comment is echoed by Doug Elmendorf, the current director of the CBO, “The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.”
So, where do we go from here? Is the U.S. doomed to be an “insurance conglomerate protected by a large, standing army” as Ezra Klein puts it? The problem with that, is that health care spending is rising rapidly for a number of reasons.
“Health care spending is rising faster than any other major part of the federal budget, driven by a costly trio of factors. One, the number of insured is rapidly increasing as Congress expands the pool of those who are eligible, fewer people get health insurance on the job, and the huge baby boom generation turns sixty-five and becomes eligible for Medicare. Two, those insured through government-subsidized insurance are using more health care, undergoing more procedures, and availing themselves of new technologies. Three, the price of that health care is rising faster than the price of other goods and services (Wessel loc. 720).”
Questions you might consider:
- I want you to find some fact in the first three chapters of Wessel’s book that surprised you, and dig deeper on it elsewhere. Find a related article–from a reputable source–that fleshes this information out in more detail. Whether this be a spending or tax “fact” I want you to think about what changes would need to take place in order to help “balance” the federal budget. Remember that you only have about a page to dissect an argument, so try to state a fact Wessel points out and then go from there. Try to find competing thoughts on the issue. For example, if you’re looking at the $1 in $5 spent on the military, find someone who supports maintaining or increasing military spending, and compare that to some other source that supports reducing military spending.
(Note, the “loc.” references are Kindle location references and not page numbers.)