Big government, big problems


President Bush’s new 2008 federal budget points out that our government is indeed big but not in the way most people think.

Dollar-wise, as a projected cost of $2.9 trillion, it is huge, but most of what it does involves moving money around, mostly from individual income and Social Security taxes, to retirees, the ailing, the disabled and the poor.

The single largest expenditure, at $612.5 billion, is Social Security, followed closely by national defense at $606.5 billion. They are followed, in order, by Medicare, unemployment and welfare, Medicaid and interest on the debt.

The interest on the national debt is projected at $261.3 billion for 2008, almost 10 percent of federal spending. The interest costs are the fasting-rising expenditure because the federal debt is rising, from $5.6 trillion when Bush took office to $8.6 trillion and rising.

After the debt, the size of federal expenditures falls off rapidly. The next-largest category is veterans’ benefits at $83.4 billion.

Foes of big government like to invoke the image of thousands of bureaucrats occupying acres of cubicles, but the federal civilian work force has remained stable at just over 1.8 million for the past decade, down from an average of over 2 million going back to the ’60s.

The Bush administration has typically been cavalier about the deficit and the national debt, and its plan to balance the budget and even show a modest surplus in five years is mostly wishful thinking. But the president and his advisers do have a point that it is not a critical problem as long as both are within manageable percentages of GDP.

But the discipline needed to balance the annual budget is a first step toward facing up to the problems of the truly huge obligations the government has assumed.

According to tables provided by the White House budget office, in the last 25 years mandatory spending — Social Security, Medicare, Medicaid, retirement benefits — has grown from 26 percent of all federal spending to 53 percent and growing. Meanwhile, discretionary spending — which funds what most people think of as government, the military, health research, infrastructure, etc. — has declined from 68 percent to 38 percent.

The budget office projects that if federal spending remains steady as a percentage of GDP, mandatory spending plus the interest on the national debt will consume 100 percent of federal revenues by 2040.

Absent any action, like tax increases and program cuts, the only way to continue to fund the government would be to borrow the money, and anybody who can read the charts would be crazy to lend it to us. Big government, big problems.