Think Again

The other day, Representative Tom Emmer – the House Majority Whip and the number three Republican in the House of Representatives – made a statement that, on the surface, doesn’t seem all that unreasonable, to the effect that the GOP budget/debt ceiling bill enacted by the House would impose exactly the same federal government spending levels next year as in this year. In addition, it would limit future spending growth to one percent per year.

Unhappily, if one actually thinks this through, which Emmer either did not or doesn’t want anyone else to, there are major economic and legal problems with such a spending cap.

First off, the federal government employs not quite three million people in civilian capacities and has 1.4 million service members on active duty. Pay raises have already been enacted for these people. In addition, the pay of military retirees is automatically indexed to inflation, as are all Social Security benefits. Active duty military pay and benefits last year ran over $51 billion, and military pay has been boosted by 4.7% for 2023 – which will require an additional $3.3 billion.

Likewise, the current annual civilian payroll for the federal government is roughly $200 billion, and the increase in payroll for this year will be $10 billion. Currently, 67 million Americans receive almost one trillion dollars in Social Security benefits annually, and benefits are automatically indexed to inflation, and next year’s mandated increase is roughly $90 billion.

The government also purchases hundreds of billions of goods and services, from paper clips to multi-billion-dollar aircraft carriers. If inflation stays even at 5%, holding the budget at the same level would result in an actual decrease in purchasing far more than just 5% because of the increases already mandated in pay and benefits will leave less funding for all other government programs. Then add in the need to replenish the amount of military equipment we’ve sent to Ukraine, and a wide range of other government programs will have to be decreased.

I could list budget category after budget category, but they’d all show the same thing.

Now, it’s true that inflation increases people’s incomes, but because federal income tax brackets are indexed, tax revenues don’t increase nearly as much as does the cost of government.

But the problems with the GOP proposal would only get worse every year. Why? Because for only three years out of the last 30 has inflation been below 1%, and the total inflation since 1993 has been 109%. All of that means that, under the Republican proposal, almost every federal program except Defense, Social Security, medicare, medicaid, and federal retiree benefits would face 15-20% cuts in less than five years, with greater cuts occurring each succeeding year.

So… the GOP proposal, if you think again, is far less reasonable than it sounds.

By the same token, Democrats can’t just keep everything as it is, because the mandated increases, and merely keeping up with inflation, will increase budget deficits. So they either have to cut back in some places or increase taxes, so some combination of both, to avoid even more inflation.

Personally, given that half of the current inflation was caused by increases in corporate profits, while the real incomes of more than half the population didn’t keep up with inflation. I’d favor higher corporate taxes, with no loopholes, and higher taxes on incomes above, say $2 million, and much higher taxes on incomes above $10 million.

Yet, from what I can see, neither side is looking at the problem rationally.

10 thoughts on “Think Again”

  1. Lourain says:

    Apparently ideology is more important than the business of governing.

    1. KevinJ says:


      1. DAracherd says:

        Actually the business of gaining and retaining power through being re-elected is more important than either ideology or the business of governing. You might say it trumps them both…

  2. Conrad says:

    The fundamental problem with your proposal is defining what income is – for the regular W2 person it’s easy but for the Bezos and Buffett of the world where the real money are, that is actually nontrivial and only wealth or high consumption taxes on high value stuff would work (eg tax a transaction like buying a house or a car progressively with taxes going to 100% or even higher on deals over x million) – not sure that anyone would dare to try to impose them as any politician is pretty much in hook to wealthy donors of one kind or another. Anyway LA for example imposed extra taxes on high value property deals and already the squeaking is heard loud, so let’s see how that goes

  3. Postagoras says:

    The Republicans in Congress are con artists. They have convinced their electorate that taxes never have to be raised. Then they say that in order to balance the budget, the US government has to default. Or we have to slash Medicare and Social security.

    It’s like when the local government says that in order to balance the budget we have to fire half the police force. No one is for that, so the local government can justify busting the budget.

    But I completely disagree with you on one point. It’s not up to the Democrats to raise taxes to pay for these programs. That’s allowing the con artists to back them into a corner to raise taxes. It’s up to the Republicans to pay the bills that they incurred while they controlled Congress, by raising taxes.

    1. Mayhem says:

      To be fair to the defunders, the NYPD budget has been revealed to be around 11 billion this year. Which is frankly insane. That’s higher than the entire budget for Puerto Rico, and puts it around the 83rd country globally.

      5.1b has been allocated to staffing, which at 50k employees gives them 100k a head. That seems excessive.

      1. Alan Naylor says:

        100k a head is excessive? In NYC? If anything, I’d say that’s low. Cost of living in NYC is excessively high and average income is about $110k.

        With a staff of 50k, 36k of which are officers and they lost 1400 officers last year alone, I’d say they have to do something to stay competitive or they will no longer have sufficient officers at all.

        With a population of 3.3 million, Puerto Rico is about 2/5ths the size of NYC, and has a GDP of about 120 billion. NYC by contrast has a GDP of about 2.5 TRILLION. These are just a few of the differences.

        Perspective is everything when comparing places. Size population, population density, GDP, business types, cost of living, etc

        1. DAarcherd says:

          A very good point. Also Mayhem seems to be conflating actual employee salaries with what in business analyses are called “fully burdened costs of labor”. $100K per person does seem like a high salary (even allowing for the painfully high cost of living in NYC) but that $100K encompasses a whole lot more than salaries. It also includes benefits like healthcare and pensions, facility costs like buildings, vehicles, communications gear, weapons, body armor, etc., plus systems and IT costs. I think that when you back out all those additional costs from the total budget of the NYPD, you might find that the actual average salary is considerably less than $100K.

          1. Mayhem says:

            That makes sense – I basically skimmed the budget and went wtf – I’m looking at it from a UK perspective.
            By comparison the Metropolitan police budget for London and the DPG is some 3b pounds. Which is roughly 2/3 what the NYPD budget used to be. So London pays around 400 per head of population covered, last year New York paid 600, this year they’re paying 1200. That’s a staggering amount of money, and I’d be very surprised that NYC gets that level of value out of their police.
            Heck the entire budget for all of England and Wales combined is some £17b, or oughly double just NYC.

      2. Postagoras says:

        Mayhem, you could not have missed my point more. I was talking about the political strategy in small towns of saying that they have to fire half the police force in order to balance the budget. This strategy is just for performance, to get the public on the side of busting the budget. Because no one wants to fire half the police force.
        You read the original post and my comment, and immediately rushed to talk about the budget of the NYPD? Wow.

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