Hacker News Reader

Comment by avalys | Hacker News Reader

In discussions like this, it's worth reviewing where total government spending in the US actually goes.

This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html.

In summary:

17% to pension programs (e.g. social security)

23% to healthcare

19% to education

12% to defense

7% to welfare

3.6% to police/fire/prisons

4% to transportation infrastructure

14% to everything else (scientific research, the courts, the Department of Agriculture, etc.)

The US budget deficit doesn't come from overspending in any particular area, and there is no single fix that is going to get us back to parity. A focus on efficient spending and reducing waste might help, but it would need to be applied systematically across the entire government.

We are simply spending too much money everywhere, and getting too little value for the expenditure.

View on HN

This is a bit misleading though as it includes state spending as well. For the purpose of federal debt, we really only have three sources of spending that can move the needle:

- Health Care 28%

- Pensions 24%

- Defense 20%

Defense seems like an easy cut, but we are not currently in any major conflicts anyway. And our allies might not take to kindly if we start pulling bases from around the world.

Pensions are entitlements and we can't really touch those.

I think though that we are underrating the effectiveness of efficiency reforms around our healthcare system. For both private patients and taxpayers.

This website has military spend at closer to 15% of all federal government expenses.

https://www.thebalancemoney.com/u-s-federal-budget-breakdown...

> The government expects to spend $6.011 trillion in 2022. More than 65% of that pays for mandated benefits such as Social Security, Medicare, and Medicaid.

> Military spending includes the Departments of Homeland Security, State, and Veterans Affairs. All of these military costs combined equal $943.9 billion.

> Pensions are entitlements and we can't really touch those.

They are touched all the time. Implicitly via decreased purchasing power of currency that is not made up for via cost of living adjustments, and explicitly via things like increasing retirement age and changes to benefit formula.

Healthcare spending is also frequently adjusted via reduced remuneration and policies for remuneration to providers changing the quantity and quality of services received.

> we are not currently in any major conflicts anyway

Disagree. The war with Russia has been slowly but steadily escalating and more directly involving NATO countries. It's not unthinkable it could turn into WW3.

Yes it is. Russia is bogged down and unable to make any progress while fighting the poorest country in Europe, who is 1/3rd their size, has been equipped with whatever leftovers NATO was getting rid of anyway, and has conditions on using NATO tech to target Russia proper.

There is zero chance of this becoming WW3. Any Russian escalation targeting NATO countries will likely be met with increased border defenses, possibly a no-fly zone, and giving Ukraine another 1% of defense spending collectively across NATO, but this time with all the long range missiles they want, the freedom to target Russia, and whatever aircraft NATO has in the back of the pantry...

> has been equipped with whatever leftovers NATO was getting rid of anyway

That’s really inaccurate; a lot of what Ukraine got is modern kit. It’s true that a lot of the really heavy equipment was ex-Soviet gear that was (or is now, if it wasn’t before) being replaced by more modern Western gear, and some of the rest was for speed current operational gear that the operators could do without even if it wasn’t planned for imminent replacement. But even some of the heavy gear (especially more recently) is new and modern, like NASAMS, and that seems to be more than case with announced and upcoming deliveries (heck, for the Ground-Launched Small Diameter Bomb – a funny name for a long-range artillery rocket – they are not merely getting new and modern Western kit, they are going to be the first operator.)

There's a reason actions you suggest like a no fly zone have not and probably will never be taken by NATO. Russia is a nuclear superpower capable of destroying most life on earth.

I don't disagree that it might very well escalate. But to the extent that the current conflict has already impacted our budget or the forecasted budget as outlined in the linked article I think is pretty negligible.

My point was that we are unlikely to find any "easy" cuts in defense spending - and a major conflict could make us regret it.

I agree that our allies would not be happy if we started closing bases, but I think that is a small price to pay for fiscal responsibility.

The small price to pay would be millions of deaths and constant economic anxiety for upwards of a billion people around the globe.

Alternatively we could raise taxes a little bit.

> The US budget deficit doesn’t come from overspending in any particular area

You are right, but even more, the US budget deficit doesn’t come from overspending at all. The deficit is about 2% of GDP. The US taxes at about 8.5% of GDP less than the OECD average. The US deficit is from undertaxing.

Bingo. And (as much as this crowd hates to admit it) the US undertaxes the middle class and poor to an incredible amount compared to other first world countries.

OECD tax vs GDP [1]

OECD rates US most progressive [2] (the rich pay more of the tax base, even when relative to their share of income).

[1] https://www.oecd.org/coronavirus/en/data-insights/tax-to-gdp...

[2] https://taxfoundation.org/news-obama-oecd-says-united-states...

Your second citation is pretty out of date, and it is pretty lacking in methodology.

For instance, does it include payroll taxes? Because that would skew the data pretty significantly.

OECD data includes payroll taxes (and all relevant taxes in each country). You can dig around on their site to find their tax data and methodology.

If you don't like the date, also dig around on their site to find anything up to date you like. The point I made is correct - and it's well backed by the OECD databases.

> it's worth reviewing where total government spending in the US actually goes.

Is it also worth reviewing

1. are we likely to ever increase incoming tax revenue (which loopholes stand to benefit the country's income the most without hurting it's citizens/economy/the businesses (and its employees who are basically the citizens) inside of it) enough to offset the debt-GDP ratio

2. if we are (or even if we aren't) going to increase taxation, are we going to lower spending in a significant manner or can we count on spending to pretty much stay the same or grow to offset the debt-GDP ratio

so far in the past like, 15 years, we've shown we're going to keep taxes roughly the same and keep spending roughly the same (continue to grow it year over year)

therefore we have no indication that we're headed towards anything but a debt/GDP ratio of 120-150% next 10 years, correct?

> so far in the past like, 15 years, we've shown we're going to keep taxes roughly the same and keep spending roughly the same (continue to grow it year over year)

I would like to bring that into question.

https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017

> The CBO estimated that implementing the Act would add an estimated $2.289 trillion to the national debt over ten years, or about $1.891 trillion after taking into account macroeconomic feedback effects, in addition to the $9.8 trillion increase forecast under the current policy baseline and existing $20 trillion national debt.

... And of course the time between 2017 and 2023 has been great for the economy with improved revenue growth offsetting the reduction in taxes.

I hate to say it but yah. There is no institutional backbone in Congress anywhere to do course correct. If memory serves corp taxes are down about 20pct from Reagan while my W2 taxes are high. I've been in the apple building in Cupertino. Nobody really thinks it's Irish for tax purposes.

>19% to education

Where does this go?

In most counties, property taxes fund local schools. Public AND private universities are largely unaffordable without huge loans. Seems like most of this money is being squandered, with maybe a few billion going to decent NSF grants.

Pre primary thru secondary education 152.2 0.0 7.3 789.9 949.4 [+] Tertiary education 481.3 0.0 292.8 49.7 823.7 [+] Education not definable by level 59.0 -112.0 80.6 13.3 40.9 [+] Subsidiary services to education 0.0 0.0 0.0 0.0 0.0 [+] R and D Education 0.0 0.0 0.0 0.0 0.0 [+] Education n.e.c. 0.0 0.0 0.0 0.0 0.0

It can be misleading looking at the budget this way. As to your last statement, they could cut the budget by a trillion, and still have 17% go to pensions, 23% to healthcare, etc. In any case, doing a comparison in percentage terms to other areas of spending won't indicate whether they are overspending in any particular area. There could be huge wastes in some categories.

Isn’t this how empires fall?

On an international level the US debt is pretty typical: https://www.imf.org/external/datamapper/CG_DEBT_GDP@GDD/CHN/...

But it’s how politicians get elected.

What is our defense relative to GDP?

Reply on news.ycombinator.com