Here’s a new feature I’ll call Civics 101. A few times per week I’ll do brief posts that explain basic facts about government and public policy that most people probably don’t know, but need to know. There won’t be any grand organization to the series. Just whatever I think of.
To open, what does our government do? Most people have no idea, and think our taxes all go to welfare, foreign aid, and $1,000 Pentagon feather dusters, or something. In reality, it’s pretty simple. Thousands of individual programs boil down to actually trying to do only a few big things.
About 2/3 of taxes are spend by the U.S. government, as follows
Note that about 70% goes to just four activities: Defense, Social Security, Health Care, and (mandatory) interest payments on prior debt. Also, the big drivers of future deficits are the health care slices: They are making the pie itself grow the most. Want to balance the budget? Either (1) control HC costs, (2) pare back government’s responsibility to pay for HC, (3) take a meat axe to other pieces of the pie, or (4) raise taxes so the public pays for what it gets and we stop borrowing from our children. There is no fifth choice. (Okay–except raising workers’ productivity, which would lift future incomes and taxes collected even if tax rates go unchanged. But Obama’s trying to do just that by investing more in public goods like infrastructure and energy.)
State Government Spending
One third of government is spent here. What they spend it on varies a lot by state. But, as this chart shows, most of it goes to education, health care, and transportation.
I think California spends one-half of its budget on education (40% K-12, 10% colleges), and another 10% on corrections. States’ choices are even more limited. they can’t do much to actually slow HC cost growth, and they have to balance their operating budgets every year–no borrowing from our kids allowed. that’s why California and others have had to wield that meat axe on higher education, etc.
Next up: Who Pays For Government?