The debate over government intervention in the economy is often phrased in grand terms in the United States of America. On the left, there are constant calls for universal health care, a new energy economy, and a 21st century upgrade to our national infrastructure. On the right, the current tone of debate is an ever rising cacophony of hysterical cries about the rise of socialism and the death of liberty. Given the decibel level of the debate, one would have the impression that two utterly conflicting views of government spending on social investment are competing with one another.
However, a look at the numerical reality underpinning this argument reveals only a narrow difference. The mainstream of the American left-wing (represented by the Congressional Progressive Caucus), and the mainstream of the American right-wing (represented by the Republican White House / Congress trifecta from 2003-2006), are only proposing a difference in social investment spending (health care, pensions, education, transportation, unemployment, and new energy), of 3.21% of gross domestic product. That is, the left and right-wings of the American political mainstream are only arguing over whether to increase social investment spending by, at most, 3.21% of GDP. That is the entire difference. This is a grand ideological argument that isn't.
As hard as this may be to believe, I have the numbers to prove it in the extended entry.
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For the purposes of this article, "social investment spending" is defined as public sector spending on pensions (mainly Social Security), health care (Medicare, Medicaid, S-Chip), education (mainly public schools and state colleges), unemployment / welfare, transportation / infrastructure, and new energy / electricity production. A comparison between the right-wing spending proposals in those six areas of social investment versus the left-wing proposals for spending in those six areas of social investment yields a surprisingly small difference.
Expressed as a percentage of gross domestic product, the left-wing proposals of the Congressional Progressive Caucus on social spending total 25.32% of GDP for fiscal year 2012 (the first post-stimulus year), compared to the 22.11% of GDP on social spending passed by the Republican Congress and Bush White House in 2004 (the lowest percentage ever passed under the Republican trifecta in D.C.). This amounts to a total difference of only 3.21% on public sector social investment spending between the left and right-wings of the American political mainstream.
Here is a table showing total public sector social investment spending from 1975-2012 (source):
Total Social Spending, All Levels Of Government, 1975-2012
Expressed in terms of dollars, a 3.21% difference in 2012 will represent about $1,700 for every resident in the United States, no matter their age or citizenship status. This is even if, first, a 100% auction cap and trade system (expected 2012 revenue of $78.7 billion, or 0.47% of GDP), and, second, the entire Congressional Progressive Caucus's proposal of $170 billion (1.13% of GDP) in additional social investment spending on top of that proposed by the Obama administration, are both instituted.
Now, $1,700 a year isn't chump change, but it is a far cry from the tone of the current tone debate over government spending in the United States of America. While a 3.21% of GDP increase, or $1,700 per person, in social investment spending it is certainly worth fighting for, it is also useful to maintain perspective on the best and worst case outcomes of electoral politics. The reality of the difference is actually not terribly large.
In terms of social spending, the main ideological debates about the role of government in the American economy ended in 1965 with the establishment of Medicare and Medicaid. Since that time, no governmental legislation has resulted in a substantial change in social investment spending as a percentage of GDP. Over 75% of the increases in social investment spending since that time came from health care and pensions, as the country slowly aged.
This perspective on social investment spending is disappointing if, like me, you crave a big ideological dispute. However, there is a major positive to it as well. If progressives can successfully frame their desired economic shift as involving only 3% of the economy (and only about 1.2% on top of what President Obama is proposing), it will help provide an important national context on just how mainstream their views actually are. When spending is considered relative to the overall size of the economy, we (that is, most Americans) just aren't very far apart.
Now, I admit that it might be too much to hope that our political debates are ever anchored by such rational, numeric based analysis. It is far more likely that anecdotal outrage over minuscule aspects of government spending (earmarks, turning down unemployment stimulus funds, family planning, volcano monitoring, national endowment of the arts, etc.) will continue to dominate our discourse. However, here is to hoping that more politicians, especially on the Democratic side, at least attempt to provide more rational, calm, big-picture viewpoints on the reality behind our supposedly grand ideological debates. |
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