I want to draw your attention to a fascinating, information-dense document: the historical tables of the budget of the United States government for 2013. It’s a detailed history of federal receipts and outlays from the beginnings of the country to the present. A few quick observations.
First, with the possible exception of 2012 the future projections contained in the document are wholly fictitious. There are assumptions being made which are so unlikely as to be fantastical, particularly on the revenue side.
Second, over the period of the last 20 years real declines in spending have been scarce. I count twice over the period: in 1993 and, remarkably, in 2007. That last makes me wonder if more federal spending in 2007 might have resulted in a shallower trough in the economy.
Third, I see no pragmatic reason that any item in the budget should have a permanent claim on a fixed or, indeed, increasing percentage of GDP. Do our defense needs increase because our production increases? I don’t see it. Or is the calculation that greater production means a greater willingness to pay? That’s even more striking when you consider the sharply rising percentage of GDP that the Department of Health and Human Services (read: Medicare) is consuming. I find blithe assertions about rich countries being willing to spend more on healthcare unsatisfying. I think that everybody would prefer to spend less on healthcare. It’s more a “market will bear” situation than one of preference.