or “How to Lie With Statistics”.
I was looking for something else when I stumbled across this pie chart at a post on the website of the Kaiser Family Foundation:
Why is this graph a lie or, if not a lie, at least grossly misleading?
What’s Wrong With This Picture?
February 22, 2016
Footnote #1: “Consists of Medicare spending minus income from premiums and other offsetting receipts”.
Shouldn’t “premiums and other offsetting receipts” be added to revenue rather than subtracted from expenditures?
Total pie chart = 101%
101% isn’t neither a lie nor misleading, certainly not in a big way. That’s just a rounding error induced by reducing decimal points shown to zero.
I think Eric Rall has it right, but the other footnote states that the “other” category is also offset by other receipts.
The significance is that the graph purports to show how government spends, when in reality it only shows what government spends from general revenues.
The social security trust fund is not a part of the federal budget and should not be shown on the chart as such.
Plus isn’t total defense spending more like 54% of the federal budget??
Yup. If you’re going to count offsets to Medicare, you should count offsets to SSRI as well. In that case Social Security spending is about 1% of the budget. And as to military spending it depends on how you count it. The question is on-budget vs. off-budget. Spending on Social Security and Medicare are higher but are off-budget.
Spending on Social Security and Medicare are higher but are off-budget.
yes, but that in itself is really a big lie, too.
There are any number of problems here. At the end of the day all of the spending programs have “offsets.” (Selectively) Reducing Medicare expenditures or SS or defense or anything without acknowledging that premiums or general tax revenues etc fund them is bizarre. Then you have inter temporal and just plain projection effects. You may say you have a trust fund, but that would just be prior period taxes. And that leads to the issue of future problems. 14% of the budget?? Not for long. No pension fund would be able to say its expenditures are only a (small number) today when a huge, looming liability is coming down the pike. In an economic sense you would present value it. And further, who wants to bet that the authors of this chart (or other budget item projections) make rosy GDP assumptions that have no hope of being met. It’s one thing to set a limit on the number of airplanes and bombs you will buy in absolute dollars. Quite another to project the aggregate per capita expenditures for food stamps, other income assistance, or Medicare when economic conditions and related tax or premium assumptions create a feedback loop.
Mary – your 56% military number comes from the fraction of discretionary spending, not discretionary plus mandatory.
I think general revenues is mostly composed of individual and corporate income taxes, payroll taxes, excise taxes, and borrowing. So I think social security is getting paid from current payroll taxes. The amount collected from payroll taxes that exceeds outgoing social security benefits is getting spent elsewhere. When spent elsewhere, the SS Fund gets an IOU and interest. I’m not sure how spending from the interest is treated in this chart, but this all seems to me to be a matter of internal accounting gimmicks, and wouldn’t change how much is spent is spent on Social Security unless I’m missing something.
It may not account for future liabilities incurred, but I think that’s correct. There are no future liabilities that the U.S. is obligated to pay.
OTOH, Medicare and Medicare Advantage set premiums on the basis of 25% of estimated program costs. So I would assume that Medicare expenditures are understated by a third.