1980-2010 Government Spending Receipts and Outlays

Spending data from 1981 to 2010 is now in. The data shows that the U.S. is now spending $3.45 trillion per year. To put this in perspective the United States government spends over $100,000 per second. The next logical question should be what is this money spent on? First spending is separated into mandatory and discretionary spending. This is language is mysterious since you could argue all spending is discretionary. The largest expense for 2010 was Social Security which cost $695 billion. The next largest expense was the Department of Defense which spent around $664 billion. Next on the list is unemployment/welfare/other spending coming in at $571 billion. Clearly, running a government isn’t cheap the question should be are we getting our what we pay for?

Despite what people say the government doesn’t have a revenue problem it has a spending problem. Looking at the data from 1981-2010 it is crystal clear that the annual increase in revenue was 4.52%, however the annual increase in spending was 5.89%. Spending has on an annual basis been 30% higher than revenue. People and politicians talk about taxing people their fair share, but isn’t the government already spending more than its fair share? There is absolutely no amount of money politicians cannot outspend. The annual deficit seems to have exploded in the past few years. In 2008 the annual deficit was only $454 billion. By 2010 it increased to $1.25 trillion.

One solution people have is to tax the rich. Let’s put this into perspective. Essentially what these people are saying is we should tax the most productive people because certain elected people spent too much money. This to me does not make any sense. Why should the rich be punished because politicians spent more than they had? We could tax everyone who made over $250,000 (the new millionaires and billionaires according to President Obama) at a 100% tax rate and this would only raise $1.97 trillion. This number is unrealistic because if the government taxed anyone 100% there would be no incentive to work. If the government wanted even more money they could take all the profit from Fortune 500 companies which would amount to $400 billion. Of course if Congress ever announced this you would see 500 companies and millions of people flee to other countries.

The solution is to just spend what we have. Individuals and families create budgets that they have to follow. If Congress were able to freeze spending for a few years (without any gimmick legislation to remove the freeze or else they would have to resign) we would slowly start to see surpluses. In addition to this, if we lowered the corporate tax rate, eliminate taxes on dividends and interest, got rid of many burdensome regulations we would start seeing money from all over the world flow into the United States. In addition to all this the government has 650 million acres (around 30% of all the land in the United States) Clearly, some of these assets along with other assets like buildings could be sold to raise money. Not only would selling land to the public raise money it would also increase revenue since people do have to pay property taxes every year. If someone tells you we don’t have enough revenue you should ask them well how much is enough?