Home | Opinion | Columnists | Mark Mellman

Our revenue and spending problems

If you do political messaging, this column isn’t for you. It’s not about how Americans think or feel; it’s not about how to communicate effectively. It’s about reality — a reality few contemplate and many deny. Nonetheless, it’s worth casting a furtive glance at reality once in a while, if only to see how far away from it the debate has moved.

In diagnosing our nation’s fiscal ills, Republicans’ mantra is that taxes are not too low, but rather that spending is too high. Most voters nod readily in agreement, but is it true?

ADVERTISEMENT
Without context, the statement is practically devoid of meaning. “Too high” or “too low” for what, or compared to what? 

Before judging size, we must agree on how to measure it. Surely it’s not just total spending. Is a government that spends $100,000 on behalf of a population of 100 really bigger than one spending $10,000 on five citizens? The former spends $1,000 dollars per person, while the latter lavishes $2,000 on each citizen. Per capita spending is the right measure. 

Controlling for inflation is also required. A government spending $1,000 per person today buys a lot less than one that expended $1,000 per person in 1950. 

With measurement basics in mind, we can ask what “too big” might actually mean.

Perhaps when Republicans says we are spending “too much,” they mean government spending is stifling economic growth. Making that case, however, implies a strong relationship between the size of government and economic growth rates. Worldwide, the correlation appears weak.

In 2009, eight of the top 50 countries spent more per capita than did the U.S. Of those, three enjoyed growth rates considerably higher than ours. The country with the world’s highest growth rate also had the world’s highest per capita government spending.

Perhaps Republicans mean our government is just spending more than most others. Impossible. Could devotees of American exceptionalism really suggest other countries’ policies be the yardstick by which we should measure our own? Heck, no. That’s why we still have yardsticks, instead of meter-sticks.

More likely, Republicans are comparing the U.S. to itself, arguing that real per capita government spending has reached a historical high. Here they are factually correct, but politically tendentious.

Government spending has been mostly on an upswing since the Depression, under both parties. Inflation-adjusted federal outlays increased by over $1,000 per person during Ronald Reagan’s presidency. Wow — Reagan, an architect of bigger government.

Indeed, only one president since World War II has presided over even a tiny decline in real per capita federal spending — Bill Clinton.

Two wars and the rescue of the financial system contributed mightily to the record spending we are now witnessing.

ADVERTISEMENT
If America’s per capita defense spending (the highest in the world) were only as large as Europe’s biggest military spender, even the recession would have left us with much lower spending levels. And absent the financial rescue, President Obama would likely have duplicated President Clinton’s feat and reduced the size of government.

Nonetheless, we need to admit we have a spending problem. We are spending some of our dollars on the wrong things, but government spending is at a record high. 

However, Republicans are wrong to deny our revenue problem. Real per capita tax receipts are down to the lowest level they have been since, well, Bill Clinton was president. The gap between federal real per capita income and outlays is far greater than it has ever been, partly because spending has increased, but partly also because taxes were cut.

To say we have no revenue problem is as misleading as saying we have no spending problem. 

In short, Americans are apparently unwilling to pay for the government they want, and that is perhaps the central challenge facing our political system. 

Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982. Current clients include the Majority Leader of the Senate and the Democratic Whip in the House.