Focus will be on growth, not cuts
The federal government estimates it will collect almost $3 trillion in revenue for the current fiscal year, which is to end Sept. 30.
Yet, $3 trillion apparently won’t be enough. President Barack Obama has proposed spending about $3.77 trillion.
But is it a significant sum? Comparison may lend context. For example, in 2008, the federal government spent $2.9 trillion.
Here’s another comparison, from figures published by The Economist:
The proposed spending would be enough to buy this year’s global oil output. Or, if invested in blue-chip stocks, land and real estate, $3 trillion would buy Apple, Microsoft, IBM and Google, plus all the farmland and farm buildings in the continental United States.
So, yes, that’s a large sum of money. But will it ever be enough? History says no.
Richard Vedder, an economist at Ohio University, has tracked taxes and spending from after World War II until 2009. During that period, Vedder said, every $1 of increased tax-revenue was accompanied by an increase in federal spending of about $1.17.
He said that’s because members of Congress negate the political fallout from raising taxes by boosting spending.
Combining that tendency with the growing demands of entitlement programs will explain why we’ll hear a lot during the next few months about growing the economy, but not much about reigning in spending.