So…Democrats want to increase federal spending. Republicans supposedly want to decrease federal spending. The “compromise” is to increase federal spending by $45 billion.
I do not think the word “compromise” means what these people seem to think it means.
It could be – numbers go negative. A compromise between $100B and $200B could be the average of $150B, so $45B could be a perfect compromise between +145B and -$55B.
We’re having a similar spending issue in the UK with MPs’s pay.
Here’s my idea. I can go along with David Cameron on the view that an “11% pay rise in one year at a time of pay restraint is simply unacceptable” – but he’s wrong to say that “No-one wants to go back to MPs voting on their own pay”. I want MPs voting on their own pay, but with a proviso. Here’s what they should do: increase their own pay by as much as they can, but give all increments above the basic pay threshold to charity, and link it to a trifecta system whereby MPs’ pay, charitable beneficence and transparency generates an incentive to beneficence for both the MPs (directly) and their constituents (by proxy).
At election time candidates can pledge their increments, their chosen charities, the breakdown (the proportion each charity gets), as well as their other economic policies. If their pledge matches the constituents’ desire for beneficence, they will obtain the most votes. If their pledge is either too high or too low, or their charity choices or breakdown poorly thought out, they will be beaten by a candidate with a better pledge.
The main thing politicians ought to be good for is doing the most good in the places that need it most – and this trifecta system is exactly the kind of radical change that would facilitate this.
What does “increase” mean here? If it’s nominal dollars, a 1.5% increase doesn’t sound so bad—it’s definitely a decrease in real per-capita terms. If it’s a $45 billion increase relative to a projected baseline that already has a substantial increase baked in, that’s not such a great deal.
Steve, what Democrats and Republicans argue about in practice is whether we should spend more or less than what we otherwise would have spent, not whether to spend more or less than what we currently spend.
Not withstanding that the Republicans are politicians, too, the last time they tried to compromise, the executive branch closed the Washington monument and, with a compliant press, forced the Republicans to capitulate by driving their poll numbers down.
Inconceivable!
Hi Steve,
According to this:
http://krugman.blogs.nytimes.com/2013/12/12/unprecedented-austerity/
we are in the midst of an “unprecedented austerity binge.” You see, Paul Krugman has looked at total government spending (federal, state, and local), corrected for inflation, then ‘smoothed’ the data by looking at 3-year changes. (‘Smoothing’ a time series by looking at its ‘derivative’. I’ll have to try that some time.)
Anyway, according to his post, the “recent austerity binge was bigger than the demobilization after the Korean war” and “you really have to go back to post-World-War-II demobilization to get anything similar.”
Well, according to usgovernmentspending.com, here is a plot of total government spending as a percentage of GDP, going all the way back to WWII:
http://tinyurl.com/lhl5g22
Here’s what it looks like since 2000:
http://tinyurl.com/n4y2ovv
I get Krugman’s point about the relative decrease over the past 4 years; however, I think the story is a little more tangled than Krugman describes, especially when the period of “unprecedented austerity” is at the top of this list:
Largest total government spending as %GDP since 1947:
42.73%, 2009
41.13%, 2010
40.84%, 2011
39.46%, 2012
37.83%, 2013
37.49%, 2008
37.22%, 1991
37.07%, 1992
.
.
.
I wonder if Krugman takes this position on global temperature? “Yes, the recent global temperatures have been record setting; however, the year-to-year changes over the past decade or so show that global temperatures are dropping, so get over it.”
@4: That is exactly Steve’s point.
@ThomasBayes,
http://krugman.blogs.nytimes.com/2013/01/17/on-the-non-equivalence-of-greenhouse-gases-and-entitlement-spending/
Three elected branches of government get a vote in the budget: the house, the senate, and via the veto the president.
Democrats control 2/3 of these branches.
Under those circumstances, I think the GOP ought to view a tiny increase like this an enormously generous compromise.
‘“you really have to go back to post-World-War-II demobilization to get anything similar.”’
Which coincided with an economic expansion.
Suppose I’m a Democrat and I want (1) to claim that I’m compromising, and (2) the government to spend X. Then the strategy is simple. I simply claim that ideally I’d like to spend 2X, but in the spirit of bipartisanship I will compromise with Republicans and vote to spend X.
The revelation principle doesn’t seem to hold here–I don’t see how we can infer legislator’s true types from their public statements. I would guess there is an alternate mechanism that could do so, but I’m not sure what it would look like.
Democrats want to spend more on domestic programs, less on defense. Republicans want to spend more on defense, but less on domestic programs.
Increasing/decreasing spending equally on both domestic programs and defense by 22.5 billion each seems like a compromise to me.
Regardless though, I find it odd that anything that isn’t an exact economic split isn’t a compromise.
Maybe you should notify the Oxford English dictionary that compromise only means “split the difference”.
Krugman explains that he adjusts for inflation using the core personal consumption expenditures deflator. To reduce volatility, this excludes considerations of food and energy, relies on “chained dollars,” and evaluates prices from adjacent periods. All of this makes certain kinds of simple point ratios misleading, but allegedly produces a more accurate measure of inflation than the standard Consumer Price Index. See http://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_index
Since we’re coming out of the biggest recession since the 1930s, it’s hardly surprising that we’d experience the highest level of government spending/GDP since 1947. Heck, that’s what you’d expect if government spending were perfectly flat.
For other discussions about ways to think about the growth of government spending, see http://www.econbrowser.com/archives/2012/12/metrics_for_the.html
To provide some context, I’d be interested in seeing the growth in non-government spending. Who can create a graph showing change in real [GDP – government spending] per capita since 1930 or so?
I don’t see why that couldn’t be a compromise. A compromise certainly doesn’t have to be an even split between the two parties, even if we do assume that the amount that Democrats want to increase spending is exactly equal to the amount the Republicans want to decrease spending by.
Compromise:
1. a settlement of differences by mutual concessions; an agreement reached by adjustment of conflicting or opposing claims, principles, etc., by reciprocal modification of demands.
2. the result of such a settlement.
3. something intermediate between different things: The split-level is a compromise between a ranch house and a multistoried house.
If group A wants 10 things, and group B wants 10 things, and we can only have 10 things in the final result, it is obviously NOT a compromise if either A or B get everything they want. It IS a compromise if each get 5 of the things they want. Is it a compromise if A gets 9 things and B gets 1? How about 8 and 2?
@ ThomasBayes,
I also think it’s highly dubious to reorder the years, out of chronological order in your post.
@17:
What is dubious about arranging a list entitled “Largest total government spending as %GDP since 1947” by beginning with the year with the largest spending and proceeding downward toward the year with the smallest?
The point of the list is to show that the 6 years from 2008 through 2013 are all among the 6 largest in a list ordered from largest to smallest since 1947.
The point of showing a list like that is to challenge the suggestion that the last 6 years have been part of an unprecedented austerity binge. Perhaps this is what an unprecedented austerity binge looks like, but I’d like to see Krugman explain this list while making his case.
I just ordered a Digicomp for my kids for Christmas! Just wanted to say that
@18,
Fair enough. But don’t you think that increases in government spending are inevitable given the aging of our population? Isn’t natural that the most recent years would be among the highest in government spending as a percent of GDP? The point Krugman’s trying to make is that the time to cut government spending is when we’re not up against the zero lower bound in interest rates and experiencing falling low inflation. I don’t think it’s unreasonable to look at the change in spending to point out that we are cutting back relative to the past few years (since the period of sustained lower employment began).
I think increases in government spending are inevitable given our system of government and the lack of accountability of our politicians due to a myriad of things, the top of which would be gerrymandering followed closely by an apathetic and ignorant voting population.
@ Kirk #21:
The tone of your post seems to imply that increases in government spending are bad.
If this is the case, what system of government would you propose to better address this?
Also, regarding gerrymandering causing increase in government spending, I find it hard to believe that a democrat control house (popular house vote) would be working as to cut spending.