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letxa2000
Joined: 30 Apr 2002
Posts: 588
Location: U.S. citizen in Mexico |
 Wed Jan 21, 2004 2:46 am
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quote:
Originally posted by Boomer Chick:
The Cato Institute numbers were accurate and as I said before were obtained from government sources!
What government sources? Can you give them to me? They cite a few, but they aren't links and I can't confirm them. That said, their numbers seem to agree with mine which did come directly from government sources which I have provided current functioning links to for you to verify. I agree with their numbers, they agree with my numbers, and they all agree with the government's numbers.
quote:
I read the graphs, understood them, and the numbers, no matter how you interpret them, do not lie! Their interpretation was not a lie nor a spin! What is your problem?
Well, you seem very confident. Then can you explain where my incorrect understanding is, please?
quote:
The Cato Insitutue is not liberal, in fact, it's a conservative institute of learned economists and credentialed economic experts!
Mostly libertarian.
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You dare to say they "spin" and "misinterpret" and that I on top of that am not intelligent enough to read simple graphs?
Yes, everyone has a viewpoint. Including the Cato Institute. They are not Republicans, they are not Reagan lovers. They have their own political view and their statements reflect that.
To think that the Cato Institute has no spin is a little unreasonable, don't you think?
quote:
I am not unwilling to learn anything -- I've spent my life learning! You are the epitomy of arrogance to assume that because you're off on a tangent arguing something that's inarguable that I am not learning from you or somehow closed minded!
Then teach me since it is apparent my understanding of government economic policies is entirely flawed. If you are not willing to understand me, please help me understand you. TEACH ME. Where am I wrong? I'm not asking you to point me to the Cato Institute. I've already read it, I've already understood it. But according to you my understanding is wrong. Please explain it to me.
Tip: The trick will be showing that I am wrong without also disproving the Cato's numbers and conclusions. 
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You fool!
Namecalling is unnecessary. I've refrained from it, hopefully you will do the same. It seems you are getting awfully emotional about a simple logical question of numbers that can be worked out on the calculator. Please explain them to me.
If you have a few minutes to spare, of course... |
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JerseyBluEyz
Joined: 09 Jul 2003
Posts: 1257
Location: Northeast |
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Wed Jan 21, 2004 3:45 am
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Whoa! This thread is WAY over my head. I wish I had the time to sit down and figure this all out. Since I don’t, I’ve invited someone here that has a background in Economics to make heads and tails of this thread. I asked for an unbiased opinion. I hope they decide to come over and put their two cents in (heh, heh - pun intended) because I’d like to have a better understanding of all this! |
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letxa2000
Joined: 30 Apr 2002
Posts: 588
Location: U.S. citizen in Mexico |
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Wed Jan 21, 2004 4:24 am
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quote:
Originally posted by JerseyBluEyz:
Since I don’t, I’ve invited someone here that has a background in Economics to make heads and tails of this thread. I asked for an unbiased opinion. I hope they decide to come over and put their two cents in (heh, heh - pun intended) because I’d like to have a better understanding of all this!
Cool, thanks JerseyBluEyz. Hopefully if I'm wrong this person will be willing to take the time to explain it to me.
Thanks! |
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Boomer Chick
Joined: 01 Sep 2003
Posts: 407
Location: Colorado |
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Wed Jan 21, 2004 4:38 am
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In billions of '87 dollars:
Defense in billions of dollars (1973)197.2 (1981)198.2 (1989)285.9 (1996)197.0
Percentage of change in defense (1973-81)0.5 (1981-89)44.2 (1989-96)-31.1
Domestic in billions of dollars (1973)380.0 (1981)581.1 (1989)615.0 (1996)790.0
Percentage of change in domestic: (1973-81)52.9 (1981-89) 5.8 (1996)28.5
Since all is relative and the percentages of change give a figure of rate of change and all was equalled on the monetary playing field through pre-table conversion to 1987 dollars -- this part of the graph alone tells the story. Military spending created the deficit.
quote:
Budget Deficit. The budget deficit exploded in the 1980s. Figure 6 shows that in 1981, the budget deficit was $101 billion (in 1987 dollars) and 2.7 percent of GDP. In 1983 it peaked at $236 billion and 6.3 percent of GDP. By the time Reagan left office in 1989, however, it had fallen to $141 billion and 2.9 percent of GDP. These deficits were higher in real dollars than those under any other post-World War II president except for George Bush.
Now what is so complicated? The original sentence of this thread was:
" The debt experienced its greatest growth, however, during the 1980s, fueled by an unprecedented peacetime military buildup."
How is this not true? Your statement that the domestic was more than the military is true and it was true when Reagan came into office (see figures). But the onus was on Reagan's administration to balance the budget, but due to his super high expenditures in the military area, not the domestic, the national debt soared!
No butts, no calculations needed! All there in black and white simple and direct! No playing with figures, no complications -- as all is relative!
Other speculations as to percentage of GNP are all there, too! All graphs were taken from government sources and it's obvious to anyone with any common sense!
The next step in this thread, if you still must argue a moot point, is to post other economy links on Reaganomics and the Reagan years, but frankly, I find it off topic!
Bush in running up our national debt is the important thing now and arguing small points in an article mentioning in passing the Reagan years is itself a tangential discussion!
bc
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letxa2000
Joined: 30 Apr 2002
Posts: 588
Location: U.S. citizen in Mexico |
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Wed Jan 21, 2004 4:54 am
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quote:
Originally posted by Boomer Chick:
Now what is so complicated? The original sentence of this thread was: " The debt experienced its greatest growth, however, during the 1980s, fueled by an unprecedented peacetime military buildup."
How is this not true?
Ok, I'll repeat it. And this time I'll take it one step at a time...
Defense spending increase from $157.5 billion in 1981 to $303.6 billion in 1989. The defense budget increased $146.10 billion/year.
Domestic spending increased from $520.7 billion in 1981 to $840.0 billion in 1989. The domestic budget increased by $319.3 billion.
Do you deny that to be true? |
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JerseyBluEyz
Joined: 09 Jul 2003
Posts: 1257
Location: Northeast |
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Wed Jan 21, 2004 6:51 am
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OK - here is a response from the friend I mentioned. He will join this board and post directly if further discussion or clarification is required.
There seem to be a couple of mixed technical issues. First, if one wants to say that military spending has almost doubled from 1981-1989, then one must also say that social spending went up 55% (nominal/unadjusted dollars). If one wants to say that social spending was relatively constant, up about 6%, then one can only say that military spending was up 44% (real or inflation adjusted dollars). However, there is a deeper analytical concern. Decomposing federal spending into military and non-military spending is not the same as military and social spending. The distinction is that non-military spending also includes interest expenditures on the debt which showed the greatest percentage increase (76.8% in adjusted dollar terms). If one was to decompose into domestic and non-domsestic spending, then the interest payments would seem to make the military spending look larger. The thread is having major apples/oranges difficulties.
More than this, the 344 to 532 (unadj $) for social welfare, whereas the 5.8% growth (581 to 615 adj$) was for domestic spending, which might not include the same components. Either way, the % growth was faster in military spending than in social/domestic spending.
From my perspective, the increase in the deficit is due to both military and domestic/social welfare increases beyond tax revenues (as well the increasing interest payments). Another question is whether going deeper into debt was worth it. Increasing military spending enabled us to win the cold war with the USSR, and led (in part) to its break up. That break up has accelerated the growth of risks from terrorism. The debt also helped to stimulate the economy, which, preseumably, helped to keep the amount of social welfare programs lower than they otherwise would have been. Of course, the benefit of an improved economy did not last long enough for Bush Sr. to get reelected.
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letxa2000
Joined: 30 Apr 2002
Posts: 588
Location: U.S. citizen in Mexico |
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Wed Jan 21, 2004 7:20 am
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quote:
Originally posted by JerseyBluEyz:
OK - here is a response from the friend I mentioned. He will join this board and post directly if further discussion or clarification is required.
Thank your friend for a fast response!
quote:
There seem to be a couple of mixed technical issues. First, if one wants to say that military spending has almost doubled from 1981-1989, then one must also say that social spending went up 55% (nominal/unadjusted dollars). If one wants to say that social spending was relatively constant, up about 6%, then one can only say that military spending was up 44% (real or inflation adjusted dollars).
Yes, I agree with that completely and believe that it agrees completely with what I have said in previous posts in this thread.
quote:
However, there is a deeper analytical concern. Decomposing federal spending into military and non-military spending is not the same as military and social spending. The distinction is that non-military spending also includes interest expenditures on the debt which showed the greatest percentage increase (76.8% in adjusted dollar terms). If one was to decompose into domestic and non-domsestic spending, then the interest payments would seem to make the military spending look larger. The thread is having major apples/oranges difficulties.
I agree completely. And when I was originally posting my original breakdown I even considered this but decided not to complicate things even further. But I agree he is right, the added interest should be grouped as interest on military and domestic spending. But even so, it's not going to change the outcome drastically or by orders of magnitude. It'll move the numbers, but not by that much. I may go back tomorrow and recompute with interest allocated into the corresponding areas for my own benefit.
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More than this, the 344 to 532 (unadj $) for social welfare, whereas the 5.8% growth (581 to 615 adj$) was for domestic spending, which might not include the same components.
This is possible, but since the numbers all seem to match it would seem probable to me that they do include the same components--or very close to the same components. Unfortunately, raw data from the 1980's seems to be hard to find.
quote:
Either way, the % growth was faster in military spending than in social/domestic spending.
Yes, the percentage growth was faster in military spending than in domestic spending. However, as I think your friend will agree, that does not necessarily mean more money was actually spent on defense than on domestic. Defense spending just increased faster than domestic spending increased.
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From my perspective, the increase in the deficit is due to both military and domestic/social welfare increases beyond tax revenues (as well the increasing interest payments).
Absolutely. I agree 100%. The increase in the deficit is simply RECEIPTS - DEFENSE - DOMESTIC = DEFICIT (or surplus). The combined total of defense and domestic spending exceeded receipts and resulted in a deficit. Restraining the growth of either defense OR domestic spending to inflation would have eliminated the deficits by the end of the Reagan administration.
But it seems to me that if you are going to analyze the "makeup" or "cause" of the debt you need to look at what was spent, see what percentage was defense, what percentage was domestic, and conclude that those percentages of the deficit each year were caused by the corresponding item.
For example, if the deficit was $100, defense spending was 33% of the total and domestic was 67% of the total, then $33 of the debt came from defense spending and $67 came from domestic spending. It seems unfair to say, "All $100 of the deficit came from defense" or "All $100 of the deficit came from domestic." The debt was created by both, and its makeup should be calculated based on the proportional contribution of each item to the debt. That's what I did in my original per-year breakdown.
quote:
Another question is whether going deeper into debt was worth it. Increasing military spending enabled us to win the cold war with the USSR, and led (in part) to its break up. That break up has accelerated the growth of risks from terrorism. The debt also helped to stimulate the economy, which, preseumably, helped to keep the amount of social welfare programs lower than they otherwise would have been. Of course, the benefit of an improved economy did not last long enough for Bush Sr. to get reelected.
All valid questions and that is certainly a valid political debate--but not what BoomerChick and I were arguing about.
Anyway... thank your friend for his or her contribution. I agree with him 100%. I welcome any further input he has but I feel that I do, in fact, understand what I was talking about. If your friend sees any blatant errors in my posts I would very much appreciate his corrections as I plan to archive my message in my own files in case the debate pops up again in 5 years. |
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JerseyBluEyz
Joined: 09 Jul 2003
Posts: 1257
Location: Northeast |
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Thu Jan 22, 2004 6:49 am
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My friend sent this article today. He thought it would fit nicely into this thread.
http://www.independent.org/tii/news/031222Higgs.html
The Defense Budget Is Bigger Than You Think
By Robert Higgs*
When President Bush signed the defense authorization bill for fiscal year 2004 on November 24, 2003, the event received considerable attention in the news media. At $401.3 billion, the public's visible cost of funding the nation's defense seemed to be reaching astronomical heights, and the president took pains to justify that enormous cost by linking it to the horrors of 9/11 and to the “war on terror.” He pledged that “we will do whatever it takes to keep our nation strong, to keep the peace, and to keep the American people secure,” clearly implying that such payoffs would accrue from the expenditures and other measures that the act authorizes.
Although the public may appreciate that $401.3 billion is a great deal of money, few citizens realize that it is only part of the total bill for defense. Lodged elsewhere in the budget, other lines identify funding that serves defense purposes just as surely as -- sometimes even more surely than -- the money allocated to the Department of Defense (DoD). On occasion, commentators take note of some of these additional defense-related budget items, such as the nuclear-weapons activities of the Department of Energy (DoE), but many such items, including some extremely large ones, remain generally unrecognized.
Since the creation of the Department of Homeland Security (DHS), many observers probably would agree that its budget ought to be included in any complete accounting of defense costs. After all, the homeland is what most of us want the government to defend in the first place.
Many other agencies, such as the Department of Justice and the Department of Transportation, also spend money in pursuit of homeland security. According to the government's budget documents (Budget of the United States Government, Fiscal Year 2004, Table S-5), in fiscal year 2002, all such agencies together added approximately 50 percent to the amount spent on homeland security by the agencies later incorporated into the DHS.
Much of the budget for the Department of State and for international assistance programs ought to be classified as defense-related, too. In this case, the money serves to buy off potential enemies and to reward friendly governments who assist U.S. efforts to abate perceived threats. A great deal of U.S. foreign aid, currently more than $4 billion annually, takes the form of “foreign military financing,” and even funds placed under the rubric of economic development may serve defense-related purposes indirectly. Money is fungible, and the receipt of foreign assistance for economic-development projects allows allied governments to divert other funds to police, intelligence, and military purposes.
Two big budget items represent the current cost of defense goods and services obtained in the past. The Department of Veterans Affairs (DVA), which is authorized to spend more than $62 billion in the current fiscal year, falls into this category. Likewise, much of the government's interest expense represents the current cost of defense outlays financed in the past by borrowing.
To estimate the size of the entire de facto defense budget, I have gathered data for fiscal year 2002, the most recent fiscal year for which data on actual outlays were available at the time of this writing. In that fiscal year, the DoD itself spent $344.4 billion. Defense-related parts of the DoE budget added $18.5 billion. Agencies later to be incorporated into the DHS spent $17.5 billion, and other agencies (not including the DoD) added $8.5 billion for homeland security. The Department of State and international assistance programs spent $17.6 billion for activities arguably related to defense purposes either directly or indirectly. The DVA had outlays of $50.9 billion. When all these other parts of the budget are added to the budget for the DoD itself, they increase the total by nearly a third, to $457.4 billion.
To find out how much of the government's net interest payments on the national debt ought to be attributed to past debt-funded defense spending requires a considerable amount of calculation. I have added up all past deficits (minus surpluses) since 1916 (when the debt was nearly zero), prorated according to each year's ratio of national security spending -- military, veterans, and international affairs -- to total federal spending, expressing everything in dollars of constant purchasing power. This sum is equal to 81.1 percent of the value of the national debt held by the public in 2002. Therefore, I attribute that same percentage of the government's net interest outlays in that year to past debt-financed defense spending. The total amount so attributed comes to $138.7 billion.
Adding this interest component to the previous all-agency total, the grand total comes to $596.1 billion, which is more than 73 percent greater than DoD outlays alone.
If the additional elements of defense spending continue to maintain approximately the same ratio to the DoD amount -- and we have every reason to suppose that they will -- then in fiscal year 2004, through which we are passing currently, the grand total spent for defense will be approximately $695 billion. To this amount will have to be added the $58.8 billion allocated to fiscal year 2004 from the $87.5 billion supplemental spending authorized on November 6, 2003, for support of U.S. military actions in Afghanistan and Iraq and for so-called reconstruction of those despoiled and occupied countries. Thus, the super-grand total in fiscal year 2004 will reach the astonishing amount of nearly $754 billion -- or 88 percent more than the much-publicized $401.3 billion -- plus, of course, any additional supplemental spending that may be approved before the end of the fiscal year.
Although I have arrived at my conclusions honestly and carefully, I may have left out items that should have been included -- the federal budget is a gargantuan, complex, and confusing document. If I have done so, however, the left-out items are not likely to be relatively large ones. Therefore, I propose that in considering future defense budgetary costs, a well-founded rule of thumb is to take the Pentagon's (always well publicized) basic budget total and double it. You may overstate the truth, but if so, you'll not do so by much.
Defense Outlays in Fiscal Year 2002
(billions of dollars)
Department of Defense --- 344.4
Department of Energy --- 18.5
Department of State --- 17.6
Department of Veterans Affairs --- 50.9
Agencies incorporated into Department of Homeland Security --- 17.5
Department of Justice (homeland security) --- 2.1
Department of Transportation (homeland security) --- 1.4
Department of the Treasury (homeland security) --- 0.1
National Aeronautics & Space Administration (homeland security) --- 0.2
Other agencies (homeland security) --- 4.7
Interest attributable to past debt-financed defense outlays --- 138.7
Total --- 596.1
Source: Author's classifications and calculations; basic data from U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2004 and U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970.
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letxa2000
Joined: 30 Apr 2002
Posts: 588
Location: U.S. citizen in Mexico |
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Thu Jan 22, 2004 7:31 am
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quote:
Originally posted by JerseyBluEyz:
My friend sent this article today. He thought it would fit nicely into this thread.
http://www.independent.org/tii/news/031222Higgs.html
Yes, very much on-topic on the current thread.
quote:
Since the creation of the Department of Homeland Security (DHS), many observers probably would agree that its budget ought to be included in any complete accounting of defense costs. After all, the homeland is what most of us want the government to defend in the first place.
This is, of course, a matter of opinion. I personally would not support the inclusion of the DHS in the costs of defense. I consider DHS more of a domestic police and intelligence force and would no more consider them part of "defense" as I would the Denver Police Department or the FBI.
But, again, that's just my opinion.
quote:
Much of the budget for the Department of State and for international assistance programs ought to be classified as defense-related, too. In this case, the money serves to buy off potential enemies and to reward friendly governments who assist U.S. efforts to abate perceived threats. A great deal of U.S. foreign aid, currently more than $4 billion annually, takes the form of “foreign military financing,” and even funds placed under the rubric of economic development may serve defense-related purposes indirectly. Money is fungible, and the receipt of foreign assistance for economic-development projects allows allied governments to divert other funds to police, intelligence, and military purposes.
I do not consider the State Department (diplomacy) and foreign aid (international affairs) part of defense. Using this logic, anything that remotely touches on defense is defense spending and if you use that logic then, yes, you'll eventually conclude that virtually everything is defense spending.
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Two big budget items represent the current cost of defense goods and services obtained in the past. The Department of Veterans Affairs (DVA), which is authorized to spend more than $62 billion in the current fiscal year, falls into this category. Likewise, much of the government's interest expense represents the current cost of defense outlays financed in the past by borrowing.
I agree with both of these. Especially regarding the interest.
I'm on the fence regarding whether or not Veterans benefits should be considered military spending. Yes, it is paid to veterans that provided service to the military--but it really is a social entitlement program. The military could simply conscript its elements (like many countries do) and forego any veterans benefits. But we choose to make the social decision to provide future benefits to those that served their country.
So the case can really be made that this is either a military or social expense.
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When all these other parts of the budget are added to the budget for the DoD itself, they increase the total by nearly a third, to $457.4 billion.
I disagree with this based on my personal opinion that the author is grouping far too much into "defense." Defense has traditionally been considered the defense of our sovereignty and protection of our interests abroad. I really don't think most of what he has chosen to include in "defense" fits that criteria. But, again, that's just my opinion.
quote:
To find out how much of the government's net interest payments on the national debt ought to be attributed to past debt-funded defense spending requires a considerable amount of calculation. I have added up all past deficits (minus surpluses) since 1916 (when the debt was nearly zero), prorated according to each year's ratio of national security spending -- military, veterans, and international affairs -- to total federal spending, expressing everything in dollars of constant purchasing power. This sum is equal to 81.1 percent of the value of the national debt held by the public in 2002.
This is exactly what I was planning to do myself. In fact, I'm almost there.
I've downloaded the entire broken-out federal budget from 1940 onwards into a custom database. I've loaded that same database with the national debt from 1791 onwards as well as CPI (inflation adjustments) from 1800 onwards. All the data is now loaded into the database so all I have left to do is write the query tools.
Within a few days those query tooks will be able to query the database, adjust for inflation (or leave in real dollars), and do the same interest-prorating that the author says he did. It will be interesting to see if the calculations coincide with his.
When I'm done and have made it pretty I plan to make the tool available to the public. I'll probably grab a domain like "usdebtdatabase.com." Anyone will be able to visit it, dump the data, verify the data is correct, and submit real-time queries to do all this complicated calculation on the fly for whatever time-periods they wish to analyze. It also already contains information of how many seats each party had in the House and Senate for each Congress and that will be easily queried as well.
The only bummer is that, so far, I've only found detailed budget data for the federal budget for 1940 and after. Prior to 1940 I have the national debt figures, but no specific budget data. If anyone knows where to find pre-1940 budget data I'd appreciate the tip. |
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JerseyBluEyz
Joined: 09 Jul 2003
Posts: 1257
Location: Northeast |
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Thu Jan 22, 2004 7:52 am
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Wow! That is some project you're undertaking! Good for you and good luck.
I have learned quite a bit from this thread. I still don't totally grasp it all, but I'm sure better off than I was a week ago - ha! I never really thought about the fact before that even in Economics there can be differing views. I always thought the figures were what they were – bottom line. Amazing how perception can change even that - interesting!
I'll ask if there's a source to retrieve the information you're looking for.
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letxa2000
Joined: 30 Apr 2002
Posts: 588
Location: U.S. citizen in Mexico |
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Fri Jan 23, 2004 3:56 am
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quote:
Originally posted by JerseyBluEyz:
Wow! That is some project you're undertaking! Good for you and good luck.
I have my Federal Budget Database system basically done now, including the ability to allocate interest to defense based on how much of the previous debt is from previous defense spending--the rest of the interest is considered domestic spending (since it is interest on the portion of the debt generated from domestic spending).
I cannot verify what the article above says because he's moved so much federal spending around in ways that the federal budget is not broken down such that there's really no way to verify his work. It's also not clear whether the agencies that are now part of DHS (and which he considers part of defense) were also considered part of defense when he tried to calculate the portion of the existing debt that was defense-related.
Anyway, detailed receipts and spending information are available for every federal budget from 1940 on. Based on this information it is possible to determine the budget deficit for each year. It is also possible to calculate what percentage of the budget each year was defense spending and what percentage was non-defense spending. Based on the percentage of defense and non-defense spending each year, the deficit for that year is split between "defense deficit" or "domestic deficit." The total defense debt and total domestic debt is then increased by those amounts, respectively.
The fact that information is only available from 1940 on is not significant since prior to 1940 the federal debt was only $42 billion so it's not terribly important how the $42 billion that existed in 1940 is allocated since it's such a small number.
To make a long story short... From 1940 through 2003, 32.2% of the federal budget was spent on defense (including interest on previous defense spending) and 67.8% was spent on non-defense spending (including interest on previous non-defense spending).
As of a few days ago, the federal debt hit $7 trillion. Of the current debt, $2.254 trillion can be blamed on defense spending and $4.746 trillion can be blamed on domestic and social spending.
Also, despite the seemingly large defense budget in 2003, as a percentage of GDP it is actually less than it was throughout the Clinton administration except for 1999 and 2000. That is to say, as a percentage of GDP, Clinton spent more money on defense every year he was in office except for his last two years than Bush did in 2003.
Within hopefully a week (time-permitting, I've already spent too much time on this!) I will be putting this federal budget database online so that it is available to anyone that wants to run queries for specific years, view specific information, etc. |
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