Evan Thomas follows Newsweek?s latest cover story with an article urging President Obama to ?tell the whole truth? about the national deficit and debt. In Thomas? view, ?straight talk? about the facts of federal government spending would lead people to accept some combination of higher taxes and some degree of entitlement cuts.
While that assertion is open to vigorous debate, Thomas deserves credit for highlighting the key problem: Government spends too much given the amount of money it takes from taxpayers:
The best place to begin is to understand the gap between the money that the feds take in as revenue and the money that the government spends?for defense, or welfare benefits, or anything else. The simplest, most meaningful measure is revenues and outlays as a percentage of the economy. For the past 30 years or so, federal taxes have amounted to about 18 percent of the economy, and federal expenditures have equaled about 20 percent. The difference, the federal deficit, has been large but manageable.
But in 2009 the feds took in revenues amounting to about 15 percent of the economy, while spending about 25 percent of the economy. That 10-point gap is huge and unsustainable. True, an economic recovery will boost taxes. But the spending side will only go up and up. Why? Because the nation is aging. In 1960 there were five workers to support every person over 65. In 2040 there will be two workers to foot that bill. As baby boomers reach retirement, they will draw ever more heavily on Medicare and Social Security. Medicare costs routinely outpace inflation by a wide margin. Obama?s recent health-care bill may slow that march, or it may not. The general feeling is that the bill failed to change the basic system that generates ever-higher costs.
For those sharing Thomas? political views, the answer lies in increased revenue, what you and I would call tax hikes.
But the exact same data also point to another conclusion: We can?t afford the government we have. Given a choice between higher taxes to support the current level of government spending and future commitments on one hand and a smaller government supported by the current level ? or even a lower level ? of taxes on the other hand, it?s at least as likely as not that most voters and taxpayers would prefer the second option.
If we have to pay for our lunch, we?ll likely watch what we eat.
