Wednesday, May 04, 2011

Government debt, government waste.

We earlier gave Ronald Reagan credit for understanding how to grow the economy through lower taxes. Reagan wasn’t so good, however, at actually reducing the deficit. Congress resisted many of his spending cuts. And today, because of big spending and low revenue, we have our largest deficits and highest debt level ever. We must turn our economy around.

Republicans advocate cutting back on government spending, controlling entitlement growth, and leaving more money with taxpayers, who will invest, spend, and generate growth. Stephen Moore, in the Wall Street Journal, peels back the cover that hides what’s really happening with government:
Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government. . . Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. . .

Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student. . . We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn't pay teachers enough or we need smaller class sizes or newer schools. If education had undergone the same productivity revolution that manufacturing has, we would have half as many educators, smaller school budgets, and higher graduation rates and test scores.
Moore points to surveys of college graduates showing our top minds want to work for the government, because only government agencies are hiring, and because they love government’s near lifetime security.

This can’t continue. Adam B. Schaeffer, with the Cato Institute, found that public education is even more inefficient than we thought. It’s because budgets bury some of the money going to schools:
Although public schools are usually the biggest item in state and local budgets, spending figures provided by public school officials . . . for the nation's five largest metro areas and the District of Columbia. . . on average, [had levels of] per-pupil spending . . . 44% higher than officially reported. . .The gap between real and reported per-pupil spending ranges from a low of 23% in the Chicago area to a high of 90% in the Los Angeles metro region. To put public school spending in perspective. . . in the areas studied, public schools are spending 93% more [per pupil] than the estimated median private school.
There is tremendous waste in government as a whole, in public education in particular, and also within our welfare bureaucracy. Peter Ferrara is director of policy for the Carleson Center for Public Policy, and a senior fellow at the conservative Heartland Institute. Ferrara’s research shows that the cost of the 185 federal means tested welfare programs for 2010 for the federal government alone is nearly $700 billion, up a third just since 2008. And when one adds in state spending, total welfare spending for 2010 nearly reaches $900 billion, up 24.3% since 2008. But here’s Ferrara’s shocker:
by 2008 [not 2010] total welfare spending already amounted to $16,800 per person in poverty, 4 times as much as the Census Bureau estimated was necessary to bring all of the poor up to the poverty level, eliminating all poverty in America. That would be $50,400 per poor family of three. Indeed, Charles Murray wrote a whole book, In Our Hands, A Plan to Replace America’s Welfare State explaining that we already spend far more than enough to completely eliminate all poverty in America.

The soaring welfare spending since 2008 is not a temporary increase reflecting the recession, as it is not projected to decline after the economy recovers. By 2013, total annual welfare spending will have grown still more, to nearly $1 trillion. Over the 10-year period from 2009 to 2018, federal and state welfare spending will total $10.3 trillion.
All this money. All this wasted money, since public education doesn’t work, since we have serious structural unemployment, since in spite of the military’s skill in combating terrorists in Iraq and killing Osama bin Laden in Pakistan, government at home seems inefficient and ineffective.

No comments: