Gaborn said:
Keep in mind that our revenue is in part a reflection of our economy. Our economy is down, guess what so is government revenue. Yet at the same time spending as a percentage of GDP saw a significant spike.
True, which is part of the reason why freaking out over a sudden increase in the deficit right now, and pointing to it as indicitive of a systemic problem is misguided. The "spike" in government spending is due mostly to increases in payments to medicaid, unemployment insurance, and other automatic fiscal stabilizers, as well as other stimulus measures, without which the recession, and resulting revenue shortfall, would have been greater.
See, the problem with what you just did is you could have made an apples to apples comparison - you compared OUR revenue to OUR GDP - at a time the economy's struggling which means lower revenues but NOW rather than looking at our taxes and our economy you've decided to compare us to the "developed world" which is rather amorphous to begin with.
The recession was worldwide, so it is not an "apples to oranges" (the expression I think you meant to use) comparison. True, the recession hit harder here than in other countries, but the difference is not nearly enough to meaningfully change where the United States stands relative to other countries.
Here is another slightly more recent list. It comes to about the same as the chart I posted, although unfortunately it does not rank the countries.
http://en.wikipedia.org/wiki/Government_spending#Government_spending_as_a_percentage_of_GDP
Also, I don't see what is so amorphous about the concept of the developed world. The phrase simply refers to countries, like the United States, that enjoy a high standard of living and a high per capita income. I'm not sure what the point of comparing the U.S. to a poorer or developing country would be.
The basic problem is simple if you look at
table 1.2 of this PDF you can see that revenue has been above 20% gdp since the 50s exactly once, in 2000. In fact, look at often and by how much revenue is exceeded by spending (table 1.3 may be useful for this as well since it's in dollars rather than % of GDP). Look as well at the future projections. In 2012 we're expecting to spend 25.3% of GDP and take in 14.4% of GDP? That's utterly insane. THAT is a spending problem whether you like it or not. You can't ignore our historical average, wave your hands, and say spending the equivalent of 25% of GDP is responsible. It's lunacy.
Considering how low our government spending compared to GDP is compared to the rest of the developed world, and considering the revenue number would be low historically even for this country, there is no reason to believe that we have a spending problem. As for the table you posted, I assume you are arguing, based on those numbers, that there is some limit as to how much revenue the U.S. government is able to bring in, which is reflected in those numbers. That argument has been posted here and elsewhere, and it is not any more persuasive now than it was then. It is an observation, reflecting the fact that the U.S. government provided a relatively constant level of services and was under a relative constant number of spending obligations over the years - as some obligations ended, others began, and vice versa - thus necessitating a relatively constant stream of revenue that was provided
through a combination of tax increases, decreases, and shifting of the tax burden, borrowing, and general economic growth leading to an increase in revenue. In other words, the U.S. never needed to take in more revenue than the top line, so it didn't, or it decided to borrow the money. There is no economic law that says that the amount of revenue the U.S. takes in cannot exceed its historical number, any more than there was a law before the New Deal limiting how much the U.S. could collect in revenue to its historical average. Indeed, looking at other countries with similar political traditions to the U.S. seems to suggest that the U.S could take in considerably more revenue if it really wanted to.
It's certainly possible that overall health care costs would decrease, but I doubt you're seriously suggesting the cost to the GOVERNMENT would decrease in such a scenario.
I'm really only interested in costs to Americans in general. When it comes to necessities, dividing costs into those born by the government and those born by individuals is meaningless unless it is done for ideological reasons.
I do think we need to reduce health care costs over the long term though, costs which are far higher than in other countries - specifically costs to medicare. I don't think that there is anyone who seriously disputes that need.
The problem with Keynesianism is it's unfalsifiable. If the economy happens to recover, even if it takes 14 years and the start of a world war? Well spending works! If spending doesn't have the predicted effect of keeping unemployment below 9%? Well clearly the economy was worse than our projection and since our otherwise wrong projections predicted that we would "save our create" 3 million jobs by golly we're going to claim the stimulus did it even though our projections were wrong in every other area. Please.
Keynesianism is really the basis for all modern economics (right now they generally refer to themselves as neo-keynesians), and constitutes a general framework for analyzing the economy, as well as different sets of policy prescriptions for a variety of economic situations. It is not simply limited to recommending deficit spending during recessions. It also happens to be well supported by the historical record. To take up the example you cited, during the Great Depression the U.S. economy continued to experience high unemployment until the government ramped up deficit spending during WWII. We undertook some deficit spending during the 1930's, but is was never adequate to the task, and always balanced by attempts to raise revenues through tax increases and, in 1937, to balance the budget. As for the stimulus, it was well known at the time that it was going to be too small and poorly targeted in order to appease centrists and conservatives. It also became quickly apparent that economic forecasters underestimated the size of the recession when the stimulus was being designed.
I can't blame you because I'm doing the same thing.
It really is a bad habit. I am regretting it a bit right now.