With the 2008 presidential elections less than a month off it’s time to step up the research into each candidate’s proposed policy platforms. Regardless of ideology, conviction, and personal preference on one candidate over another, it’s imperative to fully understand what you’re going to get when you vote for a new president. This is the first of several policy analyses that should shed some light onto each candidate’s position.
There are two major political parties – Republicans and Democrats – followed by a growing third party, Libertarians. The presidential candidates this time around are John McCain (R), Barack Obama (D), and Bob Barr (L).
One of the best ways to evaluate a candidate’s proposed platform is to look at its impact on spending. It’s new spending that we care about, because that represents what will change if you elect this candidate.
Fortunately, the National Taxpayers Union makes this easy for us by compiling this data and performing its own analysis. This is non-partisan, sticking entirely to the facts of each proposal.
The following table summarizes the net new spending of each candidate:
This can be further decomposed into the following categorical breakout:
To summarize:
Democratic candidate Barack Obama is proposing significant increases in spending for all categories except for “National Defense & International Relations” and “Veterans”. The biggest area of spending increase is “Healthcare”, followed by “Miscellaneous”.
Republican candidate John McCain is proposing increased spending in all categories except for “Miscellaneous”. The biggest increase comes in the category of “Energy, Agriculture, and the Environment”.
Libertarian candidate Bob Barr is proposing a significant decrease in overall spending, focusing primarily with cuts in “National Defense & International Relations”, “Education, Science, and Research”, and “Energy, Agriculture, and the Environment”. There is no category in which Bob Barr proposes increased spending.
Spending in Perspective
The federal government is on track to spend $2.9 trillion in 2008, representing just over 20% of gross domestic product (GDP). In other words, government spends roughly $1 for every $4 spent privately. Unfortunately, not enough revenue is collected to support this level of expenditure, leaving large budget deficits nearly every year of the last 50 yrs. So far, the United States federal government owes $10.3 trillion in debt.
Interest on the public debt was $261 billion in 2008, representing 9.8% of tax receipts and growing 9.2% over the previous year. The following chart shows historic and projected debt-to-GDP:
Personal Analysis
The United States has severe federal budget issues. This is particularly true for mandatory “entitlement” spending, summarized in the following chart:
These budget issues may seem unreal to many Americans, but they pose very real risks. There is an inflection point at which debt ratios exceed the market’s tolerance, rates dramatically rise, and insolvency inevitably takes its toll. This means devaluation of the US dollar, significant interest rate hikes, credit markets ceasing to function, and economic collapse.
Only one candidate, Bob Barr, proposes decreases in spending. Republics and Democrats don’t seem to see the problem. Serious discussion must take place soon to put our public finances in order.
Everyone has their take on what government should do. Many love the idea of spending money on education, scientific research, healthcare, and any number of personal favorites. But we should ask ourselves, do we really need government to spend $2.9 trillion every year? Do we need a government that consistently outspends its own revenue? And do we need a government that takes 20% of the nation’s income? How much is enough?
The answer is that reality will tell us when enough is enough. Candidates can promise they will spend an infinite amount on your favorite category, but one day the country will collapse and we will be left with empty promises for our own ignorance.
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