Bear in mind, those are averages. Don't be surprised if you are much worse off because of distributional skew (huge wage increases at the high end pull the average up).
Moreover, the above chart does not reflect sales taxes, property taxes, state income taxes, gasoline taxes, fees, etc., all of which are way higher now than in 2000. In other words, the chart reflects average hourly wages, not spendable income.
Actual spendable income is up far less than 44%.
It's a peculiar thing how the CPI does not properly account for tax hikes.
While pondering those thoughts, please consider federal spending.
The following table will show the purported "revenue problem" in Congress, is without a doubt really an "out of control spending problem".
|Department||2000||2012 estimate||Percentage Increase|
|Department of Agriculture||75,071||150,680||100.72|
|Department of Commerce||7,788||11,326||45.43|
|Department of Defense--Military Programs||281,028||688,254||144.91|
|Department of Education||33,476||98,467||194.14|
|Department of Energy||14,971||38,998||160.49|
|Department of Health and Human Services||382,311||871,836||128.04|
|Department of Homeland Security||13,159||60,443||359.33|
|Department of Housing and Urban Development||30,781||56,788||84.49|
|Department of the Interior||7,998||11,241||40.55|
|Department of Justice||16,846||34,556||105.13|
|Department of Labor||31,873||127,157||298.95|
|Department of State||6,687||29,937||347.69|
|Department of Transportation||41,555||84,135||102.47|
|Department of the Treasury||390,524||579,618||48.42|
|Department of Veterans Affairs||47,044||129,186||174.61|
|Corps of Engineers--Civil Works||4,229||9,184||117.17|
|Other Defense Civil Programs||32,801||51,991||58.50|
|Environmental Protection Agency||7,223||9,352||29.48|
|Executive Office of the President||283||414||46.29|
|General Services Administration||74||1,083||1363.51|
|International Assistance Programs||12,087||25,554||111.42|
|National Aeronautics and Space Administration||13,428||17,637||31.34|
|National Science Foundation||3,448||8,281||140.17|
|Office of Personnel Management||48,655||87,462||79.76|
|Small Business Administration||-421||3,157|
|Social Security Administration (On-Budget)||45,121||188,552||317.88|
|Social Security Administration (Off-Budget)||396,169||638,509||61.17|
|Other Independent Agencies (On-Budget)||8,803||53,199||504.33|
|Other Independent Agencies (Off-Budget)||2,029||-5,120|
|Undistributed Offsetting Receipts||-173,019||-279,289||61.42|
Problem in a Nutshell
- Average salaries are up 44%.
- US spending is up 112%.
The idea behind this post comes from a friend, Bob Gudas.
The numbers are from OMB Historical Tables. The spreadsheet is from Table 3.1 Outlays by Superfunction and Function: 1940-2017.
I downloaded the excel spreadsheet, hid all columns except 2000 and 2012, then calculated the percentage difference discarding a few columns where the numbers were negative or the calculations infinite.
Wages are up 44%, military spending is up 145%, total outlays are up 112%.
Let's dig deeper.
What are veteran's affairs programs and homeland security? By any rational measure of sanity, those programs constitute defense spending.
How much of NASA is really defense spending? How much of department of education spending is free tuition for those putting in military service? What about the department of state? How much of the cost of building the embassy in Iraq and other places is buried there?
Let's go further yet and investigate the 2012 OMB budget. Specifically, consider the separate budget item of $96.7 billion for "Overseas Contingency Operations".
Where was that line item in 2000?
What about the "National Intelligence Program" at 52.6 billion? Is that not defense?
Let's ignore all of that and simply total up Defense, Homeland Security, and Veteran's Affairs.
- 2000 Total (281,028 + 13,159 + 47,044) = 341,231
- 2012 Total (688,254 + 60,443 + 129,186) = 877,883
- Percentage Increase 157%
I suggest defense spending is out of control, as is nearly everything else.
Medicare and Medicaid
Medicare and Medicaid are not broken out in the spreadsheet, so here are the numbers from the Fiscal Year 2013 Budget (which contains the most current estimate of 2012 spending), and the Fiscal Year 2002 Budget (which contains actual spending for 2000).
Medicare 2000: 200,588
Medicare 2012: 480,202
Medicaid 2000: 117,744
Medicaid 2012: 283,597
Medicare spending is up 139%
Medicaid spending is up 140%
Where's the Problem?
All things considered, what's the bigger problem? Failure to collect more taxes, or out of control spending?
It's Only Make Believe
Regardless of your answer to the preceding question, one thing is for certain: The purported effort to balance the budget is nothing more than an exercise in make believe.
With a tip of the hat to Conway Twitty I offer this musical tribute.
Can we get President Obama, Ben Bernanke, and John Boehner to do a remake? If so, we need background vocals. I propose Nancy Pelosi, Dick Cheney, Hank Paulson, Barney Frank, Tim Geithner, along with international rock stars Angela Merkel, Shinzo Abe, and Mario Monti.
We just need one slight change in the lyrics.
People see us everywhere.
They think "we" really care.
But myself, I can't deceive,
I know it's only make believe.
Mike "Mish" Shedlock