Comment by _delirium | Hacker News Reader

Comment by _delirium | Hacker News Reader

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The most amazing thing I take away from that chart, having lived in both Europe and the U.S., is how little the U.S. taxpayer gets for their money in comparison, I'm guessing because spending crept up slowly without any real planning. For example, the U.S., Canadian, and Norwegian governments each spend about 40% of GDP, but somehow Norwegians and Canadians get a much stronger set of social services (including state-provided healthcare and much cheaper education) within the same budgetary level.

It seems U.S. spending has gotten to similar levels without actually having any sort of solid planning, so taxpayers are left in the worst of both worlds: 40% of GDP spending, but somehow you still have to buy everything yourself (like health insurance or college), because the state hasn't figured out how to provide it for that price. There are some exceptions; e.g. healthcare for the elderly is covered, and the interstate highway system is good. But not as much as I would expect for that size budget.

There's a very simple explanation: Unlike all the countries you mention, the majority of our US tax dollars goes toward military spending.

The npr graph from the parent post is extremely misleading, and understates the US military budget by roughly a factor of 2. Huge portions of the "non-military" budget entries are covers for military spending.

For example, the npr graph counts $141 billion dollars in VA health care for soldiers, but this isn't listed as part of the military budget. The same games are played with weapons r&d (often budgeted to the Dept. of Energy). Our recent Dept. of Homeland Security contains a great deal of military spending as well.

When one separates the budget by spending intent rather than the politicized department budgets in the above graph it becomes quickly apparent why we don't have good social services -- we're spending it all on military.

Norway is using about 7% of their gov budget to defense. U.S. 22% gotta show somewhere.

A big part of our problems are the calculations that were used to justify Social Security and Medicare (over half our budget). Neither program was built to last more than two generations. The politicians that created them didn't care about that (FDR and LBJ), in typical intentional short-sightedness. Both programs were designed to be flush early so they could be plundered. Instead of having trillions sitting in a sovereign fund earning interest, we have a blackhole of entitlement liabilities.

In other words, the biggest problem with our social systems is theft. The money was used over two generations to buy votes.

edit: it's interesting to try to calculate it roughly, but, it seems fair to estimate that the politicians have spent an inflation adjusted $30+ trillion beyond their means over the last 70 years ($16 trillion public debt, plus the money that should have been put aside and earning interest from SS and Medicare etc).

That's just not true with regards to Social Security. 100 years of projected life before dragging on other Federal finances and one major reform so far (another will be needed) is usually the sign of a successful government program. It's not in dire crisis: we will start to see it drag on other government finances in 20 years, as FICA will only fund about 75% of payouts once the trust fund is exhausted.

Medicare on the other hand is a different story. Costs are growing too high to make it sustainable. But that doesn't have to do with the efficiency of the program itself vs. other insurance companies - it's actually quite a bit efficient than private insurers. The problem seems to be the broader U.S. system of health cost/benefits compared to other countries. We spend more and get less.

> It's not in dire crisis: we will start to see it drag on other government finances in 20 years,

It's actually a drag now, as it has been paying more in benefits than it receives for the past few years.

Yes, I know about the bonds. Paying them back is a drag because they weren't used to create profitable assets.

That seems like a problem for the regular budget to sort out: Soc. Sec. basically has the money it needs for some decades, but the rest of the budget either needs significant cuts or tax hikes so that it can pay back Soc. Sec. what it owes it.

I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along, contrary to Reagan's assurances in 1983 that he wasn't making a regressive change to the tax code, because of the bonds. If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.

> I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec.,

I didn't suggest that. I'm just pointing out that the "drag" has already started.

> and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along

It's not a regressive tax because of the payout is capped too.

In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible.

That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners.

> If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.

Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights.

Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS.

If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits.

I think that SS's designers got that part correct. The payout formula needs some tweaking.

> That seems like a problem for the regular budget to sort out

I agree. My point is that the problem exists now.

> I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec.,

I didn't suggest default. I'm just pointing out that the "drag" has already started.

> and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along

It's not a regressive tax because of the payout is capped too.

In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible.

That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners.

> If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.

Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights.

Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS.

If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits.

I think that SS's designers got that part correct. The payout formula needs some tweaking.

Re: removing the cap, that was in the case, which is vaguely proposed on and off, that Social Security will never get the money back from its mythical "lockbox", and instead the money will be retroactively turned into just general-treasury money. If it's just general-treasury money, then the Social Security tax is a general-revenue tax (not one earmarked for Social Security benefits), but as a general-revenue tax it's a regressive one.

If the money really is going to be repaid to the Social Security system and used exclusively for benefits, then I agree it's a different situation, more of a quasi-retirement-account.

> but as a general-revenue tax it's a regressive one.

SS is not a general revenue tax - taxes don't have contribution-based payouts.

If you're suggesting that SS payouts should be completely means tested, you're opening the biggest can of worms. The SS recipients that complete means testing would most affect are among the most politically active people in America.

When I was younger, I used to argue against SS and the like as old-people welfare. I didn't see why my money should go to to folks who were better off than me. My age-cohorts disagreed.

Soon the subsidies will start flowing my way....

> SS is not a general revenue tax - taxes don't have contribution-based payouts.

Did you miss this part of my comment?

> in the case, which is vaguely proposed on and off, that Social Security will never get the money back from its mythical "lockbox", and instead the money will be retroactively turned into just general-treasury money

Especially in the last Social-Security-reform debate a few years ago, there were serious proposals that the Social Security tax surplus notionally held in bonds will never be repaid to Social Security, and therefore reform proposals should be made which allows SS to be solvent under the assumption that it will never get its bonds repaid.

If that happens, a significant part of the past 20 years' Social-Security tax money will not be used for SS payouts, but will be kept by the general treasury. In that case, SS will retroactively have been, in part, a regressive general-revenue tax.

If 100% of the Soc. Sec. money collected is eventually used to pay Soc. Sec. obligations (i.e. SS is able to call its bonds), then my argument doesn't apply. I'm not confident that will happen, though.

> over half our budget

32.9 != over half. Including Medicaid gets 43, still not over half. Not likely to give much credence to rest of your claims.

Ah yes, only 43%. Sorry I missed by so much when I was generalizing. =)

That's the funding side, but what I'm wondering is why we don't get more for the money we do spend. Norway and Canada spend about the same amount on state-funded medical care as we do, but they manage to provide universal coverage, whereas in the U.S. we spend all that money but I still have to buy private health insurance! Instead it goes into this patchwork of uncoordinated programs: Medicare, Medicaid, VA hospitals, reimbursements for unpaid ER visits, etc.

Don't forget administrative costs. An interaction with a medical professional in the US can involve multiple billing departments (the clinic, the lab, the actual doctor in some cases), your insurance company, any medical reimbursement schemes you may be involved with (HSA, VEBA etc), and your own time dealing with this mess.

http://www.nejm.org/doi/full/10.1056/NEJMsa022033

"The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system"

This probably doesn't even include the added cost to businesses of having to employee additional HR staff to coordinate the insurance and reimbursement accounts.

Every politician interested in job creation should be pro universal/single payer/socialised healthcare. The financial burden of administering and paying for private insurance has to be a significant burden for both small and large businesses.

Gas is subsidized by wars in the US. If you keep that in mind, the value that they get from their money is not that low.

Edit: Please do not down-vote just because you don't agree. The second Gulf War was explicitly called OIL (Operation Iraqi Liberation). See http://en.wikipedia.org/wiki/2003_invasion_of_Iraq#Military_... and http://www.youtube.com/watch?v=GoSBqs6y8uM

This is a claim that requires some justification.

Gas in many countries is far cheaper than in the US, and the reason it is more expensive in others is heavy taxation and regulation, not lack of coercive negotiations.

I'll bite. The second gulf war was officially called OIL (Operation Iraqi Liberation). See http://www.youtube.com/watch?v=GoSBqs6y8uM and http://en.wikipedia.org/wiki/2003_invasion_of_Iraq#Military_...

It was called Operation Iraqi Freedom. OIF

OIL was pretty much on the ball though :)

It was renamed as Operation Iraqi Freedom after the public relations nightmare it generated. Just look at the links I posted before.

That's a pretty silly oversight. Somewhat akin to the supervillain revealing the details of his plan to the captured secret agent.

Yes. It was really silly.

Yes, the Iraq war had much to do with protecting the world oil supply. While the oil and gas industry is heavily subsidized, that war did not give the US a better deal on oil than anyone else. While it may have impacted oil prices, it did so globally.

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