My oh my! Recently, there has been no shortage of world-wide events that have distracted our government from taking care of domestic issues. There was hurricane Harvey, hurricane Irma, and now, once again tearing through the Caribbean, hurricane Maria. These were catastrophic to the United States, and they totally destroyed some small Caribbean countries. Last week, there was a ‘bucket bomb’ that exploded in a London subway. And, much like an infant with a broken rattle, we can always count on Kim Jong-un to fire another missile anytime he thinks he is not getting enough attention on the world stage.
Because of these major events, not much attention has been given to our domestic problems. Obama Care has not been repealed or replaced. The tax codes have not been revised. And, have you recently heard any news referring to the federal budget? This got me to wondering. How is the federal government currently spending our money? It is our money, isn’t it? More importantly, how has the government spent our money in the past? So, as a matter of personal interest, I have decided to compare our 2016 federal budget to the 50 year earlier, 1966 federal budget. This was not an accidental choice, as I graduated from high school as a wet-behind-the-ears, know-it-all eighteen year old in 1966. And, yes, I can still muster up enough memory to remember the era. Let me set the stage.
1966 was just over 20 years after the completion of WWII. There were no shortage of veterans from that war. They were our parents. We fought an on-going war in Korea. Because of what was called the ‘domino theory’ we sent military advisors to a country called South Viet Nam. Eisenhower began this program, Kennedy expanded it, and Lyndon Johnson turned Saigon into the twenty-third largest American city. Little did we know in 1966 that Viet Nam would ultimately cost us over 57,000 American lives.
Our WWII ally, Russia, was now our dreaded enemy. They became the USSR (Union of Soviet Socialist Republics), which was comprised of Russia and all the countries it decided to keep in its ‘sphere of influence’ after WWII. The majority joined unwillingly by the use of Russian military force. We had NATO, and the USSR had the Warsaw Pact. They built the Berlin wall and shot anyone that tried to cross it. Winston Churchill dubbed this policy of isolation as the ‘Iron Curtain.’
In 1962, we had a little dust-up in the Caribbean called the Cuban Missile Crisis. The USSR wanted to install nuclear warheads and missiles in Cuba. US versus USSR. Kennedy versus Khruschev. Good versus evil. Eagle versus the bear. Democracy versus communism. According to all historical accounts, it was the closest the world has come to a nuclear holocaust.
In 1963, Kennedy was assassinated. (I was hoping I would find out who was responsible before I died, but time is running out!)
On the domestic front, the ‘baby boomers’ were entering the workforce. As a high school graduate, there were three life choices available: go to college, get a job, or get drafted. That was pretty much it. The economy was booming because there was a war to fuel it. Just about anyone that wanted a job had a job. As eighteen year olds, we could not wait to move away from home and become independent. We never moved back home.
With these events as a background, how did our government spend our money? Our GDP in 1966 was $4.12T. The total government receipts were $689B. Our total outlays were $708B. (Yes! We dealt in billions and not trillions!) Our deficit that year was $19.5B. Ah yes, don’t you long for the good old days now? 42% of all revenues came from individual income taxes. Payroll taxes accounted for 20% and corporate taxes accounted for 23% of revenues.
On the spending side, 43% of all funds were spent on national defense. But here is the biggie….medicare and general health spending was only 2% of the budget that year. Spending on social security, unemployment and labor in 1966 was about 23% of all outlays.
In raw numbers, the Dept. of Defense got $298B, Health and Human Services got $30.1B, Social Security Administration got $109B, Treasury got $61.9B and NASA got $31.2B. The Treasury received their money largely to pay the interest on our $1.74T national debt. Of course there are other departments, but these are the largest and pertinent to this blog.
Now we fast forward 50 years to 2016, the last year of the Obama budget. There were only two budgets put forth by the Obama admistration in his eight years as POTUS. Harry Reed, the senate majority leader, promised not to bring a budget to the senate floor and the ‘gatekeeper from hell’ kept his word. In 2016, the government took in $2.99T in tax revenues. (Yes, we got to the trillions!) 49% of these revenues came from individual income taxes. Payroll taxes accounted for 33% and corporate taxes accounted for 9% of total revenues. The national debt now exceeds $16.7T!
The sources of revenue did not change substantially in 50 years. But how the revenues have been spent have significantly changed. Remember that the defense department accounted for 43% of the 1966 budget? Well, even with all the shenanigans going on with terrorism and wars, the 2016 budget only spent 15% on the defense department. Wow! Where did that money go? The 2% of monies spent on medicare and general health spending in 1966 now consumes 28% of the spending. Spending on social security is now 37% of the budget as compared to 22% in the past. Entitlement programs now consume 65% of our national budget!
The raw numbers are staggering. The Dept. of Defense now spends $515B. The Dept. of Health and Human Services goes from $30.1B to a staggering $995B! The Dept. of Treasury goes from $61.9B to $484B! Much of this is to pay the interest on our growing, inflated national debt. Not to be outdone, the Social Security Administration received a nice bump, going from $109B to $866B! NASA, on the other hand, had its 1966 budget of $31.2B reduced to $17.2B in 2016.
I need to provide a small history lesson at this point. Do you know what the original responsibities were of the federal government? Why the federal government was founded? It was founded for two reasons; national defense and international trade. End of list. It is astounding how the federal government got to its present size. Back to the blog.
There are some logical explainations for these large differences in these federal budgets. In 1966, the huge ‘baby boomer’ generation entered the work force. They worked. They paid taxes. They paid into the social security fund. In 2016, guess what? The ‘baby boomers’ aged. They retired and they began collecting the social security in which they paid for after about 50+ working years.
In 1966, there wasn’t any government provided health care program. We never expected a federal health care program. But now look at what is happening. Obamacare happened, and it has pretty much been a mess ever since. Everyone agrees it needs to change, but we can’t get two people in a room of 100 senators to agree on how it should change. Personally, I think the federal government should get out of the health care business altogether, but the proverbial cat has been let out of the bag. Unlike the old days of 1966 where we did not believe in such a thing as a free lunch, we have people perfectly capable of working that expect a free lunch. In 1966 we were raised under the mantra that, ‘you ate what you killed.’ Now our national conscious is that everyone should eat, even if they haven’t done one thing to feed themselves.
As amazing as it is to see the differences in our budgets after 50 years, it appears this is outdone by our expectations as to what the government owes us in entitlements. Most of these entitlements did not exist 50 years ago, and yet we survived. This is borne out by a Health and Human Services budget that is over 30 times larger than in 1966. (Think ‘welfare’)
During the Cold War, we spent trillions of dollars to defeat those socialistic Communists. Russia has turned from its socialistic/communistic society. You remember socialism/communism. That is the economic and political theory that advocates the means of production, distribution and exchange should be regulated by the community (government) as a whole. Our electorate has seen fit in the last 50 years to elect officials that institute welfare programs that we can’t afford, with money we don’t have, for people who should not receive them. We have given up our independence. Now, with our dependence on our federal government, we have taken the place of the former USSR. Have we become the New Socialists/Communists?
It gives a whole new context to the motto, ‘Land of the free……..’