Thursday, June 30, 2011
Wednesday, June 29, 2011
Sunday, June 26, 2011
How Much Would You Pay for the U.S. Government?
John, Jane, and their young son Justin are the typical American family. Two cars are parked inside the garage of their moderately sized house. With one predominant breadwinner, and a spouse who works part-time, the family pulls in about $60,000 a year. They spend $50,000. They save between $2,000 and $3,000. The rest is taxed.
No, not taxed. Let's say something else instead. Let's say the money is spent to buy government. How much should they spend?
It helps to understand how much they're paying for other stuff. Every year, John and Jane spend $17,000 on housing, including shelter, utilities, and furniture, according to the U.S. consumer expenditure survey (see above). They spend $9,000 on transportation, between their cars, gasoline, and the occasional taxi. They $6,000 on food. A little over $3,000 at home. A little under $3,000 at restaurants. Average consumer spending on entertainment and media -- cable, movies, etc -- is kissing triple digits. If they have smart phones, they probably spend more than $1,000 each on a data plans.
The price of government for the average American family falls somewhere between $5,000 and $10,000.
John and Jane are content, but they want security. What happens after they retire, when one of them gets sick, or the breadwinner becomes disabled? How much would they pay for highly trained professionals guarding their country, their airports, and their neighborhoods? For good roads and bridges? For enforced regulations to keep food and consumer products safe for Justin? For a year in public schools and national parks?
All of that is what government is for. So what's a good price for government?
You can argue that government is priceless, but it has a price. It's $3.6 trillion. That's what Washington spends every year to do its business, and its business is security. Social Security (20% of the budget) provides retirement security. Medicare and Medicaid (another 20%) provide health security. Defense (another 20%) provides national security. More than 10% is various forms of income security.
Now, how much should we pay for all this? The first thing to note is that we don't pay for all this. In 2010, taxpayers paid about $2 trillion for a government that spent $3.5 trillion. We borrowed the rest.
For the typical tax unit making $45,000 a year, the price of government is $5,535.
Most government revenue comes from the richest Americans, who have most of the income in the first place. For the typical tax unit making $45,000 a year, the price of government is $5,535. For John and Jane, a typical consumer unit (which is measured differently), it's probably closer to $10,000.
The upshot is that the price of government for the average American family falls somewhere between $5,000 and $10,000. Remember, John and Jane spend $6,000 on food and $9,000 on entertainment. Somewhere between food and entertainment for the typical family is the price of government.
This exercise has two points.
First, if we want to close the deficit, we need to think more rigorously about what we want government to do, how much it will cost, and how we're going to pay for it. Republicans want to cut taxes (which are already at their lowest effective rate in half a century) while keeping defense and Medicare. Democrats want to expand the value of government for the lower middle class while letting them pay less for it. In an age of austerity, we need better arithmetic from our leaders.
Second, we also need a better understanding among of voters of how much government does that is worth paying for. Why do people in China, who are much poorer than the typical American, save 33% of their money while Americans save 3%? One big reason is that we pay our government to insure us when we get old and sick. China has much less protection. If government spends less on necessities like health care and retirement security, we'll have to spend more. Those are dollars that won't go to our homes, our food, our kids.
One more time: $17,000 for a year in housing, $9,000 for a year in transportation, $6,000 to $10,000 on a year on the federal government, and $6,000 on a year in food. So, what do you think of those prices?
The Truth About American Exceptionalism
America is exceptional but not in the way Republican Presidential candidates think
BY DAVID MORRIS
For Republican presidential candidates the phrase American Exceptionalism has taken on almost talismanic qualities. Newt Gingrich’s new book is titled, A Nation Like No Other: Why American Exceptionalism Matters. “American the Exceptional” is the title of a chapter in Sarah Palin’s book America by Heart.
And woe be to those who take issue with the phrase. 2008 Presidential candidate Mike Huckabee declares, “To deny American exceptionalism is in essence to deny the heart and soul of this nation.” 2012 Presidential candidate Mitt Romney insists, “The reorientation away from a celebration of American exceptionalism is misguided and bankrupt.”
What is this American exceptionalism Republicans so venerate? After interviewing many Republican leaders, Washington Post Reporter Karen Tumulty concludes it is the belief that America “is inherently superior to the world’s other nations”. It is a widely held belief. Indeed, most Americans believe our superiority is not only inherent but divinely ordained. A survey by the Public Religious Research Institute and the Brookings Institution found that 58 percent of Americans agree with the statement, “God has granted America a special role in human history.”
Let me make it clear at the outset. I too believe in American exceptionalism, although I don’t think God has anything to do with it. But I suspect my perspective will find little favor among Republicans in general and Tea Party members in particular. For I believe that America is exceptional in the advantages we’ve had over other nations, not what we’ve done with those advantages.
Indeed, to me there are two American exceptionalisms. One is the exceptionally favorable circumstances the United States found itself in at its founding and over its first 200 years. The second is the exceptional way in which we have squandered those advantages, in the process creating a value system singularly antagonistic to the changes needed when those advantages disappeared.
Americans did not become rich because of our rugged individualism or entrepreneurial drive or technical inventiveness. We were born rich. Ann Richards’ famous description of George Bush Sr. as an individual is equally applicable to the United States as a whole, “He was born on third base and thinks he hit a triple.”
When asked to identify the single most important difference between the Old and New World, renowned historian Henry Steele Commager responded, in the New World your baby survived. The New World had an abundance of cheap land which meant the New World, unlike the Old World, was largely populated by self-reliant property owners. Coupled with a moderate climate and rich soil, immigrants could grow all the food needed for their families, livestock and horses. There was plenty of clean water and sufficient free or low cost wood to build and heat one’s house.
The fact that Americans could choose to live on a farm also gave them significant bargaining power with employers. As a result wages in the New World were much higher than in the Old World.
The United States also benefited enormously from tens of millions of immigrants who, through a Darwinian-like process of natural selection, were among the most driven and entrepreneurial and hardy of their native countries. And on the dark side of the immigration picture, we also benefited immensely from millions of involuntary immigrants who provided an army of unpaid labor for southern plantations.
American exceptionalism must also include our unique advantage in having two oceans separating us from potential enemies. After 1815, no foreign troops ever again set foot on American soil. Indeed, America has benefited mightily from foreign wars. Arguably, the conflict between France and England had more to do with our winning independence than our own military efforts. In the first half of the 19th century, European wars led political leaders to peacefully sell huge quantities of land to the United States for a pittance (e.g. the Louisiana purchase of 1803 doubled the size of our infant nation).
A century later foreign wars again dramatically benefited the United States. “In the twentieth century the American economy was twice left undamaged and indeed enriched by war while its potential competitors were transformed into pensioner”, notes historian Godfrey Hodgson. After World War I the United States became the world’s creditor. After World War II Europe and Japan lay in ashes while the United States accounted for a full 40 percent of the world’s economy.
The list of exceptional advantages must also include our vast reserves of fossil fuels and iron ore. For our first 200 years we were self-sufficient in oil. Today we still export coal and are largely self-sufficient in natural gas.
Making a Sow’s Ear Out of a Silk Purse: The Culture Born of American Exceptionalism
Americans became the richest people on earth not because we were endowed with inherently superior national traits nor because we are God’s chosen people, nor because we have an elegant and compact Constitution and a noble sounding Declaration of Independence. We became rich because we were exceptionally lucky.
But the myth that we became richer than other countries because of our blessedness encouraged us to develop a truly exceptionalist culture, one that has left us singularly unequipped to prosper when our luck changed, when inexpensive land and energy proved exhaustible, when the best and the brightest in the world began staying at home rather than emigrating to our shores, when wars began to burden us and enrich our economic competitors.
The central tenet of that culture is a celebration of the “me” and an aversion to the “we”. When Harris pollsters asked US citizens aged 18 and older what it means to be an American the answers surprised no one. Nearly 60 percent used the word freedom. The second most common word was patriotism. Only 4 percent mentioned the word community.
To American exceptionalists freedom means being able to do what you want unencumbered by obligations to your fellow citizens. It is a definition of freedom the rest of the world finds bewildering. Can it be, they ask, that the quintessential expression of American freedom is low or no taxes and the right to carry a loaded gun into a bar? To which a growing number of Americans, if recent elections were any indication, would respond, “You’re damn right it is.”
Strikingly, Americans are not exceptional in our attitudes toward government. In a survey of 27 countries, two thirds of the respondents on both sides of the Atlantic answered yes to the following question, “Does the government control too much of your daily life? Is it usually inefficient and wasteful?”
What makes us exceptional is our response to the next question. “It is the responsibility of the government to reduce the difference in income”. Less than a third of Americans agreed while in 26 other countries more than two thirds did.
Citizens in other countries are as critical of their governments as we are. But unlike us they do not criticize the importance of government itself or the fundamental role it plays in boosting the general welfare. They do not like to pay taxes, but they understand the necessity of taxes not only in building a public infrastructure but also in building a personal security infrastructure.
Far more than other peoples, Americans believe that skill and hard work are the keys to success and wealth is a measure of how hard you work or how skilled you are. Which leads us to believe that people should have the right to amass as much wealth as they can and view a graduated income tax as a punitive penalty on success and a sturdy social safety net an invitation to slothfulness, reduced productivity and an overall slowdown in economic growth.
The expression, “The Nanny State” is singularly American. The expression “We’re all in this together”, while rhetorically still extant in the United States, less and less describes the values that motivate our policies.
In contrast, Europeans believe luck and circumstance are more important than hard work and skill and a sturdy social safety net is needed to help those who are unlucky. Acting on this principle, they have designed most of their social benefits to be universal, as have Canada and Japan, unlike here where residents have to prostrate themselves before bureaucrats to validate their penury before they are grudgingly doled out ever-smaller and temporary amounts of assistance.
One consequence of universality is that even while they complain about taxes, Europeans can point to many aspects of their lives where they directly and personally benefit from taxes (e.g. universal health insurance). Americans cannot.
For many Americans even means tested benefits are unwelcome. The term “welfare” is a pejorative a handout given to undeserving people who will use it in unworthy ways. Ronald Reagan’s lethal phrase “welfare Queen” accurately captured that mindset.
The new influence of Tea Party conservatives has taken this anti-social attitude a step further best reflected in the speeches of Representative Paul Ryan, Chairman of the House Budget Committee and made concrete in his recent budget. Ryan believes that helping the poor represents a “collectivist” philosophy. His heroine is Ayn Rand, the God of libertarians. He requires his staffers to read Rand’s novel, Atlas Shrugged and calls Rand “the reason I got involved in public service.”
Jonathan Chait sums up Rand’s moral philosophy, “The core of the Randian worldview, as absorbed by the modern GOP, is a belief that the natural market distribution of income is inherently moral, and the central struggle of politics is to free the successful from having the fruits of their superiority redistributed by looters and moochers.”
For Ayn Rand charity is not only unwelcome; it is evil.
"Do not confuse altruism with kindness, good will or respect for the rights of others…The irreducible primary of altruism, the basic absolute, is self-sacrifice—which means; self-immolation, self-abnegation, self-denial, self-destruction—which means: the self as a standard of evil, the selfless as a standard of the good. Do not hide behind such superficialities as whether you should or should not give a dime to a beggar. That is not the issue. The issue is whether you do or do not have the right to exist without giving him that dime.
That value system is made explicit in Paul Ryan’s much publicized budget which would slash taxes on the rich by almost $3 trillion while cutting spending on the needy by almost that much."
The United States is also exceptional among industrialized nations not only in having by far the world’s most unequal income distribution but in believing that this inequality benefits us all, despite mountains of evidence to the contrary.
The data is crystal clear. Since 1980, the income share of the upper 1 percent of Americans has doubled. The share going to the top 0.1 percent, those earning more than $1.2 million a year, has quadrupled. Meanwhile the average worker’s wages have declined. In 2004 a full-time worker’s wage was 11 percent lower than in 1973, adjusting for inflation, even though productivity had risen 78 percent between 1973 and 2004
In the last decade, while the top 1 percent of Americans saw their incomes rise, on average, by more than a quarter of a million dollars each, the average income of the bottom 90 percent of all working Americans actually declined.
To Republicans, inequality is unimportant because of another aspect of American exceptionalism, the unparalleled opportunity in the United States for those with ambition and grit to move up the economic ladder. They insist, and most of us firmly believe, that America is still the land of opportunity, that the probability of a rags to riches saga is much higher here than abroad.
But recent data contradicts that fundamental tenet of American exceptionalism. A Brookings Institutionreport comparing economic mobility in the United States and other countries concludes, "…"Starting at the bottom of the earnings ladder is more of a handicap in the United States than it is in other countries." And more broadly notes, "there is growing evidence of less intergenerational economic mobility in the United States than in many other rich industrialized countries.”
Another hobbling fundamental tenet of American exceptionalism is that we have nothing to learn from other countries. Why mess with God’s perfection? Back in the late 1980s I went to producers at Minneota’s public television station, TPT and proposed a show tentatively entitled, “What We Can Learn From Others”. They wondered what in the world I was smoking.
This sense of uniqueness has most clearly been reflected in our debates on national health care reform. In 1994 both the United States and Taiwan engaged in national debates about how their health care systems might be improved. To come up with the answers, Taiwan’s leaders visited about a dozen other countries to gain insights about the wide variety of existing national health system structures and used these insights to tailor a system adapted to their own needs. US leaders visited no other countries. The debate rarely even mentioned other countries except dismissively and usually inaccurately (e.g. Canadians cannot choose their own doctors). This occurred despite the overwhelming evidence that the US medical system is the most expensive, the least accessible and by many measures, one of the least well-performing of any in the industrialized world.
The 2009 debate over health reform took place as the United States economy collapsed, unemployment soared and foreclosures mushroomed. Yet there was virtually no discussion about the relationship of health care and personal financial adversity. A study by Steffie Woolhandler and colleagues at the Harvard Medical School done in 2007 revealed a remarkable statistic: 62 percent of US bankruptcies were a result of medical expenses. Equally damning, 75 percent of the people with a medically related bankruptcy had health insurance.
How does this woeful statistic compare to other countries? It is impossible to say because in other countries such a statistic would be a sign of gross irresponsibility and perhaps a societal breakdown. On Frontline, Washington Post veteran reporter T.R. Reid examined health systems around the world. In the process he interviewed the President of the Swiss Federation. Switzerland had dramatically changed its own health system in 1994 through a national referendum.
Reid: How many people in Switzerland go bankrupt because of medical bills?
Swiss President Pascal Couchepin: Nobody. It doesn't happen. It would be a huge scandal if it happens.
Conservatives proudly point to the Declaration of Independence as the foundational source of their guiding principles. “We hold these truths to be self-evident that all men are created equal that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
But American exceptionalism has bred a culture and value system that have in turn embraced policies that have made the pursuit of happiness exceedingly difficult.
More and more Americans are desperately trying to hold on. In an astonishing reversal of the first 200 years of American history when we were seen as perhaps the most optimistic of all peoples, we have become one of the most personally insecure.
To make up for the decline in wages, Americans are working longer hours and taking on more debt just to make ends meet. Today Americans are at work 4-10 weeks longer than their counterparts in Europe. Forty million Americans lack health insurance and tens of millions more have health insurance with limited coverage.
As I mentioned at the beginning of this article, at the founding of the American Republic a key difference between the Old World and the New World was that in the New World a baby survived. Today, the numbers paint a different picture. The proportion of infants that survive in the United States is one of the lowest in the industrialized world.
At the founding of the nation, access to low cost land transformed the United States into the first large nation in history populated principally by property owners. Since late 2007. however, there have been more than 7 million foreclosures in the United States and some predict another 2 million in 2011.
America has been and continues to be exceptional. At first we were exceptional because of circumstances that conferred on us enormous advantages over other nations. Today we are exceptional because of our culture, a culture born of our unusually fortunate history and now perhaps the single biggest handicap to our collective survival and prosperity in the less favorable circumstances of the 21st century.
Charting American Exceptionalism