There appears to be at least as many permutations and
combinations available for presenting the US Federal Budget and Government
Spending data as there are years that it would take you to count to $2 Trillion
dollars, which is about 60,000. Note that in the US the number One Trillion is
One Million times by One Million, or 10 to the power of 12. For the
mathematically inclined, the correct mathematical definition of One Trillion is
One Million to the power of 3, and the correct mathematical definition of One
Billion is One Million to the power of 2. But in America numbers work
differently, so it came to be that One Billion got redefined as One Million to
the power of 1.5, and One Trillion is redefined as One Million to the power of
2. The effect and advantage of being the Imperial Superpower is that everybody
else in the world now had to adopt this number conversion.
Rome is Burning
The U.S. Federal Budget has been in the news a lot lately
both Republicans and Democrats both showcasing their version of the numbers.
How you present the Federal Budget depends entirely on the bias you start with
and the point you are trying to make. Therefore I decided to admit the bias
up-front and then you can better decide what to do with the data. My bias in
looking at U.S. federal spending was the thought that maybe we might be on fire
just like the Roman Empire was over 1,000 +-years ago. To be sure, the Roman
Empire had many similarities with the modern U.S. Empire - both being Empires
built on a combination of clever legal systems, hard-work, confidence, much
brutality in military conquest and extensive use of slave labor, coupled with a
system of desirable, tempting, and free entertainment to warm the masses to the
Empire (think Roman Idol), as well as erratic spouts of helpful assistance to
the poor. Certainly also, a widespread Roman currency and trade system, and an
extensive taxation and government spending program were just as critical to the
success of the Roman Empire, as they are now in today's American Society.
The comparisons of Budgets started with finding a Roman
budget at a time around when their leaders stopped being elected and instead
were "appointed" and when ancestral lines of Emperors became very
popular. So I started with the early Empire days of the 1st - 2nd Centuries AD.
The approach I have taken is based on historical data from those days, to
calculating the Roman budget in this period. The total Roman budget was about
$1 billion sesterces, a common Roman currency that started in the BC years as
about 1/4 of the Moneta denarius. These are estimates for the Roman budget in
150 AD broken down into the following expenditure categories. Roman Empire
Budget Distribution Source of Roman Data Expense Item Percent Outgo:
Military 70%
Civil Service - Judiciary, Police, Government Departments
10%
Social Spending 5%
Economic Infrastructure 5%
Other - Mostly Foreign Affairs 10%
Now compared to U.S. Actual Government Spending in earlier
years subtracting both Social Security and Medicare, which have been fully
self-funded by separate taxes (the FICA taxes) since the early 1980s. Then you
subtract interest on public debt for comparison purposes since the Roman Empire
did not have a consistent, well-developed system of Sovereign debt issuance
like America does today.
Some other adjustments to be made to U.S. Spending were to
include Veterans Benefits, Military Retiree benefits and Military Assistance to
the Provinces (Countries) of Judaea and Egypt (Israel and Egypt) with Military
Spending. The inclusion of benefits to ex-military employees is consistent with
the way the Roman data was derived, and the inclusion of military aid to Israel
and Egypt was done because these were the two most expensive outer-Provinces to
maintain under both Regimes. The following distribution of expenses on a
comparable basis can be derived from the full current Budget of the U.S.
Government. We are focusing on the demands on the Budget coming from the aging
of the population and society's increasing medical expenses. America’s Budget
Distribution Expense Item Percent Outgo breaks down to something like this:
Military 40%
Civil Service Admin, Justice, Treasury, Fed Civil Retirees
10%
Social Spending - Medicaid, Food, TANF, Unemployment,
Housing, SI 30%
Physical and Economic Infrastructure 10%
Other - Education/Training, Research, Foreign Affairs 10%
Clearly the data indicates that social spending in the Roman
Empire was generally at a very low level. However social spending tended to
happen erratically in much larger amounts, depending on the Emperor of the day,
and the need to win over public opinion. What is clear from looking at the two
budgets is that the current U.S. budget has more regular proportions of social
spending, especially in comparison to military spending. However, it should be
noted that the U.S. budget looked much more Romanesque in earlier decades of
the last century, notably during the 40s for WW2 and during the 50s in gearing
up for the Cold War, where military expenditures were close to, and sometimes
even exceeded, the Roman proportion.
The move from a Romanesque budget of the 1950s to current
U.S. spending distribution has a lot to do with increased healthcare
expenditures such as Medicaid, and the introduction of things like the Earned
Income Tax Credit, and changes to Unemployment, Housing and Food Assistance
Programs. Note that most of these social spending items included in the 30%
fall under the grouping of "Means Tested Entitlements" which means
that they make up the social safety net for people whose income and assets fall
below a certain threshold.
The other primary social spending benefits or social safety
net items are Social Security and Medicare, which apply to Retired and Disabled
Persons and are not means tested. As noted earlier these benefits have been
self-funded through separate employer and employee contributions (known as the
"FICA taxes") for the past two decades and half. In general, rising
medical costs affect both Medicare and the means tested healthcare entitlements
such as Medicaid. In fact, one of the Historical Data Tables in the Budget
shows total government spending on all health programs to have increased from
about 2% of the Budget in 1962 to just over 10% by 1980, to almost 25% or one
quarter of the Budget by the year 2001.
The USS Ark of Healthcare Reform
As anyone with a health insurance policy will tell you,
healthcare costs under private sector coverage continues to rise. Overall, an
increasing amount of America's total Gross Domestic Product (GDP - a measure of
the total economy) is spent on healthcare. To keep score of the size of an
economy and the size of national income people often talk about GDP . This
measure of national income is also equivalent to Annual Consumption Expenditure
plus Government Spending plus Investment - which are the only three places your
money can go. That is, any income you get either goes to taxes, you spend it or
you invest it. U.S. GDP is about $14.6 Trillion US dollars. Consumption
Expenditure makes a Trillion dollars a year. Today healthcare expenditure makes
up about 16.5% of U.S. GDP. About 30% of this is picked up in Government
Spending; the rest is in private spending. At the current rate of growth,
healthcare costs are predicted to nearly double to $4.5 trillion in the year
2019. At that point, those costs will account for 19.3 percent-almost a
fifth-of our GDP. America spends more on healthcare as a percent of its GDP
than any other developed nation, but has less public coverage for this cost and
a large uninsured population. So, the high spending on healthcare in the U.S.
must be explained by something other than a general concern that everyone has
adequate care.
To a very large extent the high level of American healthcare
spending is a result of America becoming victim of its own technological
success, its sedentary lifestyle and a culture obsessed with longevity,
overcoming natural cycles and the desire to "stay young". The latter
appears to be common to inhabitants of Great Empires of the past. This cultural
obsession, fed by medical technologies far superior to those of any other
country, may suck up so much of the US economy that it won’t be able to sustain
its global super power status. Indeed it is perhaps the very fear of this that
is really driving the attempt to reform and redefine Healthcare, Social
Security, Medicare and Medicaid.
Now moving on to some of these other expense items, it
should be noted that "Other Spending" includes Foreign Affairs
expenditure other than the expenses of maintaining the outer provinces of
Israel and Egypt, which are included in the Military item. Under both Empires
so-called "foreign aid" is or was an important part of keeping peace
with peripheral provinces or countries. Unlike Rome, the U.S. also successfully
uses loans through various multi-lateral institutions such as the IMF, World
Bank and Inter-American Development Bank to maintain optimal relations with
peripheral sovereigns.
This use of loans gets to one of the fundamental differences
between Rome and America - the role and leverage of the financial system. The
U.S. success is largely due to the success and complete faith in its monetary
system. In contrast, the Roman Empire's monetary system was almost entirely
metal based and while there was easy access to credit for the ruling classes
this was not true for other classes. There appears to be much debate among
historians about what stopped the Roman Empire from having an industrial
revolution. But whatever one's opinion, surely a pre-requisite is a highly
leveraged, monetary system with sophisticated, widespread access to credit. But
Rome never got to such sophistication with its financial system.
This provides us with another reason why its success was
always more driven by military conquest than anything else. In contrast, for
the modern American superpower, financial influence is on a par with military
power, and both feed off each other. The financial success of the American
Empire has also made its tax collection process far more efficient than any
previous Empire before. In Roman time the tax collector had to go door to door
to collect heavy coins, cattle, feed etc. But still just like then the biggest
problem being with collecting from the rich. Remember the biblical character of
Noah and the Ark warned of an impending storm like no other storm in history.
Well our storm has arrived in the form of healthcare spending. And if we don’t
take swift action the USS Ark of Healthcare Reform will close its doors and
sail off leaving the bulk of its people medically stranded and unprotected. And
just like Noah’s Ark the USS Ark of Healthcare Reform will not have any place
to dock instead it will continually drift in a sea of red ink!
