Before You Vote… US Economy Decoded

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This presidential election has been nothing short of historic.  Establishments have been challenged, party positions are evolving to further extremes, and we even have a reality TV star to headline the show. Sure, he openly and without shame acknowledges that keeping Mexicans and Muslims out of the country is a priority, but it wouldn’t be entertaining without some Family Guy humor.  Sadly, too many of our constituents find that more appealing than an actual understanding of our government, its challenges, and a productive approach to solutions.  This is especially true when it comes to our economy which has hardly been mentioned in the debates.

The primary reason is that no one can really grasp the concept of trillions.  It is a number beyond anything tangible for a population with a median net worth of $45,000 per adult.  That places us at 19th globally, behind Canada, Japan, and a large portion of Western Europe.  In other words, the US isn’t exactly the greatest country on Earth when it comes to wealth or income equality.  Given that fact, I thought the most helpful way to think about our government spending and the US economy was to break it down to an individual level.  While the average person can’t conceive of the 6.5 trillion the US spends each year, a person can identify $21,000.  The amount spent on each man, woman, and child by the US government.

Of course that money doesn’t actually go to our citizens directly.  It goes to infrastructure, defense, medicare, and host of other services required to run a first world country.  In total, it comes to $6.5 trillion dollars, or roughly one third of the total US GDP ($17 trillion).  While that is up over 20 percentage points from a century ago (roughly 10% of GDP), the portion of the GDP made up by the government has been roughly one third since the end of World War II.  Meaning that no matter which party was in office, our spending relative to the size of our economy has remained mostly constant.  In fact, the only notable change is that during the Reagan administration, the percentage went about about 4 points never to return to its sub thirty percent glory.   Meaning the entire notion of Conservative or Liberal spending is moot… they both spend and many cases the portion spent was higher under a Republican administration.  

Now, back to that $21,000 and how it is spent.  The first $8,600 goes to entitlements.  Before you get hung up on the word “entitle”, the important factor to remember is that this money is committed over long periods of time and therefore takes years or even decades to control.  So even the most Conservative leader couldn’t reign this cost in during a single term or even a second term.  $4,000 of this goes to social security and government pensions, and $4,600 goes to medicare.   Unless we’re going let our elderly go without healthcare and meager social security payments (averaging $1,300 / month or just under $16,000 / year), this money is essentially taken right off the top.  Leaving us with just $12,400 per person per year for everything else.  So where does that go?

Well, aside from from $1,000 which goes directly to debt interest, we have $11,400 for what we think of as discretionary spending.  Here’s where that goes.  $3,100 goes to education, $3,000 goes to defense, and $1,500 goes to welfare.  That’s right, 5% of our total spend or 10% of our discretionary spend goes to welfare.  So for the conservatives that believe in tithing, we are right in line with our welfare spending for what good and decent Christians consider charity.  These three areas total $7,600, leaving us with with $3,600 to spend on everything else.  This includes; transportation, utilities, our government employees, national parks, and basically any other government service you can think of.

Let’s assume the $3,600 is constant and it is really about tradeoffs of where you spend it.  That leaves us with $3,100 for education and $3,000 for defense.  Put this in perspective.  The US ranks 14 globally in education.  We rank first in defense.  Not by a little either.  When you hear people complain that our military has been depleted, tell them this.  The US spends more money on defense than the next highest 13 countries combined.  Think about that visually.  On a chart, you’d have a bar going all the way to the top for the US, and you’d have to stack up the next 13 bars to even match the US.  Of course national security is critical.  But maybe we can just spend more than the top 5 combined, and still be Herculean in comparison.   I love our military, and I prioritize care for vets above all else.  That isn’t where the $3,000 is going though.  It is used to fund roughly 700 bases in 38 foreign countries, $4.5 billion aircraft carriers, $100+ million fighter jets, and other state of the art machinery.  While the pay of an average solider barely eclipses $40,000 per year.  Until we start putting more money in our soldier’s bank accounts, it is probably wise to stop saying it isn’t patriotic to cut military spending.  

How many US citizens even have a cursory understanding of this?  Our media doesn’t even report it.  The research for this post took hours of scouring through government websites and validating numbers from multiple sources.  Every election debate should start with a fact based model of our economy, our government spending, and direct specific questions at candidates for what he or she would do to address our problems.  Instead, we talk about walls, deporting families, the “war on Christianity”, and the evils of socialism.  Maybe instead of creating voter ID laws that attempt to manipulate elections, we should require our candidates to complete a comprehensive exam on our government, economy and foreign policy, then publish the results for the voters.  In most municipalities, a garbage man needs to pass a written test before even being considered.  Yet the only qualifications for becoming President of the United States are being a natural born citizen and over 35 years old.  

The framers of our constitution never contemplated that our president would have the power to destroy the planet multiple times over with nuclear weapons, or that our financial system could take down the global economy with complicated financial derivatives that hedge hedges.  We need to stop choosing our candidates based on who has the better sound bite, and start evaluating each on his or her understanding of the challenges in this country, and providing informed solutions.  It begins with each of us becoming more informed, and demanding the same of our politicians.  Each of you wields $21,000 per year in influence.  It is your money, which is merely being stewarded by our representatives.  Choose wisely this election cycle.  Otherwise, the former star of a reality show who has filed bankruptcy 4 separate times could become your new elected leader.  

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