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View Diary: Occupy the tax code: why taxing the rich will make the economy soar (79 comments)

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  •  You Read the Tables Incorrectly! GDP is not $58T (0+ / 0-)

    You wrote:

    For 2009: GDP 55,755.70, Government spending 11,670.10, ratio 20.9%.

    For 2010: GDP 58,106.20, Government spending 12,011.20, ratio 20.7%.

    The table you reference gives the quarterly results as annualized numbers it looks like you added the numbers together which is an incorrect understanding of the numbers.

    Right at the top of this table it says:

    Table 1.1.5. Gross Domestic Product
    [Billions of dollars] Seasonally adjusted at annual rates
    Last Revised on: December 22, 2011 - Next Release Date January 27, 2012

    One can take the average of the 4 quarters to get an annual total of $14,526.55 for 2010 GDP (this is not the exact total for 2010 - but very close due to seasonal adjustments)

    For total government spending you took the number that did not include transfer payments - programs such as Social Security, Medicare, Medicaid, etc..  These government programs are however a very important part of government spending.  Transfer payments are not included here - as the results of transfer payments appear in Consumption and putting it in both places would result in double counting.  So paying for a public school teacher is in the government number, but Medicare paying for a $10,000 procedure is not.

    The right data for Total Expenditures from BEA is Table 3,1 Line 33 "Total expenditures".  Taking the 2010 average of the annualized quarters we get:  $5,538.8 for 2010 Federal, State and local government expenditures.

    Dividing Total Expenditures by GDP  ($5,538.8/14,526.55)  we get 38% not the 20.7% you incorrectly calculated.

    Your giving me a HR was rude and uncalled for.  I have therefore returned the favor, but I will remove the HR you earned only after you remove the one you gave me.

    I will not ask you to prove you are not a fool.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Fri Dec 30, 2011 at 08:24:46 PM PST

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    •  Counting transfer payments (2+ / 0-)
      Recommended by:
      elwior, kyril

      as a part of government spending is probably not a valid way to make your argument. When you wrote above that

      There are many studies over decades and across
      countries that show once essential infrastructure for commerce, and other core functions of government are in place,  higher shares of GDP for government spending results in lower GDP growth.
      you probably weren't looking at studies that included transfer payments in these other countries and time periods. (Or, if they did, do they then show the U.S. as a major outlier, considering how U.S. GDP grew after first Social Security and then Medicare were instituted?)

      Let us all have the strength to see the humanity in our enemies, and the courage to let them see the humanity in ourselves.

      by Nowhere Man on Fri Dec 30, 2011 at 10:42:53 PM PST

      [ Parent ]

      •  Transfer payments are part of Government Spending (0+ / 0-)

        When GDP is calculated it accounts for goods and services produced and used in either consumption or investment or export by citizens or government.

        The accounting for spending in GDP data varies by country when it comes to items like government paid health care and some other transfers.   For example, the National Health Service in the UK gets included in its GDP calculation for Government consumption, while Medicare is not included in the US.

        With transfer payments, taxes must be collected or debt sold or monetized to pay for these transfers, so paying for transfers has the same burden on the economy as any other government spending.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Fri Dec 30, 2011 at 11:05:33 PM PST

        [ Parent ]

        •  Well, let's see... (0+ / 0-)

          Social Security taxes were first collected in 1937, which was a pretty good year for a then-dismal economy. (The US infamously slipped back into depression in 1938, when Roosevelt was persuaded that government spending had been dangerously high.) But since the U.S. entered WWII in late 1941 -- and had been helping to arm both sides before then -- it's hard to directly measure Social Security's impact on the economy. It does seem safe to say, though, that Social Security did not cause the wreck of the U.S. economy.

          How about Medicare? The Social Security Act of 1965, which established Medicare, was signed on July 30 of that year. Unemployment was then 4.4 percent. By February 1966, unemployment had dropped under 4 percent; it pretty much stayed below that level until 1970, at the start of the second year of a Republican administration.

          So what data are you looking at?

          Let us all have the strength to see the humanity in our enemies, and the courage to let them see the humanity in ourselves.

          by Nowhere Man on Sat Dec 31, 2011 at 08:31:08 AM PST

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    •  Just to let you know nextstep, (4+ / 0-)

      you should not give out an HR in retaliation for one given to you. And you should not be calling others here a "fool."
         Further, you are breaking a cardinal rule by exhibiting dickishness (as Kos calls it) in someone else's diary. And beyond that, you jumped on at the start, and have persisted throughout.
         You should remove your HR and apologize to this diarist.

      "We the People of the United States...." -U.S. Constitution

      by elwior on Sat Dec 31, 2011 at 12:03:40 AM PST

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