The spending numbers describe the times

Posted: Thursday, June 21, 2001

NEW YORK (AP) -- Were you to choose just one significant indicator of change in America in recent years it could be this: In 1962, Uncle Sam spent one cent of each tax dollar on health care; it is now about 22 cents.

Dollars might not tell a complete story about change, but unlike most subjective analyses they provide evidence that is clear and difficult to refute. How people spend money confirms their changing interests.

Digging deeper into the one statistical area of health care spending, for example, you find clues to the aging of the population, the rising concern over clean air and water, and ''right'' to improved medical care.

But, while federal government spending on health and medical care might show one of the sharpest increases in the past four decades, it remains in second place to another category, that being Social Security.

Social Security accounts for 23 percent of the budget, the greatest expenditure of any one category. But Social Security is an old story. Begun in the 1930s, it already consumed 13 cents of each dollar by 1962.

Together with income security (defined by the Tax Foundation to include such areas as retirement and disability, nutrition aid and earned income credit) these three items now make up 59 percent of federal tax spending.

Viewed in the short term, the drama of such vast changes may be lost in the relatively small annual increments. Added up, they produce some stunning results. These three spending categories are now mandated.

It means that because of spending commitments made in earlier years, far less than half of the categories in federal budgets today are at the discretion of voters and government officials.

The growth of mandated spending represents a flip-flop from the postwar era, when entitlements were far fewer and 70 cents of every federal tax dollar was available for use as Congress and the White House saw fit.

The cuts in expenditures tell still another aspect of the changes.

The decline and end of the Cold War is reflected clearly in the sharp percentage drop in national defense expenditures from 49 cents of every dollar in 1962 to about 16 cents in fiscal year 2002.

And, after three decades or so of budget deficits, the very recent development of surpluses has reduced interest payments from nearly 15 percent of the dollar to a projected 11 cents in fiscal 2002.

While the interest numbers are clear, the reasons behind the decline are not nearly so easily explained.

There is general agreement that the near decade-long economic expansion produced a surge of revenues that allowed debt payments to be reduced.

But why? Sound government fiscal policies? Or private-sector innovation and entrepreneurship?

Cause and effect aren't nearly so easily related in the short term as they are historically. As of now, political claims distort the reality, so all that can be said for now is that it's one or the other or both.

End Adv PMs Thursday, June 21.

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