Taxing the mind: Where our dollars go

April 15 — income tax day, the day we reckon up with Uncle Sam. How does Uncle S. spend the taxes we send to D.C.? Frankly, it’s hard to get a handle on tens and hundreds of billions of dollars.

I think of everything we produce in the United States as being a big pie. Picturing the pie as a clock, federal spending is a slice with one cut at 12 o’clock and the other cut at 2:30. Fifty years ago the federal slice went only from 12 to 2:15.

So in one sense, the amount we share with the government hasn’t much changed. But of course, today’s "pie," the total amount the nation produces, is enormously larger than it was a half century ago. On a per person basis (and adjusting for inflation, of course) we’ve roughly tripled output since 1954.

So while it’s true that the share taken by the federal slice is about the same, it’s worth remembering that both the pie and the federal slice are three times the size they used to be.

The feds don’t eat pie themselves so much as they divvy up their piece and feed it back to us in smaller portions. Looking at the 1954 noon-to-2:15 federal slice, the part from noon to 1:30 went for national defense. Today, the defense slice only runs from noon to 12:30, a much thinner slice of a much larger pie.

The smaller slice and larger pie roughly balance, so defense spending per person is about the same in 2004 as it was in 1954.

The piece of the budget that’s really been super-sized over the years is Social Security and Medicare.

Today, paying for Social Security and Medicare runs the next slice from 12:30 to 1:15, a 45-minute-sized portion about half again as big as national defense. Back in 1954 Social Security was only a six minute serving. And back in 1954 Medicare didn’t even exist. Social Security and Medicare are definitely the big change in how our tax money gets eaten.

The federal government has always borrowed and always paid interest on its debt. Both now and half a century back, federal interest payments on the national debt amount to a 10-minute sized slice. On the one hand, that’s not a huge share. On the other hand, it’s a big pie so the chunk is pretty big, too.

What’s worrisome is that our interest payments are headed upward. The Bush administration forecasts they’ll rise 15 to 20 percent a year for the foreseeable future.

My prediction, if we don’t get the deficit under control, is that in five years we’ll double or triple what we’re now paying in interest. A 20-minute or half-hour slice means that something else big is going to have to give way in the budget. Remember that you heard it here first and that you didn’t like it when you heard it.

The other big change in spending comes from the health and income security categories. (Military retirement pay, unemployment compensation and welfare payments all come under "income security.") This pie slice has grown from under 10 minutes to more than half an hour.

The rest of the federal pie slice goes for lots of small and medium items. We spend some on international affairs, some on science (mostly NASA), on energy, natural resources, agriculture, transportation, education and training and veterans benefits. The "everything else" category accounts for a 20-minute slice.

Of course, it’s really not pie that we send to D.C., it’s money. On Tax Day I think of all the things I could buy for my family if I got to keep more of my tax dollars.

Most of the rest of the year I find myself asking why the government doesn’t take care of this problem or that problem. There’s no point in saying that the government should spend less unless we’re willing to mark which items should be cut.

There’s no point in asking for more services unless I’m willing to pay more taxes.

Dick Startz is Castor Professor of Economics and Davis Distinguished Scholar at the University of Washington. He can be reached at econcol@u.washington.edu.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Snohomish residents Barbara Bailey, right, and Beth Jarvis sit on a gate atop a levee on Bailey’s property on Monday, May 13, 2024, at Bailey Farm in Snohomish, Washington. Bailey is concerned the expansion of nearby Harvey Field Airport will lead to levee failures during future flood events due to a reduction of space for floodwater to safely go. (Ryan Berry / The Herald)
Harvey Field seeks to reroute runway in floodplain, faces new pushback

Snohomish farmers and neighbors worry the project will be disruptive and worsen flooding. Ownership advised people to “read the science.”

IAM District 751 machinists join the picket line to support Boeing firefighters during their lockout from the company on Thursday, May 16, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Amid lockout, Boeing, union firefighters return to bargaining table

The firefighters and the planemaker held limited negotiations this week: They plan to meet again Monday, but a lockout continues.

Pegasus, a 1929 Ford Model AA that once served as Everett Public Library’s bookmobile, is parked in the basement of the Everett Museum of History’s Colby building on Thursday, May 16, 2024, in downtown Everett, Washington. (Ryan Berry / The Herald)
Cruzin’ to Colby has ‘100 years of cars’ showing off in downtown Everett

Last year, over 40,000 people came to the free event, a Memorial Day weekend tradition for nearly 25 years.

N3054V accident site. (Alaska State Trooper Photo)
Lake Stevens pilot, who lived ‘Alaska dream,’ died in Fairbanks crash

Former Snohomish County lawyer Harry “Ray” Secoy III, 63, worked as a DC-4 pilot in Alaska in the last years of his life.

Air and ground search and rescue teams found Jerry Riedinger’s plane near Humpback Mountain on Monday. (WSDOT photo)
Remains of pilot recovered near Snoqualmie Pass after Arlington flight

Jerry Riedinger never made it to Ephrata after departing the Arlington airport Sunday. Investigators have not determined the cause of the crash.

Federal prosecutors say the two men shown here outside the U.S. Capitol on Jan. 6, 2021, are Tucker Weston, left, and Jesse Watson. (U.S. Attorney’s Office for the District of Columbia)
Lynnwood roommates sentenced for roles in Jan. 6 riot

Tucker Weston was given two years in prison Thursday. Jesse Watson received three years of probation in August 2023.

Pippin the Biewer Terrier sits in the lap of her owner Kathy West on Monday, May 20, 2024, at West’s home in Marysville, Washington. (Ryan Berry / The Herald)
Marysville’s ‘top dog,’ on 48-kibble-a-day diet, shines at Westminster

Fame hasn’t turned this Biewer Terrier’s head or nose: in her spare time she’s a lap dog, hiking buff and bunny chaser.

Lynnwood
Lynnwood firm faces $790K in fines for improper asbestos handling

State regulators said this is the fifth time Seattle Asbestos of Washington violated “essential” safety measures.

A truck towing a travel trailer crashed into a home in the Esperance neighborhood Thursday, May 23, 2024, in Edmonds, Washington. (South County Fire)
Man seriously injured after his truck rolls into Edmonds home

One resident was inside the home in the 22500 block of 8th Avenue W, but wasn’t injured, fire officials said.

Ferry workers wait for cars to start loading onto the M/V Kitsap on Friday, Dec. 1, 2023 in Mukilteo, Washington. (Olivia Vanni / The Herald)
The Memorial Day holiday weekend travel nightmare is upon us

Going somewhere this weekend? You’ll have lots of company — 44 million new BFFs — on planes, trains and automobiles.

Bothell
Bothell family says racism at Seattle Children’s led to teen’s death

In February 2021, Sahana Ramesh, the daughter of Indian immigrants, died after months of suffering from a rare disease.

Boeing Firefighters and supporters have a camp set up outside of Boeing on Airport Road as the company’s lockout of union firefighters approaches two weeks on Thursday, May 16, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Union firefighters reject Boeing’s latest contract offer

The union’s 125 firefighters on Wednesday overwhelmingly rejected the offer, which included “an improved wage growth” schedule

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.