Political Economics - Part II

Or, 'How to respond to right-wing pundits/morons/officials on the Economy'.
This was basically covered my last post, but here I'll use specific items and do some recapping with updated numbers. My previous post also has lots of links.

GNP = Gross National Product ($14 trillion)
Budget = what congress has authorized to spend ($3 trillion)
Receipts = actual tax revenues received (approximately 18.5% of GNP - $2.7 trillion)

One of the ways politicians like to muddy up the waters when it comes to the economy, is to compare one item to the GNP, then comparing another item to the budget. Of course, these comparisons become talking points that are handed down the line, and no one seems to question them. Why? Well, they are valid facts, and they've been used so often. The right wing will compare military spending to the GNP (giving it a very low %), while comparing domestic spending to the budget (giving a high %).

These are some of them:
Item ------ % of...... GNP......Budget...... Receipts
federal deficit......... 1.5%....... 10%..........11.3%......($300 billion)
federal debt ............ 35%...... 176% ........ 200%......($5.4 trillion)
military spending... 3.6%...... 16.3%....... 18.5%......($500 billion)
middle-east war..... 1.2% ....... 5.6% ........ 6.3%......($170 billion)
military+war.......... 4.8% ..... 21.9% ...... 24.8%......($670 billion)
subsidies................ 0.3%........ 1.6%......... 1.8%......($ 48 billion)
scienc/tech/space... 0.2%........ 0.8%......... 0.9%......($ 25 billion - estimate)
As you can see, 25% of current taxes (22% of the budget) goes to the military/war. This does not include homeland security, retirement benefits, etc., so my tables may be different than others.
The latest gov. tables can be found here and here.

The crux of this is that comparing anything to the GNP, is nothing more than a 'red herring'. The government does *not* pay its bills from the GNP, it pays them by it's receipts. The GNP is used as a measure of how the country is doing economically, and gives an estimate of the receipts that the government can expect, but has no real bearing on expenditures (except as a comparison to other countries or historical comparisons).

So the next time a right-wing pundit/moron/official says we spend less than 4 cents of every GNP dollar on the military, turn the 'tables' on them and give them the real comparison/figures that effect actual income vs. expenditure by comparing it with the budget or receipts.

Please note: I am not an economist, but most of the info is out there if you look. Here's some starters:
Bureau of Economic Analysis
Office of Management and Budget
Congressional Budget Office