The Sixteen-Trillion-Dollar Mistake / Edition 1

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Overview

Choices about budget priorities are arguably the most important made by the federal government, profoundly affecting the well-being of citizens. Bruce Jansson documents how presidents from FDR to Clinton have made ill-advised choices that wasted trillions of dollars. Going beyond charges of corruption or bureaucratic waste, the book is an eye-opening exposé revealing innumerable useless projects (military as well as civilian), unnecessary tax concessions, and the use of interest payments to cover deficit spending, among other costly mistakes. Using Office of Management and Budget projections through 2004, Jansson shows how the madness continues -- and how an informed electorate can put an end to it.

Columbia University Press

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Editorial Reviews

Denver Post
This isn't a polemical book, it's a somber one that makes you realize how routinely we've come to mistake absurd polemics for common sense.

— Paul Rosenberg

The Historian
Jansson's analysis is persuasive on several points... will surely fuel additional interest.

— A. Scott Henderson, Furman University

Journal of American History
Provides a systematic, informative, and suprisingly absorbing survey...yields important insights.

— Mark H. Leff, University of Illinois—Urbana

The Social Policy Journal
Jansson is able to critically juxtapose the Bush and Clinton presidencies of the late 1980s and 1990s, sharing compelling comparisons of various budgetary considerations... The Sixteen-Trillion-Dollar Mistake is an excellent source concerning the ongoing evolution of social policy in the United States, and the multiple political forces that can drive policy resource provision and implementation.

— David Woody, University of Texas at Arlington

Virginia Quarterly Review

There is no other book quite like this.... It could hardly appear at a better time.... Jansson writes lucidly and at times with some panache.... Breaks new ground.

Denver Post - Paul Rosenberg

This isn't a polemical book, it's a somber one that makes you realize how routinely we've come to mistake absurd polemics for common sense.

The Historian - A. Scott Henderson

Jansson's analysis is persuasive on several points... will surely fuel additional interest.

Journal of American History - Mark H. Leff

Provides a systematic, informative, and suprisingly absorbing survey...yields important insights.

The Social Policy Journal - David Woody

Jansson is able to critically juxtapose the Bush and Clinton presidencies of the late 1980s and 1990s, sharing compelling comparisons of various budgetary considerations... The Sixteen-Trillion-Dollar Mistake is an excellent source concerning the ongoing evolution of social policy in the United States, and the multiple political forces that can drive policy resource provision and implementation.

Publishers Weekly - Publisher's Weekly
Spurred by unrealized talk of a peace dividend when the Cold War ended, Jansson (The Reluctant Welfare State), a scholar at the University of Southern California, took nearly a decade to research and write this lucid, remarkably flowing, critical history of American government spending and national priorities from 1932 to the present, tracing the policy and political dynamics that, he says, have wasted $16 trillion (a conservative estimate, he claims). Jansson is not referring primarily to the pork-barrel expenditures usually associated with government waste, which, he states, amount to only "pennies on the dollar." Instead, he focuses primarily on undertaxation (of individuals as well as corporations) and the resulting huge debt payments and military spending, which have chronically crippled vital domestic government programs. Jansson clearly documents sometimes surprising but key historical issues, such as the severe underfunding of the New Deal and Great Society ("Historians often portray the New Deal as mammoth," he notes, "but it had relatively few resources" because FDR wouldn't increase taxes to subsidize it). He similarly notes the massive size of Nixon's entitlements expansion and Reagan's ballooning of the debt (with the resulting vast interest payments). Both liberals and conservatives should care about eliminating the real mother lode of government waste, Jansson argues, and he suggests tax levels (20% of GDP) and military policies to do so. Jansson's analysis is strongly persuasive in showing that we've paid dearly for short-term expediency and ideological rigidity and surely need to change. 8 tables, 35 charts. (Mar.) Forecast: This detailed study will probably be more talked about than read. It should generate controversy in the media, aided by a publication that coincides with President Bush's submitting of his first budget. Columbia clearly has high hopes for this book it has hired an outside publicist, and Jansson will go on a 6-city speaking tour. Copyright 2001 Cahners Business Information.
Booknews
Beyond the obvious and suspected corruption and inefficiency of the US government, Jansson (social work, U. of Southern California) identifies many useless projects, military and civilian, unnecessary tax concessions, the use of interest payments to cover deficit spending, and other costly mistakes. Then, using the US Office of Management and Budget projections through 2004, he shows how the madness continues, and how an informed electorate can end it. Annotation c. Book News, Inc., Portland, OR (booknews.com)
From The Critics
The United States bungled its national priorities from the New Deal to modern times, making fiscal and tax mistakes which have totaled over 16 trillion dollars from FDR through Clinton. The Sixteen-Trillion Dollar Mistake charts federal waste and how it's harmed this country's plans, providing the first book to examine politics, national priorities and federal spending.
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Product Details

  • ISBN-13: 9780231114332
  • Publisher: Columbia University Press
  • Publication date: 8/1/2002
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 508
  • Product dimensions: 1.02 (w) x 6.00 (h) x 9.00 (d)

Meet the Author

Bruce S. Jansson is the author of Social Policy: From Theory to Political Practice, The Reluctant Welfare State, and many other books and articles on social policy and welfare. He teaches at the University of Southern California and lives in Los Angeles.

Columbia University Press

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Read an Excerpt




Chapter One


Failed National Priorities
from FDR to Clinton


Every nation must decide how much to tax its private wealth and how to spend the resulting revenues. Public servants probably make no choices that are more important—choices that singly and in tandem determine a nation's priorities. From 1931 through 2004 the federal government will have spent roughly $56 trillion in constant 1992 dollars—and that's not even counting more than $12.8 trillion just since 1968 in indirect spending through so-called tax expenditures, the tax concessions to individuals and corporations that deplete federal tax revenues.

    My interest in this subject was piqued in the early 1990s when considerable pressure for a "peace dividend" surfaced as the cold war ended. When I found no extended critical analysis of U.S. national priorities in recent American history, I decided to write one, beginning in the early 1930s when the federal government first developed a large ongoing budget. (Large budgets during the Civil War and World War I returned to peacetime levels once those wars were over.) This analysis of the federal budget extends through eleven presidencies and encompasses government budget projections through 2004.

    Curiously, presidential scholars, historians, and political scientists have not written extensively about national priorities, whether the tension between guns and butter, battles between liberals and conservatives about budgets, or the economy of scarcity that has often bedeviled the domestic agenda in a low-tax nation with highmilitaryspending. Indeed, indexes of presidential biographies by such noted scholars as Stephen Ambrose and Robert Dallek do not even list budgets—a remarkable omission in light of the prevalence of budget controversies during the Johnson and Nixon presidencies. Yet choices about budget priorities are arguably the most important made by the federal government, profoundly shaping the well-being of citizens, the nation's security, and the national economy.

    I began this research with the suspicion that Americans had made numerous errors in their national priorities from the presidencies of Franklin Roosevelt through Bill Clinton. I knew, for example, that Americans devoted smaller resources to their domestic agendas in recent decades than most European nations—and that the United States had spent larger sums than these European nations on military forces when measured as a percentage of gross domestic product (GDP). I knew that certain resources had been wasted on tax expenditures (or loopholes) for affluent Americans, corporate subsidies (or corporate welfare), and pork-barrel spending. I knew that excessive deregulation had sometimes required large federal outlays, as in the case of the savings and loan debacle of the 1980s and 1990s. And I suspected that the nation had spent excessively on interest payments on the national debt at certain points in recent history.

    I was surprised, however, to find that Americans had, conservatively, made fiscal and tax errors totaling roughly $16 trillion from 1931 through 2004. That's $16 trillion in constant 1992 dollars, which is how the Office of Management and Budget states budget figures in its Budget of the U.S. Government, FY 2000, Historical Tables (1999), the source of much of my data. (In fact, if we were to convert that enormous figure to account for inflation in the remainder of the decade, it would be $18.46 trillion.) Many Americans underestimate the magnitude of mistaken budgetary and tax choices because they associate them only with specific insurances of fraud or corruption—such as a specific defense contractor's overbilling of the government or a specific welfare recipient's fraud. Or voters associate these errors with "government bureaucracy." Such instances of waste ought not be dismissed and should be rigorously investigated, but they amount to pennies on the dollar when compared with failed national priorities. Failed priorities stem from misguided assumptions, such as overestimating the amount of weaponry or the numbers of troops needed to provide national security. Or they occur when the nation undertakes an ill-advised military engagement such as the Vietnam War. Or when public officials fail to foresee the negative consequences of their budgetary choices, such as the sheer size of interest payments from deficit spending that will take significant percentages of future budgets. Or when lobbyists obtain funding for projects or tax concessions that do not serve the public interest, such as for a weapons system that is not needed or by convincing legislators to write into the nation's tax code specific concessions that deplete the treasury for many decades. Or when presidents and Congress establish tax rates at excessively low levels, thereby depleting the resources available for military or domestic programs.

    Such fiscal and tax errors have often had negative consequences for the domestic agenda. With a substantial portion of the federal budget already preempted for military allocations and veterans' benefits, as well as interest payments on the national debt, scant resources have been available for critical domestic programs when tax and fiscal errors also depleted the treasury. The so-called discretionary budget, which is determined annually in the push-and-pull of budgetary politics, has been especially devastated since the early 1930s in such pivotal periods as the New Deal, the Fair Deal, the Great Society, and the Clinton administration. (Entitlements such as Social Security, Medicare, and Medicaid are more immune to annual budget battles because they are automatically funded to the level of benefits claimed during a specific year.)

    Liberals, who favor an expanded domestic agenda and usually are unable to secure tax increases, should have been militant in seeking cuts in mistaken allocations and tax loopholes since the 1930s. Curiously, however, they often let conservatives pose as the advocates of responsible finance, even when conservatives favored ill-advised tax loopholes and corporate welfare, excessive military spending, pork, or deregulation that would ultimately require mammoth federal expenditures. Indeed, conservatives often sent liberals to their political graves by calling them "tax-and-spend liberals," a phrase attributed to Harry Hopkins, Franklin Roosevelt's top domestic aide, before the congressional elections of 1938. Although Hopkins denied that he had said that Democrats would "tax and tax, and spend and spend, and elect and elect" if they prevailed in those elections, Republicans seized on the phrase and have used it to tar liberals ever since.

    Had the $16 trillion in squandered resources been diverted to the domestic agenda, American society would have been dramatically transformed. For roughly $2.15 trillion (in 1992 dollars), for example, the United States could have funded, from 1945 to 1996, free child care for women with the smallest annual incomes, substantially subsidized child care for women in the next two income quintiles, and funded one thousand primary-care health clinics to serve twenty-five million Americans in medically understaffed urban and rural areas. It could have increased funding for entitlements—such as food stamps, Supplemental Security Income, Medicaid, and the earned income tax credit—designed to assist (mostly working) people in the two lowest quintiles of annual income. The United States could have increased funding for social investment programs, here defined as certain education, social service, employment, and training programs, mostly funded by the discretionary budget. (These programs averaged less than 1 percent of the federal budget from 1944 to 1966, 3.7 percent in the 1970s, and 2.7 percent from 1980 to 1994.) It could have lowered taxes of low- and moderate-income people or granted them major tax concessions to help them buy houses, set up businesses, and further their education. Or it could have vastly increased the amounts spent on public transportation, environmental cleanup and protection, and programs to repair the nation's fraying infrastructure. The squandered resources would have provided $15.78 trillion—more than sixty times the entire domestic discretionary budget of 2000—to more than double the U.S. discretionary budget each year since 1933. Or the United States could have substantially increased some of its entitlements, such as expanding Medicaid to cover everyone or almost everyone without health insurance, from 1965 through 2004.

    Skeptics might contend that it is unfair to criticize fiscal errors with the advantage of hindsight. In fact, however, dissenters from both parties did criticize most of the fiscal and tax mistakes discussed in this book in each presidential era. Such dissent would include FDR's effort to use taxes to fund a larger portion of World War II, the insistence of Sen. Claude Pepper, D-Fla., that civilian agencies take control of military procurement in World War II and the cold war, the determined behind-the-scenes opposition of Sen. Mike Mansfield, D-Mont., to the Vietnam War, and the opposition of Sen. John McCain, R-Ariz., to pork-barrel spending in the late 1990s. Citizens and think tanks that have questioned failed priorities would include William Kaufmann and his estimates of necessary U.S. military spending after the cold war.

    This book is an interdisciplinary and critical analysis of American national priorities from 1933 through 2004. It melds military, tax, budget, and social policies—subjects usually discussed in isolation from one another—into a discussion of the fiscal and tax choices by successive presidents and Congresses. It draws heavily on archives in the Franklin Roosevelt, Harry Truman, Dwight Eisenhower, and Lyndon Johnson presidential libraries, as well as in the Nixon Presidential Materials. (Congress placed Nixon's papers in a special archive, now located at the University of Maryland, because it feared he might destroy some of them.) It both explores the hypothesis that Americans could have greatly enriched their domestic agenda had they pruned excessive expenditures by the military, for corporate subsidies, and for pork and estimates the magnitude of the failed priorities. Chapters 2 through 14 provide a blow-by-blow description of priorities of presidents and Congresses from FDR to Clinton, placing them in their political context. Chapter 15 provides the data that support my contention that the United States has squandered nearly $16 trillion.

    A brief technical note: although specific chapters describe budget data in terms of the dollar's value at the time, summary data at the ends of chapters, as well as in chapter 15, are presented in constant 1992 dollars. (Overview data rely heavily on the historical tables issued annually by the Office of Management and Budget as part of its review of the federal budget.) Total federal receipts, outlays, surpluses, and deficits include the receipts and outlays of all government programs, including those that, like Social Security, have been placed "off budget" at specific points in time. In each chapter I present an overview of fiscal and tax errors and estimate their magnitude in chapter 15. Estimates of projected expenditures and revenues for fiscal years 1999 through 2004 come from the Office of Management and Budget, Budget of the U.S. Government, FY 2000, Historical Tables.

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Table of Contents

Preface1. Failed National Priorities from FDR to Clinton2. Roosevelt as Magician3. Roosevelt's Dilemma4. The Conservatives' Revenge5. Truman's Nightmare6. Truman's Bombshells7. Eisenhower's Ambivalence and Kennedy's Obsession8. Johnson's Policy Gluttony9. Nixon's Megalomania10. Reagan's Fantasies11. Reagan's Gordian Knot12. Bush's Myopia13. Clinton as Backpedaler and Counterpuncher14. Clinton Boxes with Reagan's Shadow15. On the Magnitude of Failed National PrioritiesNotesCollections, Oral Histories, InterviewsBibliographyIndex

Columbia University Press

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