Economics and Politics - Paul Krugman Blog - NYTimes.com. August 14, 2010, 2:29 pm A Tale Of Two Expenses

Social Security outlays are projected to rise from 4.8 percent of GDP now to 6 percent of GDP in 2030. This is a huge crisis, requiring complete overhaul of the system.

Defense spending rose from 3 percent of GDP in 2001 to 4.2 percent last year; you should also add a couple of tenths of a percentage point for non-defense security spending. This was no big deal — certainly not a reason to reconsider the tax cuts sold back in 2001 as easily affordable given large projected budget surpluses.

Just saying.

I particularly liked two of the responses to this – one from AndyfromTucson:

The conservative value system that explains this result is:

  1. The military is a necessity.
  2. Protecting the interests of our non-wealthy elderly citizens is a luxury.

If you assume that the purpose of the military is to protect the interests of all Americans then this can be translated to:

  1. Protecting the interests of all citizens is a necessity.
  2. Protecting the interests of our non-wealthy citizens is a luxury.

Which then translates to:

  1. Protecting the interests of the wealthy is a necessity.
  2. Protecting the interests of the non-wealthy is a luxury.

and this, from John Bosley:

Very simple, Paul. Social Security benefits the American worker. Defense spending benefits the wealthy who own and operate the military-industrial machine that runs our Congress. Q.E.D. Who’s Congress going to favor? Their masters–or the powerless and alienated who are content with “anger” directed toward the “insiders” who are responsible somehow for their impotence, if we believe the MSM’s crazy analyses.

which is pretty consistent with what I posted:

Social Security outlays go to ordinary folks. The benefits of military spending go in large part to the shareholders of certain corporations whose interests get protected.

If you aren’t familiar with the statistics about the distribution of stock ownership, you might look at the Survey of Consumer Finances data at http://lvtfan.typepad.com… – see Lines 08 and 31 through 40. Ownership is quite concentrated (and SCF data understates it, due to the intentional omission of the Fortune 400 families from their sample).

As a friend’s sigfile says, “I believe in the division of labor. You send us to Congress; we pass laws under which you make money …and out of your profits, you further contribute to our campaign funds to send us back again to pass more laws to enable you to make more money.” – Senator Boies Penrose (R-Pa.), 1896, citing the relationship between his politics and big business.

But the dollars that flow to Social Security recipients get spent – likely within the same month they’re sent out; 14% of recipients have no other income, and a majority rely on SS for more than half of their sustenance.

The dollars which flow in profits and dividends to the owners of the corporations – publicly held and privately held – flow into relatively few pockets, and into very well-lined pockets, from which they are more likely to emerge as “investment” in ownership of scarce resources than in spending on the products of human labor, particularly American labor.

See America’s Wealth Distribution – 2007 – Wealth Concentration, Part 1 of 3 with particular attention to lines 08, 19, 28, 32, 35 and 36.

Line 32 shows that the benefits from stocks, mutual funds and retirement assets (IRA’s, 401(k)s, etc) are distributed as follows:

  • 31.8% to 1% of us;
  • 42.4% to 9% of us — that’s 74.2% to just 10% of us!
  • 25.8% to the bottom 90% of us

Line 19 shows that the benefits from owning privately held businesses flow as follows:

  • 62.7% to 1% of us;
  • 31.0% to 9% of us – that’s 93.7% to just 10% of us!;
  • 6.3% to 90% of us.

(Which one do we call “main street?” And who is the “middle class?”)

Line 35 combines lines 19 and 32, and accounts for 50.3% of household net worth in the US in 2007. Here’s the ownership:

  • 45.9% to 1% of us;
  • 37.2% to 9% of us – that’s 83.1% to just 10% of us!;
  • 16.9% to the other 90% of us.

For contrast, vehicles and houses, net of the debt against them (and accounting for 26.0% of 2007 US household net worth), are distributed as follows:

  • 12.0% is held by 1% of us;
  • 33.5% to 9% of us – that’s 45.5% to just 10% of us;
  • 54.4% to the bottom 90% of us, of which 5.6% is owned by the bottom 50% and 48.8% by the next 40%.

Who benefits from Social Security? Who benefits from spending on war? And which group has the spare cash to contribute to the re-election campaigns of our senators and representatives, who vote to use our funds to finance war? As one who has had the privilege of watching Linda McMahon’s saturation of Connecticut’s airwaves in the leadup to the Republican primary for the race for Christopher Dodd’s Senate seat, I am acutely aware of what campaign dollars can buy.

Just saying.