Forget “Government Spending.” The Only Thing That Really Matters is Healthcare.

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Josh Barro says that government expenditures (federal + state + local) are going up, up, up. Just take a look at the top chart on the right:

This chart has a lot to teach us about what we can expect from the coming fiscal adjustment. For me, the most notable fact about this chart is that the growth of government spending has been remarkably steady. The trend over the last 83 years has been for government spending to rise by 0.24 percent of GDP per year, and the correlation is strong: a linear regression on this trend has an R-squared value of 0.72, meaning that time explains most of the movement in government spending.

But there’s another way to look at this too. The chart on the bottom is my take: I’ve cut it off at 2007 so that the Great Recession doesn’t obscure the real trend of the past few decades: government spending increased steadily until the mid-70s, but since then it’s flattened out almost completely.

Now, I agree with Barro that entitlement spending is certain to go up over the next 20-30 years as the baby boomers retire. But what the bottom chart shows us is that government expenditures in general haven’t been on an inexorable upward path over the past three decades, and there’s no special reason to think they’ll rise inexorably in the future. Generally speaking, domestic spending, defense spending, and Social Security are on extremely sustainable paths.

What’s left is healthcare spending. That’s it.

So this is basically just another excuse to repeat something that I and others have said over and over: We don’t have a spending problem in America. We have a healthcare problem. The other three categories of government spending taken together will probably rise by a point or two over the next few decades, but that’s not a big deal. We need to pay normal, prudential attention to them, but nothing more.

Bottom line: no one serious should spend an awful lot of time talking about “the deficit” or about “government spending.” We should be talking about healthcare. Everything else is just a red herring.

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Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

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