Lies, Damned Lies, and Really Pretty Charts

Via Hit and Run, that old Death and Taxes chart is making its way around the blogosphere again. While it's a clever idea, and very nicely executed, the message it's designed to convey---that the US government has prioritized military spending at the expense of social programs---is simply not true.

The problem with the chart is that it shows only part of the Federal budget, specifically so-called "discretionary spending." To be fair, this is explicitly acknowledged in the central circle:

The discretionary budget is that amount of money that Congress has direct control of; essentially, the money taken out of your paycheck under Federal Income Tax. Corporate and Excise taxes also contribute a small portion to the total. Military spending accounts for over half of the discretionary budget. However, when the White House releases its budget pie graph it includes mandatory expenditures such as social security and medicare. This is misleading because Congress has no control over manditory expenditures [sic as needed].

This is wrong for a number of reasons. See how many you can find before peeking below the fold.

First, "Mandatory spending" is a misnomer. The difference between "mandatory" and "discretionary" spending (you should be mentally drawing scare-quotes around those words every time they appear in this post) is that discretionary spending must be debated and voted on each year. In contrast, mandatory spending is essentially on autopilot---spending for mandatory programs is determined by formula and does not need to be approved explicitly every year. This does not mean that mandatory spending is truly mandatory or that Congress has no control over it. In theory, Congress could cut off all mandatory spending at any time. Of course, this would be politically infeasible, but so would cutting off discretionary military spending.

But let's suppose for the sake of argument that Congress really does have no control over mandatory spending. So what? That still doesn't mean that we can determine Congress's priorities just by looking at discretionary spending. Suppose that the average Congressman thinks that about 80% of the Federal budget should go towards nondefense expenditures. But most of that (about 60% of the total) is already taken care of in the mandatory portion of the budget, so the logical way to achieve the desired allocation is to divide discretionary spending roughly equally between military and non-military expenditures.

So what exactly is included under the heading of mandatory spending? According to table 8.1 in the 2007 budget's historical tables, the budget for 2004 was as follows (figures in billions):

Discretionary - Defense $454.1 20.7%
Discretionary - Nondefense $441.4 20.1%
Mandatory - Social Security $491.5 22.4%
Mandatory - Means-Tested Entitlements $328.6 15.0%
Mandatory - Medicare $264.9 12.1%
Mandatory - Other1 $210.7 9.6%
Total Discretionary $895.5 40.9%
Total Mandatory $1295.8 59.1%

[Net interest ($160.2B) excluded]

Not only does the "Death and Taxes" chart ignore nearly 60% of the budget, but the part that it ignores contains virtually all of the Federal government's social welfare spending. And this is no coincidence. The logical conclusion to draw from the fact that social welfare spending is classified as mandatory is that the government gives it a very high priority---not the opposite.

On top of that, there's not a word about spending by state and local governments. Technically, the Constitution doesn't authorize the Federal government to spend any money on most of the items on the right-hand side of the chart, and most of this type of funding still happens at the state and local levels. In fact, in any given year, state and local spending exceeds Federal discretionary spending by a factor of two. In FY 2002-2003 (one year, not two), states spent $621B on education, $118B on highways, $311B on welfare programs, and $772B on all other public services (table B-86 of the Economic Report of the President).

And last, but far from least, there's no mention of private spending. People can, should, and do spend their own time and money on education, health care, housing, the arts, museums, charity, parks, space exploration, drug abuse prevention, libraries, and all the other worthy causes and activities represented by gloriously small circles on this chart. A large circle represents a failure, not a success, and I would very much prefer the picture of government spending depicted in this chart to the one we actually have.

[1] The "Other" category originally included Medicare. I looked up the value in table 8.5 and listed it separately for clarity. I'm not entirely sure what remains in the "Other" category, but I believe that about half of it is for benefits for veterans and other retired Federal employees (see table 8.5).

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Sometimes I wonder if it's

Sometimes I wonder if it's even worthwhile trying to get people to understand statistics. Perhaps a good rule of thumb would be in order: if someone is using statistics to make a point, they're lying. Then people only need to identify when statistics are being used.