CATO’s Cheap Shot at Keynes

The CATO institute is the foremost libertarian political organization.  I like their blog because even though it's ideological, it's non-partisan.  Meaning they will criticize both political parties and criticize both depending on what their advocating.  That being said, in a recent post they took some cheap shots to try and disprove Keynesian economic theory.

Wikipedia gives a good summation of Keynesian economic theory:

Keynesian economics (pronounced /ˈkeɪnziən/, also called Keynesianism and Keynesian theory) is a macroeconomic theory based on the ideas of 20th century British economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle

Economists who accept this theory usually advocate that when the economy is doing good - as indicated by rising inflation- the government should reduce spending and pay off past deficits, but when the economy is bad - as indicated by high unemployment - our government should increase spending in spite of any deficits that may occur.  The key part of the theory is that in a typical business cycle unemployment and inflation are indirectly related.  As one rises, the other should fall.

It is with this part of the theory that CATO tries to "disprove" in a post called Does High Unemployment Make Inflation Impossible?

If this “slack theory” of inflation makes you too sanguine about future inflation, recall that it is the same theory that predicted stagflation would be impossible in 1973–75 and 1979–81. Figures from The Economist, August 21, raise some doubts.  The latest unemployment rate in Argentina is 8.3%, but CPI inflation over the past year was 12.2%. Unemployment in Venezuela is 8.2%, but inflation is 13.3%. Unemployment in Egypt is 9.1%, but inflation is 10.7%.  Unemployment in India is 10.7%, but inflation is 13.7%.  Unemployment in Turkey is 11%, but inflation is 7.6%.   Wasn’t high unemployment supposed to make high inflation impossible

My first problem with this is that Keynes never said High Unemployment makes inflation impossible, so I think CATO setup a straw man argument.

My second problem is the 2 examples used to point out when the united states had both high inflation and high unemployment.    Both of them were caused by a giant oil shock(1973 and 1979).  No macroeconomic theory can fix or prevent a sudden scarcity of a natural resource that is integral to an economy.  Of course it's going to wreck it.  Those 2 cases weren't caused by a typical business cycle and had a clear cause.

Third, and finally, CATO tries to disprove their straw man argument by listing off countries that have fairly high unemployment and inflation.  The problem with this is that typical inflation and unemployment is different for every country.  It varies based on natural wealth of the country, their various policies and laws, and levels of corruption.  Therefore comparing one country to another isn't useful.  You have to compare trends within the country.

Let's take a look at Egypt.  According to the CIA, unemployment in Egypt was 9.4%, but inflation was 11.8% in 2009, but in 2008 unemployment was 8.7% and inflation was 18.3%.  So when CATO says that inflation in Egypt is 10.7% you can see that 10.7% is a low inflation rate... for Egypt.  Turkey's numbers play out similarly to Egypt's.   Inflation was 10.4% in 2008, and went down to 6.3% in 2009.  At the same time, unemployment, as Keynesian economists predict, went up from 11.2% to 14.1%.  I went through all of the countries listed, and India was the only country whose inflation and unemployment didn't act in perfect accordance of Keynesian economics.  However, in India's case, it's GDP grew at the same rate both years suggesting that something else was going on because GDP growth and employment rate almost always rise and fall together.

In the end, India and the two oil shocks of the 1970s does disprove the straw man argument that CATO setup.  It is possible to have high unemployment and high inflation, however I think that's a long ways from disproving what Keynes actually theorized.

Direct Loans vs. Guaranteed Loans

Let's pretend for a moment that you're a bank.  You make money by loaning people money and them paying you back with interest.    So what stops you from loaning money to whomever wants it?  The risk is that the person won't be able to pay you back.  Let's say though, that some guy comes into your bank and asks for a loan, and tells you that his rich uncle will co-sign the loan.  You then do a credit-check of this uncle and find out that he has unlimited money.  That means no risk to you.  What a deal!  Just one question though, why doesn't that rich uncle just loan the guy the money?

That is my question when the government does so-called "Loan Guarantees".  Often when the fed wants to encourage a private enterprise they will guarantee their loans so that banks will lend them money.  The banks take the deal - there' is no risk to them after all.  The company then does their thing.  If they succeed the bank makes money and every body is happy - including the fed which owes no money.  If they fail, the bank is happy because they still get their money, but the tax payer is left with the bill.  If it's something worth doing, like researching a new technology, encouraging business in a poor area, or developing a natural resource, I don't mind risking government money on it for the greater good, but why give the banks a free ride?

If the congress thinks something is worth doing and banks won't loan the money, why not loan the federal money directly from our government?  Worse case scenario is that the enterprise fails and the fed is on the hook for the same amount as if it was a guaranteed loan, but if it succeeds, then the taxpayer can actually make money on the deal.  This seems like an obvious benefit to the fed and banks no longer get a free ride.

So why doesn't congress loan money directly?  My guess is that it's all about perceptions over the budget.  If congress guarantees a loan in 2010, it doesn't cost anything for the 2010 budget.  In fact, it may never show up on the budget if the enterprise is successful.  However, if the enterprise fails, it won't show up as a cost to the budget until years later.  Probably long after the president that approved it is out of office, the congressman that voted for it are now Senators, and the Senators that voted for it are dead or retired.  In other words, the people that agreed to guarantee it will be long gone by the time there's a default and it shows up on the U.S. budget.

So why not stop loan guarantees and start doing more direct lending.  There is a recent precedent where this was successful and the federal government came out ahead.  It was with student loans.  For a long time our government would guarantee student loans to get banks to loan to students for college.  The public benefit is obvious - a better educated work force is a more productive work force.  However, starting last year, the government quit guaranteeing those loans and started loaning directly to students.  Now, according to the non-partisan Congressional Budget Office, the fed is on its way towards saving billions of dollars a year thanks to this decision.

So, why not expand this to all services.  For the last month I've been reading about all sorts of programs where the government guarantees loans.  I think it's time for politicians to quit hiding our obligations in the short term, and save us some money in the long run.

How the 2009 Federal Budget Could Have Been Balanced.

Our government collected fewer taxes in FY2009 than it did in FY2000 - this can be said without adjusting for inflation. In 2000, the government took in 1.54 trillion dollars in on-budget taxes, but only took in 1.53 trillion in 2009.  This is despite spending twice as much money in 2009 than in 2000.   Tax receipts during the 90s grew fast.  That was partly do to higher taxes and also with a phenomenal increases in GDP and wealth.  Then came the 2000s.  Tax receipts languished from lower taxes, a recession, more tax cuts, another recession, a slow recovery, and then the Great Recession.  So as an academic exercise, let's see where the budget deficit would be if tax revenue had grown instead of diminished during the 2000s.  You can see how revenue has slowly, but steadily, gone up during the 80s and 90s, but then went sideways during the 2000s.  I included the raw numbers, plus numbers that adjust for inflation.

(Click chart for larger image.  Click here for the numbers)

I always read some pundits claiming that the Clinton-era tax and GDP growth was unsustainable(see here for example).  Therefore, I calculated the tax revenue increases of 1993-2000.  The average growth was 8.78%.  However, since I'm adjusting for inflation now, I adjusted everything to 2009 dollars.  This yielded average growth of 6.01% in tax revenue from 1993 to 2000.  However, since people accuse that being unsustainable and unrealistic, I decided to chart out the slowest growth in tax revenue from the Clinton Era.  It was 5.9% if using non-adjusted numbers and 3.61% if using adjusted numbers.  Here's what revenue would've been like if the 2000s had averaged the slowest rate of the 90s.

(Click chart for larger image.  Click here for the numbers)

Whether or not you adjust for inflation, it would've put on-budget revenue at approx 2.6 trillion$ in 2009 and 2.74 trillion in 2010.  What that means is that the on-budget deficit would've only been 400$ billion dollars in 2009 if our spending patterns had been exactly the same.   However, if you strip out all the spending that was done because of the great recession, but keeping stimulus spending, that would've been 397$ billion in spending cut.  The 2009 budget could've been balanced if revenue had grown at the slowest rate it grew in the Clinton Era, and there had been no Great Recession.  No other adjustments necessary.

Now let's explore another scenario.  Let's say that tax revenue had grown even slower than the slowest rate it did during Clinton's presidency.  I decided to take a look at what the average growth rate for tax revenue has been since 1962.  When adjusting for inflation, the average growth rate from 1962-2000 was 3.16%.  However, if you exclude the Clinton era completely it's even lower.  From 1962-1992, the average growth rate was 2.4%.  You can see my raw numbers and other statistics here.  I added to the graph what would've happened if the 2000s had maintained revenue growth in accordance to the historical averages.  This time I only included the adjust for inflation numbers.

(Click chart for larger image.  Click here for the numbers)

If 63-2000 average tax revenue increases had occurred in the 2000s, the 2009 revenue would've been about 2.55 trillion.  That means the 2009 budget would've only had a 50$ billion dollar deficit once you take away the Great Recession spending.  That probably would've been easily covered if you eliminated the 2009 stimulus spending.

If 63-1992 average tax revenue increases had occurred in the 200s, the 2009 revenue would've been about $2.38 trillion.  That would mean that the 2009 budget would have to have been about 620 billion dollars lighter.  If, once again, we assume no Great Recession and remove $400 billion, that still leaves 220$ billion to cut from spending.  Not an easy task, but much less daunting than the 1,500 billion dollars we actually had because of sideways revenue.

If there had been no recession, where would you cut that 220$ billion from the 2009 budget?  Remember - I already removed the direct costs of the recession(and only those costs).

What is the US Debt?

As the yearly budget deficit has grown radically during the recession, so has the total debt that the United States has accumulated in it's 234+ years of existence.  So how much does the United States owe?  Well... there's really 2 answers to that.  If you want the numbers, here they are.  The total US federal debt is approaching $13.5 trillion and approaching $8.9 trillion.  zFacts has a national debt counter if you want to see what the total debt is, this very moment.  If you'd like an explanation of why there's 2 answers, read on.

As you probably know, there's this thing called the Social Security Trust fund.  Actually, there are lots of government controlled trust funds out there.  Many of them have lots of money in them(Like Social Security).  The first number doesn't add in the value of these trust funds, the second number does.  Which number is the "real" debt number is all in how you look at it.

If you look at it as the trust funds exist and the government has "borrowed" from them to support spending today, then the federal debt is indeed approaching  $13.5 trillion dollars.  However, if you look at all the money the federal government owes minus what it's "saving" in it's trust funds, then the federal debt is only approaching $8.9 trillion dollars.

Before you decide how you want to view the debt, you may want to think about the consequences of your view on social security.  If you view the federal debt as $13.5 trillion, then you must also believe that the social security trust fund is fully funded and will be fine until it runs out in 2037.  Conversely, if you view the United States debt as only $8.9 trillion, then you must believe that social security is already in crises because the so-called "Trust Fund" is nothing but government bonds that have already been spent by the government, and that Social Security checks are going to start coming out of the general fund.

I included this last paragraph because U.S.  government debt is usually reported as the larger number(i.e. Heritage Foundation and OpenMarket).  However, those same organizations then claim that the Social Security Trust Fund has been raided and is empty(See here Heritage Foundation, OpenMarket).  Well good news, guys!  If the Trust fund is "empty", then the national debt is only $8.9 trillion.

It is one way or the other.  The United States federal debt can't be over $13 trillion dollars AND have an "empty" Social Security Trust Fund.  Those statements are not compatible no matter how you look at it.  Anyone who tells you otherwise is either a liar or has been lied to themselves.

Standing up for deadbeat dads

The American Conservative Magazine has bravely stood up for the rights of deadbeat dads.  In a somewhat nonsensical blog called , "Child care's debtors prison", it starts by asking the question, "How many real “Deadbeat Dads” are there?".  Strangely, The article never does anything to try and answer the question.

So why do I care, and why should you?  Well, as I've written before, deadbeat dads cost the federal government over 4 billion dollars last year(and collects over $30 billion with it).  Now here is a supposedly conservative blog trying to defend fathers that don't pay child support.

Here's the crux of the article:

The stereotype of the impoverished single mother and the divorced dad driving around town in a sports car with the new girlfriend who doesn’t see his kids is still a powerful one, enough to basically keep the debtor’s prison of the child care system in place without anyone challenging it.

Well, there's a reason no one is challenging it.  Neither this article, nor the one it links to, give any indication of the number of fathers in "debtor's prison" that don't deserve to be there.  Child support is usually payed willingly by a father who wants to see his kid's or through wage garnishment.  Punishment is only reserved for father's who seem to find ways around this, like working for cash "under the table", or running their own business and refusing to pay child support.

The article does link to a study that says that most divorced dad's aren't deadbeats - that's good to know; however, it doesn't mean that deadbeats don't exist - and at a cost of $4 billion dollars to the federal government, it baffles me a supposedly conservative blog would defend them.

A Redundant Federal Agency is wasting $871 million/year.

What if I told you that there was a government agency(let's call it Agency 'S') that is tasked to do everything that another agency(let's call it Agency 'H') does?  Also, Anything that Agency H does must also be done by Agency S, and almost everything done by Agency S must also be done by Agency H.  You would probably say that one of these agency's is redundant and an example of gross government waste that can be eliminated.

So let's say you want to get rid of one of these redundant agency's.  Which one would you get rid of?  Well, you might gid rid of which ever one costs more.  That would be Agency H.  Also, notice that Agency H is completely redundant, because Agency S does everything it does plus some that doesn't need to be approved by Agency 'H'.  It would seem like an easy choice that you would want to keep Agency 'S' and get rid of Agency 'H'.

But now, what if I told you that Agency 'S' isn't doing it's job?  Agency 'H' has done everything that Agency 'S' has done that need's their approval.  However, Agency 'S' still has 290 unfinished tasks that has already been completed by Agency 'H'.  Worse still, the few things that Agency 'S' does that Agency 'H' doesn't aren't getting done either.  A total of 113 tasks that Agency 'S' alone can fulfill haven't gotten done.

Now ask yourself, would you get rid of one of the agencies because it's redundant, and if so, which one?  Me personally, I would get rid of Agency 'S'.  Agency 'H' might cost more, but at least they can get their crap done.  Agency 'S' are a bunch of slackers that we don't need.  Let's give the rest of Agency 'S' responsibilities to Agency 'H' so that it can actually get done.

In case you haven't figured it out, Agency 'S' is the Senate, and Agency 'H' is the house of representatives.

• Their are 290 bills that the house has passed, but the Senate hasn't even voted on.  It would be one thing if they voted them down, but not even holding a vote is ridiculous.
• The Senate hasn't got around to confirming or denying  77 judicial nominations.
• The Senate hasn't got around to confirming or denying 113 government posts that require Senate confirmation.
• In 2009, the house cost $1,349 million dollars and the Senate cost $871 million dollars. (Account information here)

I don't know why so-called Government watchdog groups aren't all over this.

Rural Utilities Service

Here's an interesting half a billion dollar bureau inside the Department of Agriculture that you probably never heard of: The Rural Utilities Service.  Like 4/5ths of the department of agriculture it has very little to do with actual agriculture.  Instead, it concentrates on bringing quality, affordable utility to rural areas.  Utilities such as electricity, clean water, telephone, and even broadband.

In 2009, the department spent 774 million on clean water and sewer projects.  It spent the money on loan guarantees, direct loans, and grants to partially funded projects.  What this means is that the Rural Utilities Service cannot decide to build something.  The local city or Indian tribe must plan it first and then petition for the department's help.  The department gave out more money than usually thanks to the ARRA (American Recovery and Re-investment Act).  They even have a great annual report that it's easy to read through.  Here's a highlight of what the money was spent on:

In FY 2009, WEP funded 1,239 projects for $2.5
billion. The majority (77 percent) of the projects were
funded from the WEP regular loan and grant program
using both FY 2009 appropriated funds and Recovery
Act Funds. The balance of the projects was funded
through several special programs and initiatives.

Another utility that this bureau is trying to provide is broadband Internet.  This one cost us $135 million in 2009.  Not only does it help bring broadband to rural areas it also brings distance learning and medical resources to rural areas.

The Distance Learning and telemedicine Program (DLT) is designed specifically to meet the educational and health care needs of rural America. Through loans, grants and loan/grant combinations, advanced telecommunications technologies provide enhanced learning and health care opportunities for rural residents. The DLT program has funded over 1,050 projects in 48 states and four US territories totaling $350.4 million.

The accounts that track the spending does not differentiate between broadband and the DLT programs.  I guess because it's hard to have one without the other.

The final expense account for the Rural Utilities Service is $100 million dollars for telephone communication infrastructure.  Maybe I'm a city-slicker snob, but this sounds like an awful lot of money for a dying technology.  I think we could eliminate this program, and either pocket the money, or put it into the rural broadband program.

For those paying close attention, you may have noticed that the previous 3 programs added together cost $1,009 million dollars whereas at the beginning I claimed that the department only cost half a billion.  That is because the last utility that the Rural Utilities Service provides actually made money in 2009.  Rural Electrification.

So how does Rural Electrification bring in money?  It's because so many of it's programs are direct loans.

USDA Rural Development makes loans to corporations, states, territories and subdivisions, and agencies such as municipalities, people's utility districts, and cooperative, nonprofit, limited-dividend, or mutual associations that provide retail electric service to rural areas or supply the power needs of distribution borrowers in rural areas.

If more people pay off loans, than new loans are made -poof!- money made that year.  As far I can tell, this is the only utility program run by RUS that offers direct loans.  Of course this means that the program doesn't make money every year, but it did in 2009.  350 million was made which even includes $22 million from the ARRA for High Energy Cost grants.

One more thing that offset the cost of the Rural Utilities Service is $209 million dollar income  leftover from the Rural Development Insurance fund(pdf).  The program winded down in 1987, but money is still being collected on loans it made.

So in conclusion.  If we take away some of the misleading offsets, we can see that about a billion dollars is spent on trying to bring city quality services to rural areas.

Social Security & Medicare Are Gonna be Alright... for now.

Last week the Medicare Trustees and the Social Security Trustees released their annual report of their respective trust funds.  The good news is that these programs will remain solvent for a couple of decades or so.  The bad news?  The actuaries still identify certain dates when the trust funds will run out.

To summarize news on Medicare "way better than last year".  Last years report suggested that Medicare would exhaust it's trust fund as of 2017.  However, that's been moved back 2029.  From their public release.

Despite lower near-term revenues resulting from the economic recession, the Hospital Insurance (HI) Trust Fund is now expected to remain solvent until 2029, 12 years longer than was projected last year, and the 75-year HI financial shortfall has been reduced to 0.66 percent of taxable payroll from 3.88 percent in last year’s report. Nearly all of this improvement in HI finances is due to the ACA. The ACA is also expected to substantially reduce costs for the Medicare Supplementary Medical Insurance (SMI) program; projected program costs as a share of GDP over the next 75 years are down 23 percent relative to the costs projected for the 2009 report.

The ACA was primarily responsible for the increase in stability for Medicare.  The ACA is the Affordable Care Act - the Health Insurance Reform that passed early this year.    That would be the one that conservatives claimed would kill medicare.

Meanwhile, the news on social security is almost no news.

Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983. The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy. After 2014 deficits are expected to grow rapidly as the baby boom generation’s retirement causes the number of beneficiaries to grow substantially more rapidly than the number of covered workers. The annual deficits will be made up by redeeming trust fund assets in amounts less than interest earnings through 2024, and then by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084. The projected exhaustion date for the combined OASI and DI Trust Funds is unchanged from last year’s report.

Social Security is still scheduled to exhaust it's trust fund starting in 2037.  That's a ways off, but still a problem that needs to be solved.

I'll leave you with the closing statement from the message from the Trustees to the public.

The ACA makes significant progress toward making Medicare financially viable. But while it is projected that the Medicare HI Trust Fund is adequately financed until 2029, and the Social Security OASI and DI Trust Funds are adequately financed until 2040 and 2018, respectively, the significant longer term financial imbalances of the programs still need to be addressed. The sooner action is taken to address the long-run financial imbalances, the more reform options will be available, and the more time there will be to phase in changes so that those affected will have adequate time to prepare.

Another $600 million wasted on Border Patrol

I didn't realize that my Wednesday post, Increased Border Security Doesn’t Stop Immigration, would end up being so timely.  Last night, the Senate voted to spend another $600 million on immigration enforcement.  From the AFP.

The US Senate has voted to beef up US-Mexico border security with another 1,500 agents and more unmanned aerial vehicles that scan the frontier for undocumented immigrants or drug runners.
The legislation's 600-million-dollar price tag would be paid for by raising fees on what the measure's backers called a handful of foreign firms that exploit US visa programs to improperly import workers to the United States.
The measure includes money for 1,000 new US Border Patrol agents to form a "strike force" for quick deployment, 250 new Immigration and Customs Enforcement agents as well as 250 new Customs and Border Protection officers at ports of entry, and to boost communications among law-enforcement officials.

What's galling about this is that all this money being spent is essentially being thrown away.   As I showed in my last post, in the past, no matter how much we spend on past enforcement techniques, the number of illegal immigrants never went down.  Maybe this money wouldn't be a waste if they were going to try something new, but there is no new program here.  I seriously doubt that the impact of this will be anything but a small blip - if that.

(Click chart for larger image. Click here for the numbers)

Another point that suggests this is a waste is where the money is going.  45% of immigrants who aren't here legally are from expired visas.  However, of the 1500 new enforcement agents that are being hired, 67% of them are going to patrol the border, 17% are going to other ports of entry, and only 17% will be in Immigration and Customs Enforcement - not all of which are guaranteed to be immigration enforcers.

This bill will likely become law.  The bill passed on a voice vote so we know that it's a pretty popular bill in the senate.  Now that it's passed its going to go to the house of representatives.  Considering a very similar bill (costing $701 million) had already passed the house of representatives (239-182), that this Senate bill will easily pass.  The only problem is that the house is currently adjourned for the august recess.  However, it will be called back into session to pass another bill that the Senate has sent them.  Perhaps they will pass this bill while they're at it.

Increased Border Security Doesn't Stop Immigration

Immigration reform is a hot topic right now.  There's a lot of calls for more border security and increased enforcement.  However, do these policies work to actually reduce the number of illegal immigrants in the country.  Every year we spend more on enforcement and almost almost every year the number of undocumented workers living in the country still  grows.

I wanted to create a graph that showed the number of undocumented workers in the country vs. the amount we spend on immigration enforcementborder security over time.  The problem is that there is surprisingly little data that estimates the number of illegible immigrantsundocumented workers living in the country.  The Department of Homeland Security created official estimates(pdf) for the years 2000, 2006, 2007, 2008, and 2009. 

The rest of the years I would have to find other sources.  Fortunately, a website called procon already did that.  They compiled a list of illegal immigrant estimates from several different sources.  The data goes back to as early as 1969, but doesn't have separate numbers for each year.  However, I think that's the best we can do so I'll have to make do.

Here is the graph of the amount we spend on immigration enforcement vs. number of undocumented workers living in our country.  The amount spent has been adjusted for inflation and made into 2009 dollars.

(Click chart for larger image. Click here for the numbers)

As you can see the amount we spend on enforcement - even adjusting for inflation - has been going up since the mid 80's.  However, the number of immigrants keeps going up.  It is not until the enforcement spending skyrocketed in 2008 and 2009 that the number of immigrants actually decreased.  That is the only time there has been a correlation between increased border patrol spending and a decrease in illegal immigrants.  The rest of the time there is no correlation between increased spending and falling undocumented immigrants.  In fact, the numbers almost seem to rise and fall at the same time.

Some might argue that we're finally spending enough on border control and immigration enforcement that we can finally see the results.  However, let's take a look at the graph above.  This time, however, I've added in the United States GDP (also adjusted for inflation) into the mix.  (Border Patrol spending is in thousands of dollars, GDP is in millions of dollars)

(Click chart for larger image. Click here for the numbers)

Looking at this graph we can see 3 instances where a decrease or a flatline of U.S. gdp(i.e. a recession) has been a leading indicator to fewer undocumented workers.  If there weren't so many gaps in the historical data of illegal immigrant populations, we'd probably see even more.

I think the case for an enforcement only immigration policy is pretty thin for two reason. One, only once has increased spending lead to fewer immigrants, and that may yet still prove to be because of the recession.  Two, look at how much we've increased spending on enforcement since 1962.  We've been using an enforcement only policy for years and do you think  its working?

Finally, one last interesting statistic.   The federal government spends more on border patrol and immigration enforcement than the rest of it's law enforcement activities combined.  In 2009 we spent  $27.5 billion total on law enforcement activities.  $17.2 billion of that was spend on border patrolcustoms and immigration enforcement(see numbers here).  So the FBI, Secret Service, DEA, ATF, and U.S. Marshals all combined cost less than our current immigration enforcement policies.

There must be a better solution for dealing with undocumented workers than to spend 62% of all federal law enforcement.  Based on these numbers I find it hard to see how an enforcement only policy can work.

The Deptartment of 1/5 Agriculture

Here's a fun factoid for Monday morning.  The federal government spent approximately $22.2 billion dollars on agricultural research, services, and stabilization in Fiscal Year 2009.  However, the Department of Agriculture spent $114.4 billion dollars in Fiscal Year 2009.

So what is going on here?  Obviously, the Department of Agriculture spends it's money on things besides agriculture.  This is nothing new.  This has been occurring at least since 1962 and will continue through 2010 and 2011.

(Click chart for larger image.  Click here for the numbers)

Looking at the chart above, you'll notice that the amount the Department spends on non-agricultural spending was pretty low in 1962, but in the 70s started rising and kept rising, until the 2000s and great recession when spending didn't rise, it exploded.  However, that doesn't tell the full story.  I charted the non-agricultural spending by the Dept. of Agriculture and then adjusted for inflation.

(Click chart for larger image.  Click here for the numbers)

Looking at the inflation adjusted numbers, the spending doesn't have quite the upward trend as before.  It looks like there was an increase during the seventies, but from there, the amount spent went sideways, not up.  That is, until the Great Recession and now the Department's non-agriculture spending is rising fast.

So where is all that money going for the department?  A lot of places.  You can see all the accounts that it goes to if you wish(here).  For those who prefer a summary, here are all the non agrarian functions the department of agriculture spends money on as well as how much it spend for each.

1. Area and regional development $1099
2. Community development $27
3. Conservation and land management $9246
4. Consumer and occupational health and safety $956
5. Disaster relief and insurance $71
6. Food and nutrition assistance $78796
7. Housing assistance $1093
8. International development and humanitarian assistance $1696
9. Pollution control and abatement $8
10. Recreational resources $19
11. Water resources $248

As you can see, many of the things that it spends money on do have an in-direct relationship to agriculture.  For instance, water and land management are important as they are 2 of the 3 main ingredients needed for growing crops.

All that being said, It's still fun to point out that only 1 out of 5 dollars spent by the Department of Agriculture, actually gets spent on agriculture.