Saturday, April 23, 2011

How much did your vote for Obama cost you?

In this post I determine how much your vote (or someone else's vote) for Obama will cost you throughout your working career to pay for the interest on Obama's massive deficit spending. The results may astound you. I welcome suggestions and attempts to help refine my calculations. But first, just how massive is Obama's deficit spending? This massive:

To do the following calculations, I assumed you are a college student graduating this year (2011), and you will have a 40 year working career ending in 2051. I also made the safe assumption that between now and 2051 the principal on the federal debt will not be touched, but only the interest payments will be made each year. Why did I include only the interest? You can argue all day about the cost vs. benefit of Obama's deficit spending, but one thing is certain: taxpayers get nothing from paying the interest on the national debt.


All my budget data came directly from the Office of Management and Budget's 2010 analysis, or the excellent website, which aggregates the same OMB data into easily downloadable spreadsheet format. My tax calculations used the 2006 IRS tax brackets, FICA rates, and standard deductions (I wanted to pick a pre-recession tax code) -- in other words, I assumed your actual tax rates will NOT go up any time in the next 40 years, which is a very generous assumption. Nationwide average wage/salary data by occupation came from the Bureau of Labor Statistics database. Inflation rates came from

Methodology and analysis:

I calculated the average annual interest rate paid on the national debt from 1980-2010 by dividing the yearly federal interest payment by the gross public debt for each year. That average comes to 5.875%. The 2010 interest rate was very low at 2.19%, but OMB projections have interest rates increasing in the coming years, and given historical trends and the S&P's recent downgrading of the U.S. financial outlook, I think 5-6% interest on our national debt is a good estimate for the next 40 years.

Next I needed to estimate total federal spending from 2011-2051. I did this by taking the OMB estimate for federal outlays from 2012-2016 and extrapolating that trend to 2051. I did the same for federal revenues. The OMB projects both revenues and outlays to increase linearly from 2012-2016, and extrapolating those trends, the federal budget will be balanced in 2029, and from 2030 on revenues will exceed spending. By 2051, revenues will have exceeded spending by a total of $815 billion. Looking at the historical spending and revenues trends back to 1980, I think a linear extrapolation is quite reasonable, and is the most fair and politically balanced estimate -- e.g. it does not include any massive increases or cuts to spending or revenues. By this method, total federal spending from 2011-2051 will be $321,845 billion, or $321.8 trillion. This may seem like a huge number (and it is!), but this was arrived at with a linear spending increase each year, and we can project GDP growth will increase by a constant percent each year -- which means GDP grows exponentially instead of linearly. From 1980-2010 the average rate of GDP growth was 5.68%. Assuming this is the average growth rate from 2011-2051, that $321.8 trillion in federal government spending will account for only 16.6% of the total GDP for that period. At the peak of the US economy in 2000, federal spending was 18.0% of GDP (it is 24.9% in 2011). So the financial outlook from these projections is actually pretty favorable, and in fact may be a little too much so.

Now on to the cost of Obama's deficit spending. I calculated the total public debt added by Obama's deficit spending from 2009-2012 using the OMB data (2011 and 2012 are estimated of course). To be as fair as possible, I subracted from each year the 2008 deficit of $459 billion. Even though the 2008 budget was passed by Democrats when Obama served in the Senate, it cannot be ascribed to him. In other words, $459 billion was the annual deficit "baseline", and I included only the 2008-2012 deficits over that amount in determining the cost of Obama's spending. The total debt from 2009-2012 is $5.45 trillion, and Obama's portion of that is $3.62 trillion.

Next, I used the average annual interest rate of 5.875% to calculate the total cost of the interest payments on the $3.62 trillion in Obama debt. From 2011-2051, interest payments on Obama's 2009-2012 deficit spending will total $8.72 trillion. To look at it another way, when Obama sold us his 2009 "Stimulus" bill at a cost of $1 trillion, he failed to mention its true cost to taxpayers is actually $3.4 trillion ($1 trillion principal + $2.4 trillion in interest over 40 years). When the government is running a deficit, any politician's sales pitch for new spending is a bait-and-switch scam so massive it should be illegal.

We now have enough information to calculate the cost of a vote for Obama. The $8.72 trillion in interest payments on Obama's 2009-2012 deficit spending will account for 2.7% of total federal spending from 2011-2051.

Using IRS data, I calculated the total federal taxes (income tax + Social Security and Medicare taxes) paid by heads of household earning incomes between $10,000 and $240,000. I then matched and interpolated these numbers with Bureau of Labor Statistics data to calculate the average total taxes paid during a 40-year working career for each occupation in the BLS database, and adjusted for an annual inflation rate of 4.1%, which is the historical average rate from 1980-2010. Finally, I calculated the fraction of those tax dollars that will go to pay for the interest on Obama's 2009-2012 deficit spending. The results for various occupations are given in the table below. The first entry, average of all college graduates, assumes a lifetime average salary of $45,000 (in 2010 dollars).

According to these results, the average college student graduating this year will pay $25,941 just to cover the interest on Obama's deficit spending. Many students will pay much more. If you voted for Obama, that 30-minute trip to the polling station was probably the most expensive 30 minutes of your life.

Table: Scroll down to find your occupation and see how much your vote (or someone else's vote) for Obama cost you.

Your occupationYour vote for Obama cost youDays of lost income to pay for it
Average of all college graduates$25,94189
College professors$53,18997
Kindergarten teachers$34,03894
Elementary school teachers$34,44794
Middle school teachers$34,50695
Secondary school teachers$34,74395
Chief executives$137,415122
Sales managers$88,514114
Engineering managers$98,317116
Education administrators$61,797108
Social and community service managers$43,215100
Financial analysts$61,585108
Loan officers$43,464100
Tax examiners, collectors, and revenue agents$34,54395
Computer programmers$52,600105
Architects, except landscape and naval$53,065105
Aerospace engineers$70,588110
Biomedical engineers$61,320107
Chemical engineers$70,180110
Civil engineers$61,185107
Computer hardware engineers$79,091112
Electrical engineers$61,684108
Environmental engineers$61,142107
Materials engineers$61,626108
Mechanical engineers$61,126107
Anthropologists and archeologists$35,05096
Political scientists$79,062112
Community and social services occupations$25,64889
Child, family, and school social workers$25,75189
Paralegals and legal assistants$33,99394
Art directors$70,167110
Fine artists$34,07594
Multi-media artists and animators$43,413100
Fashion designers$52,569105
Graphic designers$26,31090
Interior designers$34,27694
Reporters and correspondents$25,71589
Broadcast news analysts$44,069101
Technical writers$43,768101
Writers and authors$43,635101
Sound engineering technicians$34,56495
Dentists, general$127,700121
Family and general practitioners$137,487122
Obstetricians and gynecologists$180,178129
Pediatricians, general$137,081122
Physician assistants$61,544108
Registered nurses$43,885101
Physical therapists$52,770105
Radiation therapists$52,894105
Recreational therapists$25,45488
Respiratory therapists$34,60295
Speech-language pathologists$44,115101
Dental hygienists$44,053101
Radiologic technologists and technicians$34,59995
Emergency medical technicians and paramedics$18,99186
Pharmacy technicians$13,69889
Massage therapists$20,03190
Fire fighters$26,23890
Police and sheriff's patrol officers$34,74795
Private detectives and investigators$26,22090
Chefs and head cooks$25,84289
Janitors and cleaners$12,70984
Hairdressers, hairstylists, and cosmetologists$13,31487
Flight attendants$25,72689
Sales representatives, technical and scientific products$61,203107
Real estate brokers$53,007105
Real estate sales agents$34,44094
Executive secretaries and administrative assistants$25,81289
Legal secretaries$25,67289
Plumbers, pipefitters, and steamfitters$26,57791
Structural iron and steel workers$26,39590
HVAC mechanics and installers$25,76889
Commercial divers$35,17396
Airline pilots, copilots, and flight engineers$88,943114
Air traffic controllers$79,541112
Truck drivers, heavy and tractor-trailer$19,95190

Note: my original post contained some errors in the interest and inflation rate calculations, which have been corrected now.

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