A Twitter follower of mine just praised president Trump for saving money by donating his salary back to government departments:
“He takes a ZERO salary from the american people. How much did americans paid for Obama, Biden, Pelosi, Schumer, etc?”
Is this a significant saving for “the American people,” that is, American taxpayers? To check that, the voter must do some simple calculations. But even among those voters who can easily find the data sources and do the calculations, “rational ignorance” (as public choice economists say) will prevent most from doing it. Rational ignorance is the fact that the voter remains rationally ignorant of politics because he or she, individually, has no impact. It’s not as when he buys a car: he pays the money and gets the car he ordered. Politics and voting are very different: Why take the trouble and cost of finding information when your vote is not going to change the result of the election anyway? You’ll get the same political car anyway. Add partisanship to the mixture, and a perfect anti-Enlightenment storm is forming.
So let’s calculate if we should be grateful to the president for being so thrifty with public money. The annual salary of the president is $400,000—which means at most $300,000 after tax. This corresponds to 1/16,000,00o (one sixteen-millionth) of the annual expenditures of the federal government, which were roughly $4.8 trillion ($4,800,000,000,000) in 2019, before the pandemic struck. It can be easily calculated that in 2019 (note again: before the pandemic), the amount by which Trump increased the annual expenditures of the federal government was a bit more than $600 billion ($600,000,000,000) compared to the last year of Obama’s presidency (see https://fred.stlouisfed.org/graph/?g=vzfE).
Thus, by foregoing his presidential salary, Trump saved the American taxpayer $300,000 a year and, by the end of 2019, was spending $600,000,000,000 more of their money on an annual basis. This means that what Trump saves the taxpayers in annual salary is 1/2,000,000 (one two-millionth) of what he ended up spending over and above what Obama spent during his last year. (It is of course much worse since the beginning of 2020.)
Many taxpayers, if they knew, would have preferred that Trump ran with his $300,000 and showed frugality with the trillions of dollars of federal expenditures. According to USA Today, two previous presidents, also very wealthy, John Kennedy and Herbert Hoover, also donated their salaries. But they did not increase annual federal expenditures by half a trillion dollars.
PS: Thanks to Jon Murphy for his comments on a draft of this post.
READER COMMENTS
Shane L
Sep 14 2020 at 10:54am
Furthermore, remember that political office was often an unsalaried position in the past, which meant that only wealthy people could pursue it. In the UK, the Parliament Act 1911 allowed for the payment of members of parliament for the first time.
Salaries for MPs was a great radical cause, one of the six demands of the Chartists in the 19th century.
Hence, it does not seem sensible to celebrate a wealthy person who refuses to accept payment for public office. We want politicians to be paid for their work, so that poorer people might feasibly seek public office.
Pierre Lemieux
Sep 14 2020 at 3:02pm
@Shane: One precision: I understand (just from press reports, though) that the president of the US cannot refuse a salary, but that he can give it (or part of it) back in donations to the government, which is what Trump has been doing. Second point: although I understand your argument, it is not watertight. Paying statocrats has led to professional politicians who sometimes start exploiting the actual taxpayers soon after getting out of their mothers’ wombs. The Texas model has something to say for it: the Assembly meets once every two years for at most 140 days (I have the impression that it is often shorter); and assemblymen are paid $221 for each day the Assembly is in session. Trump is of course an outlier, having inherited $200 million from daddy, but perhaps a similar model could also be applied to the presidency? The only citizens being able to afford to run would be those who have previously made enough money on the market (that is, through voluntary relations), or those who are about to retire, or those intelligent enough to think they could later marshall their presidential experience in books, lectures, and speeches.
Shane L
Sep 15 2020 at 5:17am
Well Pierre, I think there’s no doubt that politicians can be paid too much, too! To stick with the UK, the expenses scandal of 2009 is a good example of professional politicians using their position to receive enormous sums of money for questionable expenses.
I’m unaware of the Texan system so I can’t really comment on it, but I think it’s important for democracy that any citizen can feasibly seek office, and I suppose that means reasonable payment for the position.
Matthias Görgens
Sep 15 2020 at 11:56pm
Compared to positions of similar responsibility in the private sector, politicians aren’t paid nearly enough. (With the possible exception of Singapore.)
Hence political positions mainly attract people who are in it for political power.
suddyan
Sep 16 2020 at 8:55am
[Compared to positions of similar responsibility in the private sector…]
That is easily addressed. Take most of the “responsibilities” away. Politicians have assumed wholly unnecessary “responsibilities” in their never-ending quest for power and desire to sell their “having done something” for votes.
PS. The reason I use scare quotes around the word “responsibility,” is that evidence suggests the word should rather not be used in the same sentence as the word politician.
Pierre Lemieux
Sep 17 2020 at 10:36am
@Suddyan: Good point!
Henri Hein
Sep 14 2020 at 3:30pm
It’s interesting that you mention Herbert Hoover as not having increased the federal expenditures by half a trillion dollars. That may be correct, but it is worth pointing out that the budget at the time was around 3 billion total.
When I looked into it while examining some data around the great depression, I noticed that Hoover’s term was one of the most expensive presidential terms in US history. A quick look now at historical budget data shows that expenditures went from 2961 million in 1928 to 4659 million in 1932. That’s an almost 60% increase. Just browsing cursorily, I can find no comparable single-term increase under FDR, LBJ or Bush, who are otherwise known as spendthrift presidents.
Henri Hein
Sep 14 2020 at 3:38pm
I meant peace-time. We can find expenditures increasing by more than 60% during wars, but Hoover’s term did not involve foreign conflict.
Pierre Lemieux
Sep 14 2020 at 6:06pm
@Henri: Interesting comment, thanks.
Niko Davor
Sep 16 2020 at 12:11pm
The article is written as if the $600B/yr increase in federal spending is Trump’s personal spending choices over Obama.
In reality, the $600B/year growth in federal spending is mostly mandatory spending items that are already owed that the current President has no choice over, like Social Security payments, Medicare payments, and payments on the national debt.
We should hold politicians accountable for their policies and their actions and inactions. Holding them accountable for the size of pre-existing debts owed when they take office isn’t reasonable.
The writers here know better, but let emotion get the best of them and write these cheap political jabs.
Oh, and of course forfeiting the $300k salary is obviously a publicity act.
Pierre Lemieux
Sep 17 2020 at 11:09am
@Niko: That’s a good question but the answer is easy. Just look at Table 3.1 of the Historical Tables of the federal government budget, more specifically line 5. The increase under Trump of all federal expenditures on education, health (including Medicare and Medicare) and Social Security explains only half of the annual increase in federal expenditures between 2016 and 2019. As for public interest expenses, they have increased because borrowing has increased (interest rates have decreased). I would be happy to revise my numbers by cutting the increase of government expenditure in half: Trump has presided over an increase of annual federal expenditures of about $3,000,000,000 and has donated back $300,000 a year to the taxpayer (of the money the taxpayer was giving him personally), the latter corresponding to 1/1,000,000 (one-millionth) of the former (at 2019 annual rates).
Moreover, note that it is not because some entitlements increase automatically, given the government’s own laws, that it is forbidden to reduce other expenditures to compensate, instead of increasing them equally.
Niko Davor
Sep 18 2020 at 2:08am
According to that spreadsheet, total federal expenditures for 2016/2019 where $3.853/$4.448T which is a growth in expenditures of $596B. That growth is broken down into $311B for human resources (health + education + veteran services), $135 billion for interest payment growth, $93 billion for national defense, $40 billion for “Other functions” such as agriculture, and $20B for physical resources such as the housing credit.
You agree that the $311B increase is mostly mandatory spending increases. We have more retirees collecting larger payments.
The National debt in 2009/2017 was $11.9T/$20.2T. That’s a big difference. Interest owed is proportionate with debt, so interest paid should be correspondingly higher regardless of who the president is. Those two numbers right there make up most of the 2016/2019 difference.
Trump did push for increased defense budget, so he deserves either the blame and the credit for that. As for the other items like increased agriculture spending and housing credit: Did the President push for that? Congress has the “power of the purse”. They have authority over federal discretionary spending.
Trump deserves credit or blame for the things he did or the initiatives he pushed or the opportunities he missed. Criticism of the COVID spending is valid. Criticism that Trump didn’t push for other spending cuts or reforms is valid. Criticizing the health care reforms most of which failed to pass are valid. Criticizing (or crediting) Trump’s deregulation agenda is valid.
Criticizing the President for the level of existing debt when he assumed office and the interest owed on that isn’t reasonable. Criticizing the President for the actions of a hostile Congress isn’t reasonable. And criticizing the President for growth of retirement payouts that the US is legally obligated to isn’t reasonable.
Niko Davor
Sep 18 2020 at 11:21am
One simple question: When the Trump’s term ends, and he is succeeded by another administration in 2021 or 2025: will these federal spending numbers drop down to Obama-era levels? Will interest payments on the national debt drop to Obama-era levels? Or will they rise, because regardless of who the President is, a larger debt requires larger interest payments? Will the spending creep on the smaller more obscure items reverse without Trump in office? I’d bet against that.
Secondly: Kamala Harris was a co-sponsor of the Green New Deal and was a co-sponsor of Bernie Sanders single payer healthcare plan. The Green New Deal is estimated to cost an extra $51–$93 trillion over the next decade by the American Action Forum. The health plan is expected to cost an extra $40 trillion over the next decade. Those numbers make the $600B/yr of federal spending growth, again mostly in mandatory spending increases, look petty. I don’t see you endorsing Harris, but I sure don’t see you saying that those programs which Kamala Harris was a vocal formal co-sponsor for are bad ideas.
Pierre Lemieux
Sep 27 2020 at 5:18pm
@Niko:
Do see me.
Comments are closed.