‘More harm than good’

About a week ago, Warren Buffett, the chairman and chief executive of Berkshire Hathaway, made a powerful case in support of raising taxes on himself and those like him who enjoy enormous wealth. He noted, among other things, that he has a lower tax burden, as a percentage of his income, than anyone in his office. Millionaires and billionaires, Buffett said, “have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”

President Obama strongly approved; Fox News called Buffett a “socialist.”

National Review, meanwhile, asked right-wing financier Charles G. Koch for a reaction to his fellow billionaire’s suggestion. The Koch Industries CEO said:

“Much of what the government spends money on does more harm than good; this is particularly true over the past several years with the massive uncontrolled increase in government spending.”

There are two parts to this, and let’s take them one at a time. The first is the notion that there’s been a “massive uncontrolled increase in government spending.” On this, Koch has no idea what he’s talking about.

This has been debunked before, here and elsewhere, but since ignorance is resilient, let’s take a look at a recent item from Paul Krugman.

[T]he peddlers of this myth point to the fact — which is true — that federal spending as a share of GDP has risen, from 19.6 percent in fiscal 2007 to 23.6 percent in fiscal 2010. (I use 2007 here as the last pre-Great Recession year). But what’s behind that rise?

A large part of it is a slowdown in GDP rather than an accelerated rise in government spending. Nominal GDP rose at an annual rate of 5.1 percent from 2000 to 2007; it only rose at a 1.7 percent rate from 2007 to 2010.

Krugman posted some worthwhile charts on this, but there are basically two key elements to keep in mind. The first is that spending rose as a percentage of GDP, not because of a spending binge, but because GDP went down so sharply during the Great Recession.

But what about the rest? There are safety-net programs — unemployment insurance, food stamps, SSI, refundable tax credits — that respond to help families in need during down times. When the economy gets worse, these programs spend more automatically because there are more people qualifying for the benefits.

“What we’re seeing isn’t some drastic expansion of Big Government; we’re seeing the government we already had, responding to a terrible economic slump,” Krugman explained.

And then there’s that other part of Koch’s claim: much of the money spent by the government “does more harm than good.” Here’s the follow-up: name some.

I can appreciate the notion that some spending proves more effective than other investment in achieving policy goals, but I’m fascinated by the notion that “much of what the government spends money on does more harm than good.” Such as?

Or more to the point, more harm than good for whom?