Mon 20 Aug 2012
Another look at how big our government has grown (or not)…
Here’s a chart I made from White House data on historical federal receipts and spending from 1931 to the present:
Nothing amazing or really stunning to see here, but it is informative. For the last few decades the size of the federal government as measured as a percentage of the economy has fluctuated but not shown any definitive trend. We’ve had a tendency to overspend on a regular basis. No clear patterns related to political party in power jump out to me. Prior to the current financial crisis, spending as a percentage of GDP peaked in 1982 excluding WWII (that did surprise me a little).
Government is NOT much bigger now than at other times during the post-war era when measured against GDP. The massive U.S. national debt appears to be mostly due to policies of moderately overspending while reducing federal receipts over a period of many years — i.e. we keep spending a little too much as a country while also lowering tax collections.
So should government size generally be measured against GDP? If GDP doubles is it optimal or necessary for government spending to also double? I have no answer to those questions. In other words, I can draw a few conclusions from the data in terms of where we are now compared to previous times, but I can’t tell you if that means we’re doing well or poorly.
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