Another “How Big?” Question: U.S. Federal Spending

Just about everyone and their dog has seen those scary graphs of government spending shooting skyward along an exponential curve.  They look like this:

This runs from 1913 until 2011 and was retrieved from http://www.whitehouse.gov/omb/budget/Historicals.  In 1913 Federal spending was $715 Million.  In 2011 it was $3,603,061 Million ($3.6 TRILLION).  However, if you’ve seen my last few posts you know how important it is to adjust for inflation and population before assigning any meaning to these kinds of statistics.  Well, that’s just what I did.  I grabbed my population numbers from a previous post and used an online inflation calculator to convert everything to 2012 dollars.  We end up with real (inflation-adjusted) Federal spending per person from 1913 to 2011.  How’s that one pan out?  Again, I was stunned by the result (which means my guess and reality were *again* very different).

Wow!  I kinda thought the folks screaming about how much government spending has grown were exaggerating in a major way.  It looks like I was wrong.  In 1913 the federal government spent $172 per person per year (in 2012 dollars!).  In 2011, the federal government spent $11,799 person person per year (in 2012 dollars).  I’m blown away!  At the height of WWII we spent only $8515 per person in 2012 dollars.

Here are my thoughts:

  • Since around 1930 we’ve seen an almost linear growth in federal spending per person.  The nineties represent a departure from that trend, but 00′s soar to bring us right back to the trend line.
  • We get a LOT more from our government today in terms of social safety nets, research, public health, education and other programs than we did in the early 1900′s.  Is that good or bad?  That’s a matter of whether or not that is what we want in terms of what we give the government and what we expect to get in return. There isn’t a clear right or wrong — but we need to recognize that fact as a society and make an enlightened choice.
  • Federal spending really is increasing dramatically over the long-term trend and seems to do so in a fairly predictable way.
  • I don’t think that trend line is sustainable.  How far can it go?  How will it end?  I have no idea.

I’d really like to look at federal spending vs. median household income, but that is a topic for another day.

Hat tip to Kenny Felder for getting me to pursue this set of calculations!

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