US Government Growth 2009

The size of government in relation to private sector has grown to 40% in 2009, according to www.gpoaccess.gov estimates.

Below please find a historical chart that shows the growth of the size of government in the US from 1930 on through now. I estimated the numbers of state/municipal expenses prior to 1948, based on the general observable trend back then, applied the GPO’s estimate for 2009 federal expenses, and assumed that state/municipal expenses in 2009 remained at the same level as 2008:

government-expenses-growth-1930-2009

One thing that one can generally take from this: The scope of government intrusion has grown from 7% in 1930 to now over 40%. It is beginning to reach levels that are unprecedented in post war history and only matched during World War 2.

During the Great Depression of 1929, the government already made the mistake of spending more money instead of less. Note the doubling of expenses from 7% in 1930 to 15% in 1933. As we all know, this was the very cause of the immense prolongation of the depression. In particular the war times were hard on the American people, with its 90% income taxes and rationing policies.

The US economy did not get back on its feet until about 18 (!!) years later, partly as a result of a massive winding down of excessive spending and taxes by the federal government, partly of course due to the fact that all the capital in the world flocked from countries in ruins to the only industrialized nation that was still virtually unharmed by bombings, holocausts, nukes, or occupations.

So long as the current path we are on continues, we are bound to repeat the mistakes from the past. Maybe we are even headed for a World War 3? All these mistakes and fallacies could then once again be conveniently obfuscated and masked, voices of reason trampled down by pseudo-patriotic propaganda, precipitating a populace in robotic mode … an army on the march. (“Don’t question your almighty government. The fault is your greediness. It’s the foreigners. It’s the businessmen. It’s the corporations. It’s Al-Quaeda, North Korea, Iran, and everyone else. NOT YOUR GOVERNMENT.”)

One note to all the Krugmans of the world: Just say “Stop” when your prescriptions will have wrecked the world enough and when you’re content with your achievements.


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6 thoughts on “US Government Growth 2009”

  1. “During The Great Depression of 1929, the government already made the mistake of spending more money instead of less. Note the doubling of expenses from 7% in 1930 to 15% in 1933.”

    Try studying your own graph. According to your graph, spending fell after 1933, and we all know this is the reason why the depression was prolonged. And spending did not double from 1930 to 1933. GDP collapsed during this time period, so it was higher relative to GDP but did not double in aggregate. Misleading statement.

    “In particular the war times were hard on the American people, with its 90% income taxes and rationing policies.”

    Yes a 90% top tax rate sucked but wars were paid for back then. If we actually paid for wars today, the blind public would wake up to how their money is being spent and they would not last as long (or would be prevented). Out of sight out of mind is a terrible fiscal policy, and we are paying for it today. It’s pathetic how people stood by while we sunk $2 trillion in two wars, but you try to help people with health-care suddenly everyone is worried about the deficit and throwing teabags at each other. Pathetic.

  2. @sb: Spending fell by a few percentage points after 1933, but STILL remained way above the 1930 level. Regarding doubling of expenses: Of course I meant the doubling of expenses as percentage of GDP. Just because GDP collapsed that doesn’t change the fact that government intrusion doubled in the very process. Something that we can observe again today.

    To say that this tiny dip in spending after 1933 was the CAUSE of the depression which had already been going on for 4 years in plain ridicuouls.

  3. At what point did my post say the dip after 1933 caused the depression? My post clearly states the slow down in spending, measured in aggregate or relative to GDP, PROLONGED the depression.

  4. bravo response. I can see why your site is just a hot bed of thoughtful economic discussion with responses such as that.

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