True Economics Applied in the Real World
Since my last update included some projections and my own estimates, I am herewith updating data on US government growth with completely and 100% finalized actual data:
All this data is of course as always available at the US Government Printing office.
Update: I have now corrected this chart by excluding the budget addendum for Federal grants.
The former CBO head at Yahoo Tech Ticker:
Walker states the simple fact that …
… “government is bigger, entitlement programs have expanded, spending has increased and taxes are higher” as a result of the law.
… those points should be listed in the default template header for any bill brought forth in Congress.
In addition to that, multiply any expense number presented by 10 and you’ll usually have a rough approximation of where a government program is headed.
Government always grows, it’s inevitable so long as people cling on to this mad fantasy.
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:
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.
(Check here for much better and updated charts regarding government growth.)
If there has been one consistent trend in economic developments in the United States over the past 60 years it would be the growth of the size of federal, state, and local governments in relation to the private sector.
The extent to which federal, state, and local governments in the US spend on the one hand and tax and borrow on the other hand has grown consistently. The best way to measure this is to take a look at the development of government receipts and spending as compared to total spending in the United Stated which is measured by GDP ( = Total Consumer Spending + Total Investment Spending + Total Government Spending + Exports – Imports):
As can be seen in the first chart above, government expenses as % of GDP in the US increased from 17.2% in 1948 to 31.5% in 2007. The second chart shows that taxes rose from 21.7% to 29.2% in the same period.
What is noteworthy that there was a brief period (1992 – 2000) where federal, state and local governments as a whole managed to cut its expenses as compared to the private sector from 33.4% to 29.2%. From 2001 through 2007, however, total government expenditures have once again grown consistently.
The fact that government expenses have grown throughout US history is hardly ever acknowledged or even mentioned in media outlets or by the responsible authorities. This is not surprising. For once one acknowledges it, the age-old myths about neo-liberalism, free markets on steroids, anarchy, merciless capitalism, or insufficient government funding would immediately be debunked and could no longer be utilized as convenient excuses by those in power.