Chart of the Day: Federal Spending, Share of GDP
Looking at federal spending as a share of GDP during the terms of U.S. presidents, federal spending increased under Carter and both Bushes, remained about the same under Reagan, decreased under Clinton to the lowest level since 1970 and skyrocketed under Obama to the highest level since WWII. If the Ryan Plan is successful at getting federal spending below 20% of GDP by 2018, it would the first time since 2002 that the size of the federal government is below one-fifth of the U.S. economy.
28 Comments:
The Ryan Plan is smoke and mirrors and avoids making a real attempt to reduce the deficit. It is easy to project good times ahead if you make optimistic assumptions that have no hope of being true. But we do not live in the world of fantasy and have to deal with real problems. So far the Republicans and the Tea Party people have been a very real disappointment.
I agree that the Ryan plan isn't good enough, but I don't see how you can blame the Tea Party. They're the only reason the Ryan plan even has a chance of getting through. If anything, we need to chuck out more Democrats and non-Tea Party GOPers and get many more Tea Party people in office. I look forward to toppling Boehner and the rest of them in 2012.
Vange is right.
Furthermore, what no one has noticed is that Ryan is proposing a Euro-style military, down at about 1.8 percent of GDP in years ahead.
Why we should wait until 2030 to get down to that level is a good question.
However, those of you bashing me for proposing a reduction in military outlays now have to take up the cudgels against Ryan. He is moving in the same direction I propose, albeit 10 years too late.
That's a lot of money to spend is we are just going to demobilize anyway. .
Well, they seem to have Obama backing up. His new budget (revised) is said to include cuts to medicare, and Social Programs.
Probably not much, but it's a start in the right direction.
Benji The Heroic Truthteller,
Nobody bashes you for proposing military cuts. They bash you for advocating an idiotic 75% reduction in military spending.
If Ryan is offering thin gruel, where is your boyfriend's deficit reduction plan?
Nobody bashes you for proposing military cuts. They bash you for advocating an idiotic 75% reduction in military spending.
Hell, the US can cut 80% and still spend more than any other country. Why should it spend as much as it does has never been adequately explained.
Vange-
You see, a mysterious enemy is going to invade by the polar route...sure, The Hunt for Red October was a fantasy doomer-porn, but haven't you played any of the war games out there?
Really, if our military was only to protect out shores, and we avoided foreign entanglements...it is hard to see much need for more than some recon satellites, some hunter-killer subs, a few ballistic subs.
Terrorists are not a military threat. They are more like ugly punks doing heinous PR stunts.
Remember the Soviet Union? They had blue water navy, and were producing dozens of subs every year. ICBMs. A KGB. Millions of men in uniform. They were building (if I remember) 3,000 tanks a year. Supersonic bombers, and the world's fastest fighter jet. Monkey-thugs ran the place.
Al Qaeda? I don't think they have one tank. Not an airplane. No satellites. No ships or subs.
They had 24 US-based Saudis armed with boxcutters.
The words "microscopic threat" come to mind.
VangelV, the U.S. has a world empire to defend.
Countries pay tribute by making sure the U.S. can consume more than produce, in the long-run, to insure their defense.
They really don't have a choice anyway, because the U.S. is the world's only superpower. Nonetheless, that's the way the "world order" has developed.
When the Roman Empire fell, the world had a thousand years of economic stagnation, called the Dark Ages.
Also, I may add, the Roman and British empires lasted for hundreds of years. The American empire began after WWII and will likely last hundreds of years.
This is only a "soft-patch." The Romans and British had many of them. The E.U. and China have more economic problems than people realize and they're much worse than the U.S.
And the Roman Empire lasted for hundreds of years even after Nero.
"Why should it spend as much as it does has never been adequately explained."
Because the US does the world's heavy lifting while freeloaders like the Canadians sit back and criticize us.
Remember the Soviet Union? They had blue water navy, and were producing dozens of subs every year. ICBMs. A KGB. Millions of men in uniform. They were building (if I remember) 3,000 tanks a year. Supersonic bombers, and the world's fastest fighter jet. Monkey-thugs ran the place.
You are missing one point. If I were in a European nation I would demand some level of military spending because of the vulnerability of all European nations to invading armies. But in the case of the US, where would a credible invasion threat come from?
VangelV, the U.S. has a world empire to defend.
Empires are too expensive for taxpayers. That is why they keep going broke.
Countries pay tribute by making sure the U.S. can consume more than produce, in the long-run, to insure their defense.
Really? You mean that China is paying the US to defend it? It seems to me that its businesses are taking advantage of events to accumulate productive capital that will make Chinese workers and investors much better off than they could have without American stupidity. Had the US kept to a small government and small army policy it would not have any meaningful competitor in most of the industries that it excels in.
They really don't have a choice anyway, because the U.S. is the world's only superpower. Nonetheless, that's the way the "world order" has developed.
A superpower? You are borrowing money from China and Brazil so that you can keep your government afloat. That is not the definition of a real superpower. I suggest that you confuse illusion with reality.
When the Roman Empire fell, the world had a thousand years of economic stagnation, called the Dark Ages.
First, a cooling planet tends to do a lot of damage to agricultural societies. Second, when the French, Ottoman, Russian, and British empires fell the world just moved on.
Also, I may add, the Roman and British empires lasted for hundreds of years. The American empire began after WWII and will likely last hundreds of years.
The British Empire peaked just before it lost the Boer War. The American Empire peaked before it lost in Vietnam and declared bankruptcy. Forty years have passed since then and the fiscal and monetary conditions are driving what is left of the empire towards the abyss.
This is only a "soft-patch." The Romans and British had many of them. The E.U. and China have more economic problems than people realize and they're much worse than the U.S.
The US is broke. It borrows from the EU and China to keep its government operating, not exactly a sign of strength. And nobody claims that the Chinese people are better off than their American counterparts today. Like Europe, China is still poorer on a per capita basis in the US. But economically it is a lot freer, even with the meddling idiots in Beijing getting in the way here and there. This is why the Chinese standard of living has gone up so rapidly and why Chinese citizens in cities like Shanghai, Qingdao or Dalian have a better standard of living than Americans living in Detroit, New Orleans, Atlanta, Buffalo, or Los Angeles.
And the Roman Empire lasted for hundreds of years even after Nero.
It was in decay with few viable competitors. Life after Nero was one of hardship, uncertainty, and high taxation, not exactly great for the average person living in the Empire.
Because the US does the world's heavy lifting while freeloaders like the Canadians sit back and criticize us.
Define heavy lifting? Do you mean supporting tyrants like the Shah, Saddam, or the Saudi Royal family? Or invading other nations?
And as I pointed out, Canada lost a bigger percentage of its population in World War One and about the same in World War Two, even though it was never attacked in either conflict. Americans were so reluctant to volunteer after Pearl Harbour that FDR had to institute a draft. It is easy to talk big when you have not lost many people in war and you usually fight enemies that are out-gunned by a massive margin. Dropping bombs from 20,000 feet on wedding parties and people who are armed with rifles is not exactly a sign of bravery, no matter how many movies you make that says it is.
Sorry but you have to make a rational argument to justify why American taxpayers should spend more on defense than the next 50 countries combined. So far I have yet to hear much except an admission that your 'home of the brave' seems to be afraid of a few hundred terrorists.
"Hell, the US can cut 80% and still spend more than any other country..."...
Says someone living comfortably far from the sharp end of reality...
"Why should it spend as much as it does has never been adequately explained"....
Ahhhh, its all about 'peak oil'...
Really the title of this posting should read: "Federal Spending is Wealth Extorted from the Economy"...
VangelV, your response is illogical.
The American empire is not expensive (to America) when other countries pay for much of it, including China, which has to be part of the empire to improve its economy.
Face it, the U.S. is the world's economic and military powerhouse - the world's only superpower.
Says someone living comfortably far from the sharp end of reality...
As I said, Canada has a better record of performance than the US. It certainly has not lost as many wars as you have over the past 60 years and has not bankrupted its people by spending more than it needs.
Ahhhh, its all about 'peak oil'...
It very well might be. But it is very hard for you to get the oil when you can't afford to buy it because foreigners will not lend you the money. Going bankrupt sooner is not exactly a good strategy.
The American empire is not expensive (to America) when other countries pay for much of it, including China, which has to be part of the empire to improve its economy.
If you want to see an example of illogical read your own posting. China is not paying for your military. Chinese businesses are busy accumulating capital over the past 30 years even as your own have been shedding capital for the better part of half a century. The government has taken that money and used it to finance all kinds of infrastructure spending. When the USD is toast China will still have the factories and the infrastructure, and the means to trade what it makes for the products that it needs. But with their currency's reserve status gone and purchasing power eroded what will Americans use to purchase all of the things they need?
If you want wealth you need investable savings. If you want power you need capital accumulation. The US has neither savings nor capital accumulation.
Face it, the U.S. is the world's economic and military powerhouse - the world's only superpower.
Superpowers don't borrow from developing world countries.
I completely agree with Vange about defense spending, we could draw it down at least 80% and not notice the difference. It is such a joke that Canada has passed the US in economic freedom in the last couple years, despite their ridiculous single-payer medical system. Where I disagree with Vange is his repeated calls for "capital accumulation," presumably referring to manufacturing, or "making real things" as all the twits call for these days. The fact is there isn't much value in manufacturing, even the high-tech stuff that the US dominates in is less than 25% of US GDP. All the value now is in intellectual capital, which isn't the silly patents or copyrights or other IP, but the specialized information and processing ability embedded in the brains of information workers, who still congregate and do the best here.
China is too stupid to realize this and Europe chokes these people off and pushes them out with their crazy regulations. Unfortunately, the US has started going down the European route under Obama, but it still has a long way to fall.
Getting back to the original post, charting Federal spending as a percent of GDP is actually fairly misleading, because a lot of the recent functions of govt are being destroyed by private markets and technology. The USPS is being decimated by email and FedEx: this is going to happen to a lot more to a lot more agencies, everything from the FDA to the Fed. Simply handing over 20% of an ever-growing pie to these govt bozos while they do less and less is just stupid, yet this is what charts like the above try to justify.
Hmm, I wrote another comment before this China comment, that seemed to go through but now isn't posted. I assume it's stuck in some spam trap because I dared to include a link.
"I assume it's stuck in some spam trap because I dared to include a link."
There seems to be no rhyme or reason to it. Sometimes several links are OK, other times even pasting a URL is to much for it.
VangelV, obviously, the world's only superpower borrows from poor countries, and you continue to make false assumptions:
U.S. has plundered world wealth with dollar: China paper
Oct 24, 2008
Plunder: to rob of goods or valuables by open force, as in war; despoil, or fleece; to take wrongfully, as by pillage, robbery, or fraud; loot.
BEIJING (Reuters) - The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said.
"The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University.
Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington's sole concern had been protecting its own interests.
Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.
It is such a joke that Canada has passed the US in economic freedom in the last couple years, despite their ridiculous single-payer medical system.
The American medical system is hardly the model of liberty. The government already spends more than 50% of the money that the system gets and has passed legislation that limits choices. If Canadians have medical issues they have to wait longer if they rely on their local resources. But if they have the cash to travel, they can get care in another city or simply cross the border and pay for what they need at a foreign facility.
Where I disagree with Vange is his repeated calls for "capital accumulation," presumably referring to manufacturing, or "making real things" as all the twits call for these days. The fact is there isn't much value in manufacturing, even the high-tech stuff that the US dominates in is less than 25% of US GDP. All the value now is in intellectual capital, which isn't the silly patents or copyrights or other IP, but the specialized information and processing ability embedded in the brains of information workers, who still congregate and do the best here.
Really? I do not see the American education system create very many information workers as a percentage of the economy. The simple fact is that if you want an increase in jobs you need capital accumulation. Because that is not happening in the US many of the jobs that could have been done there have moved abroad. This means that the people who do have good, high paying jobs that they can defend through high productivity will see their wages go up much faster than the median. But it does not guarantee that in real terms the median income in the US will continue to rise, which is what this debate is partially about.
China is too stupid to realize this and Europe chokes these people off and pushes them out with their crazy regulations. Unfortunately, the US has started going down the European route under Obama, but it still has a long way to fall.
At the PDAC I saw a number of Chinese companies that were not listed anywhere looking to make deals. They were finance people looking to hedge their exposure to the USD by acquiring developers and producers who will need a great deal of debt to build their mines and mills in various countries around the globe. They are doing this because they know the danger of having too many USDs in reserves.
Simply handing over 20% of an ever-growing pie to these govt bozos while they do less and less is just stupid, yet this is what charts like the above try to justify.
Mark is an optimist who tends to ignore reality and will continue to for as long as he can.
VangelV, obviously, the world's only superpower borrows from poor countries, and you continue to make false assumptions:..
You lost me. What false assumptions have I made?
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