(Note that I am a little cautious of any graph labeled total gov’t spending, due to it being a pain in the butt to add up the budgets of every city, county, and other municipality in the entire country over many years, but I think the graph may be accurate.)
So this graph came from a Forbes article, “Lessons From the Decades Long Upward March of Government Spending,” which notes that:
For me, the most notable fact about this chart is that the growth of government spending has been remarkably steady. The trend over the last 83 years has been for government spending to rise by 0.24 percent of GDP per year, and the correlation is strong: a linear regression on this trend has an R-squared value of 0.72, meaning that time explains most of the movement in government spending.
In other words, mission creep. If you’re clever, you might start to wonder what will happen if this trend keeps going. If you’re really clever, you might figure out that in 1847, the US must have had negative government spending.
Or maybe there’s more than just mission creep going on.
Here’s a graph of federal spending vs. GDP since 1791:
Wow. Spending pre-WWI looks radically different than spending post-WWII, and I don’t think it’s just the difference between GNP and GDP.
The graph ends at 2011, but 2015’s total gov’t spending is estimated at 6.2 trillion dollars, or 35% of GDP. (Though I’m wondering if that shouldn’t be 39%; someone take a look and tell me why they aren’t adding the 3% for debt. For that matter, they don’t seem to have Social Security listed, and SS is like 24% of the budget so that’s kind of huge if they left it out.) Federal spending seems to be at 21 or 24% of GDP. Obviously these are all estimates.
Prior to WWI, non-wartime government spending was practically flat. Spending as percent of GDP did remain elevated after the Civil war and even after the small bump of the War of 1812, but in both cases it gradually fell back toward pre-war levels, perhaps as much due to gradual economic recovery/growth as budget cuts. Immediately after WWI, it looks like the same process has begun, but then it doesn’t.
Let’s explore some possible reasons why:
1. Cold War Spending
Maintaining a nuclear arsenal plus a lot of aircraft carriers, fighter jets, and tanks costs a lot more than just trusting your citizens to bring their own guns to the next skirmish.
(“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”)
Defense spending is about 13% of the Federal budget, and 5% of total GDP, which is a bigger % than the entire Federal budget for the entire 1800s except for the Civil War.
The Cold War acts a lot like previous wars, but takes a lot longer.
2. The Income Tax
While there were some, shall we say, mini-income taxes proposed or passed to fund wars in the 1800s, the system really got going with the passage of the 16th Amendment in 1913. Look back at the graph; other than the effects of wars ending, (including the Cold War,) spending as % of GDP has been steadily on the increase ever since.
Prior to 1913, the Federal government got most of its money from tariffs, customs, and certain sales taxes. The Income Tax obviously made it much, much easier to increase tax revenues, regardless of the reason. One may wonder about the wisdom behind such a move:
During the two decades following the expiration of the Civil War income tax, the Greenback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others called for a graduated income tax.[6]
The Socialist Labor Party advocated a graduated income tax in 1887.[7] The Populist Party “demand[ed] a graduated income tax” in its 1892 platform.[8] The Democratic Party, led by William Jennings Bryan, advocated the income tax law passed in 1894,[9] and proposed an income tax in its 1908 platform.[10]
“The federal income tax was strongly favored in the South, and it was moderately supported in the eastern North Central states, but it was strongly opposed in the Far West and the Northeastern States (with the exception of New Jersey).[14] The tax was derided as “un-Democratic, inquisitorial, and wrong in principle.”[15]” source: Wikipedia
Looks like poor farmers and laborers wanted to increase taxes on the wealthy and get rid of taxes that fell on themselves. The government decided to go along with the scheme because hey, free money. So you I guess you have the socialists to thank for your nukes.
Interestingly, William Jennings Bryan, one of the populist popularizers of the idea of the income tax as a means of freeing the people from the shackles of the gold standard, (“You shall not crucify mankind upon a cross of gold!“) was an anti-Darwinist who lobbied for (and got) state laws banning the teaching of evolution in public schools and represented the prosecution in the Scopes Trial in 1925. According to the Wikipedia, he opposed evolution not only on the regular religious grounds, but also because he feared its use as an weapon of war, ie the Social Darwinism being promoted by the Germans.
The US officially switched to fiat money in 1976, well into our long rise.
Anyway, here’s a graph showing the prominent role of income taxes in the Federal Budget:
If the Federal government were still limited to customs and excise taxes, this would be a much smaller pie.
3. The Federal Reserve
Like the Income Tax, the Federal Reserve Bank of the US was founded in 1913–boy was Woodrow Wilson busy. It purpose was to stabilize the banking industry and prevent bank runs from wrecking the economy, and I believe it serves as one of the major lenders to the US government, letting them spend more than they take in.
I am basically ambivalent on questions like, “Is the Fed a good thing?” or “Should we allow fractional reserve banking?” until I know more, but I am a little sympathetic toward the Fed just because QE is one of the few things anyone in government has actually done to try to fix the economy.
Here’s a graph for you, showing the growth of deficit spending:
4. Suffrage
The percent of Americans who are legally allowed to vote and actually do so has increased from <5% in the late 1700s to almost 45% today. (Wikipedia)
Back in the 1700s/early 1800s, only free adult males who owned property were allowed to vote; the laws were set by state and so varied a bit–in some places property owning women could vote, for example; ethnicity was probably a concern here and there.
The first major expansion of the franchise occurred between 1792 and 1856, as the property requirements were repealed state-by-state. Looks like several states abolished theirs around 1820, including NY and AL. (Actually, looks like Alabama entered the Union around them with no property requirement to start with.)
I’m guessing the 1866 dip is due to disenfranchisement of Southerners due to the Civil War.
Racial restrictions on voting were removed in 1869. The black vote does not represent a very large expansion in suffrage just because black men were a relatively small % of the overall population at the time and the KKK and other groups were effectively preventing them, especially by the early 1900s, from voting.
The biggest single jump in the graph begins around 1920, when women were allowed to vote–an expansion that more than doubled the size of the voting population.
Since then, there have been a few small expansions–the elimination of poll taxes and other impediments to voting; the voting age switched from 21 to 18, etc.
Overall, I don’t think I’m going out on a limb to say that women seem to prefer spending on social welfare projects, and men prefer spending on armies.
You might think that different interest groups would argue over the budget until they come to a reasonable compromise, or that one year Democrats would pass all of their ideas, and then a Republican administration would come along, repeal it all, and pass their own agenda.
But this doesn’t happen; it’s been over 40 years since Roe vs. Wade, and Republicans still haven’t gotten rid of it.
Once one side passes a spending program, it’s virtually guaranteed to stay.
5. Modern Mass-Media
As I have discussed before, recent (ie, in the past 100 or so years) technological advances have created a completely novel memetic environment. For almost the entirety of human history, people got almost all of the information about the world around them from the people around them, principally their parents, grandparents, and tribal/village elders. Information passed vertically in this way I refer to as “meme mitochondria,” due to their similarity to the mitochondrial DNA passed down from mother to child.
Since the invention of the printing press, and increasingly since radio, TV, and the internet, people have gotten more and more of their information about the world from these sources. Information thus passed horizontally I call “meme viruses,” due to the similarity with the horizontal spread of conventional viruses. (I’d call them “viral memes,” but that name’s taken.)
I theorize that evolution selects for meme mitochondria that maximize the chances of their own reproduction, that is, since they are passed largely from parent to child, they are ideas that encourage high natality, personal survival, and loyalty to family and tribe. Meme mitochondria do not need to encourage any kind of loyalty to people outside one’s tribe or protect their lives in any way.
Meme viruses, being spread horizontally, succeed by promoting the common good of the group, but do not need to promote the welfare of the individual, nor natality.
Modern mass communication technologies, therefore, have created a completely evolutionarily novel selective environment in which horizontal meme transmission has become dominant over vertical transmission for the first time in all of human history, which may in turn cause people to demand radically different things of their governments, like social welfare spending or legalized gay marriage.
6. Longer Life Expectancies
The single biggest expense in the government budget is old people:
At the state and local level, pensions become a big deal.
Here’s a different graph:
Anyway, Social Security is the single largest item in the Federal budget at 24%, and pensions and Medicare add quite a bit more–overall, I wouldn’t be surprised if old people received a full half of government budget dollars.
“But wait,” I hear you saying, “Social Security is totally special and not a real government expenditure because I paid into it and therefore it’s something I’m entitled to but totally not an entitlement.”
Well, no. Not really. Sorry, but Social Security is a ponzi scheme. You don’t pay into it and then get your own money back out. The money you put in now goes to pay retirees right now. When you retire in the future, future workers will pay for you.
The whole system was thought up during a time of expanding population growth, when there were plenty of new workers around to pay for old workers to retire. As growth has tapered off, this system has become less viable.
There was actually a Supreme Court case in which the court decided that Social Security is not, in fact, an entitlement.
By the way, “not an entitlement” means “there is no guarantee you will get this because you are not entitled to it.” If the government decides that it just can’t afford to fund Social Security anymore, well, then you just won’t get Social Security anymore.
(Yes, I have had some very annoying discussions with people who complain about the evils of “entitlements” while defending their right to never, ever have their Social Security cheques cut.)
Medicine and hygiene being what they were back in the 1800s, there were just fewer old people around. Even if they’d had Social Security back then, it would have been a much smaller program.
Changes in the composition of the budget over the past 50 years:
Of course, there was a war going on in 1964, but it still shows just how much Social Security and related programs have expanded over the decades.
I have a two more graphs that might be of interest:
Grey bars mark recessions
Interesting how local spending crashed between 1933 and 1945 as Federal spending took off.
I always look at people funny when they complain that proposed government program X or Y is socialist. “We’re already socialist,” I tell them. When government spending is 25% of the entire nation’s GDP (and I’m not sure if that even includes Social Security,) you are already living in a socialist country. If the theory that politics is really just people arguing over the budget is correct, then as the budget becomes an increasingly large percent of GDP, then I expect the political discourse to only become more heated and nastier as people’s entire livelihoods become increasingly dependent on whether or not they qualify for a government handout or program of some sort.
Finally, the Forbes article also notes:
Most importantly, trends on entitlements look a lot more unfavorable than they did in 1992. Baby boom retirements will continue to push Social Security spending upward, by about a percentage point of GDP over the next 25 years. Medicare costs actually aren’t growing as fast as they did in the early 1990s, but they are starting off a larger base, making medical inflation a more significant fiscal problem than it used to be.
I don’t think the upward trend can continue forever.
